The Grey Chronicles

2009.January.2

The Dragon and The Elephant


Several articles have been written about the resurgence of India, the elephant, and China, the dragon. Early this decade, both of these countries were lumped with a group called: BRIC—Brazil, Russia, India and China (IBM, 2006). Multinationals are carving out their own piece of each pie, to take advantage of these growing economies.

Gregson (2008) in a cover story for the May 2008 issue of Global Finance wrote:

“Often uneasy neighbors and fierce competitors, India and China are finding ways to cooperate as their influence on the global economy grows.”

Gregson’s article also accentuated the two countries’ strengths and weaknesses:

“If projections based on recent annual growth rates of around 11% for China and 9% for India hold good, then these two countries will generate half of global GDP by 2050, By that time China will be the world’s largest economy, with the US relegated to second place, followed closely by India.”

“The two Asian giants are "inverted images of each other," . . . "what China is good at, India is not." The absence of overriding central authority in India may explain why "China can build cities overnight while Indians have trouble building roads."” (Khanna, 2008)

“And the fact that each country has developed quite separate strengths—China as the world’s factory and India as its back office. . . many Indians’ facility with English and "soft skills" make them supremely adapted to IT programming and staffing call centers, but the country’s inadequate transport infrastructure inhibits their competing in finished goods as the Chinese do.”

“[India] is painfully aware that, both militarily and economically, China is the dominant player. . . Indians point to their "demographic dividend"—the competitive advantage 10 years out of having a larger population of working age while China’s aging population will have to support more dependents.”

Here’s a rejoinder from Shankar Acharya (2005), honorary professor at the Indian Council for Research in International Economic Relations [ICRIER] and former chief economic adviser to the government of India:

“Other indicators of living standards were just as decisively in China’s favour by the turn of the millennium. China’s poverty ratio . . . was less than half India’s 35% . . . Life expectancy in China was a solid eight years higher that in India. . . . If you think of infrastructure as providing the essential sinews of current and future economic development, China’s lead is even more striking. Electricity production in China is nearly three times higher than in India. . . . Looking at the future, it is easier to foresee a widening of the existing economic disparities between China and India that a reduction. . . Let me put this bluntly: As an economy, we are simply not in China’s league.”

Hexter and Woetzel (2007), predicts:

“As the country merges into the world economy, best practice in China will become best practice globally, products developed in China will become global products, and industrial process developed in China will become global processes.”

India’s Minister of Commerce and Industry Kamal Nath (2008) wrote:

“We proudly proclaim: 15 years, 6 national governments, 5 prime ministers, 1 cohesive economic policy, 1 direction — upward . . . India’s capacity to assimilate, synthesise, and modernise is infinite—that, in fact, is the nation’s genius.”

Thus, of the two Asian giants, in the question of which would rise as a new global force? Your guess is as good as mine!


Notes:

Acharya, Shankar (2005). Asia Reading: India is China’s economic equal? BAH!. Asia Inc. No. 11. Hongkong: Praxis Communications, 2008. p. 64-66. back to text

Gregson, Jonathan (2008). The Elephant and the Dragon. Global Finance Vol. 22, No. 5. New York: Global Finance Media, May 2008. pp. 20-24. back to text

Hexter, Jimmy & Woetzel, Jonathan R. (2007). Bringing best practice to China. McKinsey Quarterly: No. 4. McKinsey & Company, 28 August 2007. back to text

International Business Machine (2006). IBM Global Briefing 2006. Bangalore, India: IBM, 06-07 June 2006. back to text

Khanna, Tarun (2008). Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours. New York: Harvard Business School Press, 2008. 352 pp. back to text

Nath, Kamal (2008). India’s Century: The Age of Entrepreneurship in the World’s Biggest Democracy. New York: McGraw-Hill, 2008. 320pp. back to text

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