Conventional wisdom states that China will become the next world superpower. The billion-strong nation has been rapidly modernizing, consolidating its manufacturing base, building a high-tech economy, and educating its youth. The result has been unprecedented productivity growth, with China recently becoming the world's fourth largest economy. Some Americans are genuinely concerned that soon it will overtake even the U.S., both economically and militarily. But by and large, most Americans view China as an opportunity on the rise, and many are scrambling to invest in its markets, learn its language and history, pursue its entrepreneurial opportunities, and immerse themselves in its culture.
Now at this moment, it probably seems I'm at the point in this essay where I'm about to state that I disagree with the above assessment.
But this time I don't. Everything I mentioned has either already occurred or stands a great likelihood of occurring.
But while I certainly can't deny China's upward trajectory, I believe that another nation will ultimately overtake it: India. Why? For the simple reason that China is a Communist dictatorship while India is a democracy.
Like China, India is home to a billion plus, has experienced rapid GDP growth, features a burgeoning high-tech sector, and is rapidly modernizing. But unlike its Far East neighbor, India lives with American-style capitalism, free elections, intellectual property rights, and an unrestricted press. In combination, these create opportunities that China cannot hope to match under its current governmental structure.
China certainly has opened its doors to greater capitalism in recent years (and, in fact, this has been a primary driver of its extraordinary growth). But it still suffers greatly from socialist misunderstandings of people's self-earning motivations, lax intellectual property rules that stifle entrepreneurship, economic centralization that adds inefficiencies to markets, and a government whose draconian one-child policy has played havoc on the nation's future social fabric and workforce.
India, on the other hand, faces none of these issues, and sits on a wide-open path to national prosperity. China may be a good place to invest, but as I see it, India is even better.
You stated the India will ultimately overtake China, what is your time line for this occurrence? Also in regards to the middle class I would like to point out a couple things. The GPD Per capita purchasing power parity for China is currently one and a half times greater than India. India's cast system is keeping 25% of the population living below the poverty line as opposed to 10% in China. As a large communist nation begins making more democratic decisions primarily for economic reasons why could they not continue to grow more rapidly than a country in a similar position with a different type of government?
Thanks for your regular columns I do regularly enjoy them.
Posted by: 1stTimeResponder | December 26, 2005 at 10:14 PM
Thanks for writing; glad you like the site! Assuming nothing changes politically, I think India will overtake China in about 20-30 years. Of course, that leaves plenty of room for China to become more democratic (and talking purely straight up, I'd say it'll happen within 20 years); if they do, I think they'll stay ahead of India for the forseeable future.
As for right now, India's caste system is certainly an obstacle to growth, but the walls between castes have been coming down rapidly as the country modernizes. Discrimination based on the caste system has been declared illegal, and in the past 15-20 years, hundreds of millions of Indians have moved from poverty to the middle class.
China has also been modernizing, of course, but I believe its lack of intellectual property enforcement and one-child policy will eventually catch up to it if nothing changes. Without good intellectual property laws, there is little incentive for inventions and entrepreneurship, as anyone can just steal your ideas and the government won't do anything about it. Meanwhile, if everyone continues to have only 1 kid, there will soon be far more retirees than the working-age population can support, which will become a giant drain on China's growth. India has neither of these problems.
Posted by: Solid Surfer | December 27, 2005 at 04:17 PM
As always thanks for the response. I think that with the amount of brain power in China today they have to realize that democracy is the most effective way to run the country. They are learning from the West and even there closest neighbor Taiwan. Many local and state elections are held in democratic fashion already.
The ageing population is a problem they will have to address soon but the one child policy has helped them keep some semblance of control of such a large and diverse population. My understanding of this policy though seems a bit different than many. There are no forced abortions or adoptions. The rural people continue to have multiple children because they need the man power and when it comes to enforcement they pay the increased taxes on those children. The urban population is different I would say that with the current population densities in many large Chinese Cities. Many families choose not to have more than one off spring for economic reasons that are not wholly affected by the government regulations on family size.
Just some food for thought looking forward to your next post.
Posted by: 1stTimeResponder | December 27, 2005 at 05:22 PM
The nonprofit group Consumer Watchdog is seeking to determine the extent of the FBI and Drug Enforcement
Posted by: cheap jerseys | June 24, 2011 at 01:13 AM