Economy of China V India

Introduction

China and India before they deliberately insulated from the outbreak of World Economy and similar development strategies, in the market-oriented economic reform and liberalization to come. China's reform and opening up in 1978, central planning, non-market economy. India has always had a large private sector and the market are subject to it until the 20th century, 80's hesitant and piecemeal reform of the rigid state control. These become systematic and far more extensive in 2001; India experienced a severe macroeconomic crisis.

The continued growth

China's annual average growth rate of 10% in 1980-2008 has decreased to 7-8% per year within the 1998-2009 periods. It is predicted to grow by 8% in 2008 (World Bank 2008a, table 4.1; World Bank 2008b). Fixed investment growth to continue by the increasing proportion of GDP, is expected to reach 42.2% in 2008 driven. World Bank (2008b) noted that this rate of investment over the 20th century to the early 90's level, is considered to be overheating. In addition, most of the investment is clearly very poor, directly or indirectly support the monitoring of sub-national entities. Clearly, the rapid growth of this investment will weaken its efficiency, and could threaten future macroeconomic stability.

In India, average annual growth rate of gross domestic product close to 6% in 1980 eight years. It reached a crisis of 2001-02, in 1996-97 from 7.8 to 1.3 percent of the lower peak. Since then, it has fluctuated between 4.0% lower in 2009-10, in which the economy has suffered severe drought in 1998-99 level of 6.5% per year. With abundant monsoon rains in 2008, growth is expected to be 7.5% to 8% range in 2008-04, according to February 2004, Minister of Finance's Budget presented to Parliament.

In both countries, the current growth rate into the future (that is, the next two decades or so) of the sustainability issues is important. Obviously, if the high rates of savings and investment is not sustainable, and investment efficiency is questionable, then China's economic growth rate will decline. Indeed, improving the quality and variety of consumer goods (including durable consumer goods such as cars) are increasingly larger number in the market, the Chinese family may consume more and save less of their income than they are now do.

Financial situation

China seems to be a better financial position than a very modest budget deficit of India accounted for 3.3% of GDP and debt / GDP ratio of only 26.3% in 2009 (World Bank, 2008b) 3 .

In contrast, the central government in India's fiscal deficit in 2009-10 of 5.9% GDP increase of a 4.6% GDP deficit state. Total debt / GDP ratio was 75.3% (RBI 2008a, Table 223 and 224). However, the World Bank (2008b) pointed out that in the face of a costly reform agenda, including the Chinese pension / social security reform and the accumulation of bad loans of four state-owned banks to disclose (non-performing loans) 5.12. Although the proportion of non-performing assets has fallen to the end of 2009 to 26%, which is considered ...