CONTENTS…..CONTENTS….. Introduction

Recent Development History

Problems of Chinese Economy

Problems of Indian Economy

Strengths of Indian Economy

Growth of China and India and its Influence on the World Economy

Policy and Implications

Present Economy of India

Present Economy of China

INTRODUCTION

• Both are world’s most

ancient civilizations

• Chinese built 4000-mile

Great Wall some 2000 years ago

• Invented bureaucracy

Conti…..

Indian contributions to :-

• Algebra

• Textile

• Chemistry

• Medicine

• Metallurgy and

• Astronomy in the Ancient and Medieval periods

Conti…..• India and China, lost their edge somewhere during

the 16th and 17th centuries

• Contacts between these two civilizations ceased during the colonial period because the new rulers of the world did not encourage such contacts. 

• When the contacts revived, they turned into conflict and hostility over rival territorial claims in the Himalayan region, the Chinese annexation of Tibet, and the Exile of Dalai Lama into (Dharamshala) India

India became independent peaceful transition of sovereignty from Britain in 1947

China had a proletarian revolution in 1949

Both democratic India and Communist China embarked upon ambitious science, technology, and economic development programs through centralized planning. 

That relationship began to crack in 1962 because of the USSR’s reluctance to transfer nuclear technology to the Peoples Republic

Conti….. China continued its isolation and suffered

serious stagnation for 20 or so more years

The Indian economy began to open its door a bit more widely by the middle of the 1980s

It missed 20 years of the IT revolution that was sweeping the world and driving the global economy IBM and Coca-Cola were kicked out of

India in the middle of 1970s. 

Conti…. Chinese economy has been growing at

about 9-10% per year (1980)

GDP per capita of China is the world’s 4th largest economy, overtaking Japan within next 5-10 years

India has left behind its “Hindu growth

rate” of 3% to hit an annual growth rate of 8+%. 

India’s per capita GDP - 12th largest, 4th largest in the world in terms of purchasing power parity

Problems of Chinese Economic Growth…?

1.Pollution

2.Shortage of Power

3.Growing Income Inequality.

4.Property Boom

5.Inefficient Banking Sector.6. Unemployment7. Undervaluation of Yuan.8.Overheating Economy.9. Huge Balance of Payments

Surplus.

Problems Facing Indian Economy…?

1. Inflation. (7-8%)

2. Poor educational standards.

3. Poor Infrastructure.

4. Balance of Payments deterioration.

5.High levels of debt6.Inequality has risen rather than decreased.7.Large Budget Deficit.8.Rigid labor Laws.

Strengths of Indian Economy

• Demographics of India are favorable.

• There is much scope for increases in efficiency.

• India is well placed to benefit from globalization and outsourcing. 

• Positive Growth Forecasts

Conti…..

If the US finds itself more at ease with India,

rather than China, it makes perfect sense.

Both are successful, open, and large

democracies with sound, viable democratic

institutions as well as independent media and

judiciary

Growth of China and India and its Influence

on the World Economy!! Indicators of the Extent of Integration in

World Markets for Goods and Services

Shares of China and India in Global GDP and its Growth

Sources and Sustainability of Growth

• Factor Accumulation

• Growth in Total Factor Productivity

• External Capital Inflows

Policy Implications

• Chinese GDP growth since 1980 - 9%

• India's GDP growth since 1980 - 6%

• With populations of 1.3 and 1.1 billion in 2003, they present huge & fast growing domestic market for a range of goods and services,

• and export opportunities for producers in the rest of the world.

Conti….

•Acceleration of global grTheir increasing competition for the world’s raw materials and their increasing shares in the global markets for a range of goods and services, is a threat to their prosperity and growth.

•Growth would increase the demand for transport and shipping.

Present Economy Present Economy of Indiaof India

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India's output, with less than one-third of its labour force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth began slowing in 2011 because of a tight monetary policy, intended to address persistent inflation, and a decline in investment, caused by investor pessimism about domestic economic reforms and about the global situation. High international crude prices have exacerbated the government's fuel subsidy expenditures, contributing to a higher fiscal deficit and a worsening current account deficit. In late 2012, the Indian Government announced reforms and deficit reduction measures to reverse India's slowdown. The outlook India's medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.

Present Economy of China

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fuelled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.

PRESENTED BY:

MonikshaMegha

KanchanKhushbu

Class: X C