i got my GD PI on 17th..so preparing for the same. and i reckon that INDia Vs CHINA is indeed a hot topic
Here it goes…
Why did the price of oil and other commodities rise in the last five years? Why is the US able to fund a massive external deficit without an increase in interest rates? Why have global prices of manufactured products declined in the past decade relative to other products and services? The answer, in part, to all of these questions is simple: China.
Its emergence as a global power via its integration into the global economy has had significant implications. China’s strong growth has contributed to higher oil prices. Its policy of maintaining a low valued currency has meant accumulating dollars and thereby funding the US external deficit. And its massive investment in manufacturing capacity has put downward pressure on global prices and margins. It has become conventional wisdom that China is the biggest story of our time. Now, as India goes through a similar process characterized by historically high rates of growth and further integration into the global economy, it appears that the path that China and India follow will influence the global economy and business environment. Perhaps, then, India is the next big story.
Yet China and India, despite their massive populations and growing importance, are quite different. Their economic structures, sources of growth, areas of competitive advantage, and the impact they have will remain different in the coming years. Today, many global business leaders believe that they must have a strategy for China and India. For many, China is seen as the place to produce or procure goods while India is the place to procure business and IT services. Yet in the future this discrete division of labor might not be so clear, or even relevant. Moreover, both countries are increasingly seen as burgeoning markets in their own right, although only China has attracted significant investment in this regard. After a long chill, China and India are developing a significant economic relationship with one another. Trade and investment are booming, potentially creating competitive challenges and opportunities for global companies based in developed countries. Moreover, this relationship will likely contribute to the rapid emergence of global companies based in India and China. The question, then, for global companies is what to do in each country. And the answer will depend on the circumstances of each company. But surely neither country can be ignored.
Yet should they be compared? Is there any basis other than the fact that they are both big and growing rapidly? Perhaps not. If comparisons were made on the basis of a true symbiosis between countries then China might best be compared with the US, Russia, or Japan, but not necessarily India. Still, the size and sudden importance of China and India is reason enough to make a comparison. Moreover, the integration of more than one billion Chinese and Indian workers into the global economy in the past quarter century was one of the most important economic events ever. Indeed it can be argued that their addition to the global economy was, in part, responsible for the spectacular rise in productivity growth in the West. And as incomes in China and India rise, the addition of more than two billion consumers to the global economy will contribute to global growth as well. This post offers some thoughts on the future direction of India and China, the risks and opportunities of doing business in each country, and the likely impact they will have on global business.
