CHINA-INDIA: ECONOMIC DISPARITY

In an article published in the Global times on September 18, 2017, Song Guoyou,  Director of the Center for Economic Diplomacy, Fudan University, Shanghai, commented on reports that India's economy is likely to catch up with China's soon. He said that measuring FDI is not only about the amount of money absorbed from foreign direct investment, but the amount of outward foreign direct investment (OFDI) is also important. He cited data from UNCTAD, which said China's OFDI in 2016 was $183 billion, while that of India was $5.1 billion. Song Guoyou argued that based on the exchange rate, China's GDP in 2016 was $11.2 trillion or 4.87 times more than India's $2.3 trillion. With this size, even if China's GDP grows at only 6 percent annually in the next 10 years, India would need to have average annual GDP growth of 29 percent to catch up. Pointing out that in terms of per capita GDP, China's figure in 2016 was $8,113, while India's was $1,723, he said India still has a long way to go before it can catch up with China. He added that one reason it is hard for India to catch up with China is because China's total population is 4.4 times that of the US. However, India and China are much closer in terms of population and GDP growth, but there is still a big gap in per capita GDP. Hence, the likelihood of India's economy surpassing that of China in the short term is slim. Moreover, India's domestic problems may curb its economic growth.





Subscribe to Newswire | Site Map | Email Us
Centre for China Analysis and Strategy, A-50, Second Floor, Vasant Vihar, New Delhi-110057
Tel: 011 41017353
Email: office@ccasindia.org