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July 18, 2006

China tops India again

Bruce Einhorn

China’s science and engineering community has been distracted the past few months by a series of scandals involving accusations of fraud and plagiarism. But the incidents, however embarrassing, don’t seem to be slowing the rush of U.S. companies expanding their R&D operations in the country. For big multinationals, China’s low-cost talent pool, government support and huge market are what matter, and so companies are willing to invest in knowledge workers even with what could be a greater risk of wrongdoing. The latest example: last week Ruey Bin Kao, president of Motorola China, said that the U.S. telecom giant is adding another 1,000 R&D workers in China this year. (Here's the story from the Xinhua website.) In other words, by yearend Motorola will employ 50% more R&D staff in China than a year ago.

China’s progress is certainly making some people nervous. For some years now, many Indians have taken solace from the idea that China may be ahead in manufacturing, but can’t compare to India when it comes to R&D. Or, as Sunil Jain writes in India’s Business Standard, “Tradition has it that while China is the factory of the world, India is going to be the laboratory of the world.” But, Jain adds, a top science body in India, the Scientific Advisory Council, last week caused jitters among Indians after assessing a recent U.S. military report comparing the research output of scientists in China, India and other developing countries. Not only was India behind China in number of papers published, Jain notes, but far more Chinese research papers are landing in top Western journals. More worrisome still for the Indians – and encouraging for the Chinese – is the likelihood that the trend is going to continue: Jain writes that the World Bank’s “Knowledge Index,” a ranking that looks at a country’s scientific fundamentals including Internet and PC usage, patents, and IT adoption by local companies, also skews heavily toward China. In 1995 China scored 3.03 and now scores 4.21, he writes, but India has gone in the other direction, scoring 2.76 11 years ago and just 2.61 today. With scores like that, China can afford to suffer its share of embarrassing science scandals.

04:04 PM

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Thanks for showing the fact. It's absolutely ridiculous for the American and indian press to keep publishing non-sense like "china is the factory of the world and india is the laboratory of the world." This kind of fabricated rumor, which wildly spread in the US and india, has to stop. It's funny to see most people in America only attribute china's rapid economic ascent to solely cheap labor and totally ignore and intentionally not want to acknowledge Chinese people's intelligence. It's time to cut all the non-sense about cheap labor and acknowledge the Chinese people on ivy-league campuses and major academic institutions. We are intelligent, creative and innovative. We talk the talk and walk the walk.

Posted by: medical professor at August 3, 2006 06:42 PM

Its quite in place for Indian intellectuals to live in a land of illusion, where India is poor but proud, where huge portions of its population lives in penury but its dazzling intelligence is illuminating the world. While of this is true, to bask in such ideas is nothing short of ridiculous. China is progressive in every way and if its making some mistakes along the way, its also showing a great deal of character in its relentless focus on nationalism, and progress with independent thinking on what that should be - most important its trying to do the best for its people. I agree that China does not conform to the "liberal" world's notion of democracy but with the kind of phased approach its taking to its progress, I think its foolish in the extreme to either underestimate, compare or denigrate China's achievements.

If India needs to progress, it has to do so on its own against its own yardstick. This will take time given the baggage of corruption, poverty, monolithic bureaucracy that it has, but with the right focus it can achieve much. Spending time pulling down another country is counter productive.

Posted by: Aurita at August 4, 2006 02:11 AM

As of now China is unambiguously ahead of India, no doubts about it, but its my strong conviction grounded on solid facts that in a couple of decades thigs are going to turn upside down owing to two fundamental reasons.Firstly India is going to really leverage its demographic advantage over China which is rapidly ageing.Those in the age group of 15-25,that is about 65% of India,are going to mature into leaders in their respective fields, sadly though for China they wouldnt have much young people then to sustain the momentum.Secondly the rewards for a strong democratic system is only waiting to materialise for India ,because after persisting agonisingly for decades with democratic institutions a strong Indian middle class which has just started to grow will ensure that the Indian Leadership delivers on the development agenda. On the contrary China with its repressive regime will witness a collect outburst of anger and disenchantment resulting from decades of suppression. Sooner or later the people of China will call this great socialistic bluff.When that happens expect turmoil and disintegration.

Posted by: Vineet Chandran at August 4, 2006 05:35 AM

I do not know why so many Indians take comfort in such hype that India will have more young people than China while 'China will grow old before it gets rich'. I think it was all started by a study released by a German bank some 2-3 years back. Many take this as truth, hook, line and sinker. What is the use of having a greater population growth if the youth are badly educated and couldn't find jobs in their sort of environment. Besides it means more mouth to feed and more depletion of resouces which could otherwise be allocated to wealth production. Use some common sense instead of sounding like a broken record, pushing this tired hype around.

Posted by: Jim Webb at August 4, 2006 09:46 AM

Many indians still believe the more is better, in particular in thier population. There is limit on that. The mothers were encourged to have more kids in 1950 and 1960's. Quickkly Chinese earn that population outgrow the produciton for the basic needs, and it started implementaiton of the family planning. Today, there are still about 4 million college graduates that entering inot job market, and government are facing tremenous pressure to providing jobs fo the well-educate young work force. It could be worse if it let go without any family planning.

I hope that our Indina friends be realistic and independet in their thinking what path best suit them. In 10-20 years, we will be able to see the impact. Just to have more young workforce is not solution.

Posted by: Mitchell at August 4, 2006 12:54 PM

Again, some indians are so ready to self promote shamelessly by spending time to pull down other country with groundless information, while ignoring their own issues. This kind of narcissistic, delusional behavioral disorder should be despised and censured without mercy. Good luck in isolating your strong neighboring country, and cornering yourself. Everyone else will see through your disgusting, insecure true self and shun away from those people who take comfort in fabricating absurd prediction of social unrest in china. The most repressive regime in the world is the caste system in india, so stop calling yourself democratic society. You don't even know what democracy means. Why don't you go ahead and predict your own social outburst of anger and disenchantment resulting from decades of suppression, and expect turmoil and disintegration of your own country?!

Posted by: medical professor at August 4, 2006 03:45 PM

I couldn't agree more with Jim Webb. India just doesn't have the resources to accomodate the the new baby boom. What good is a new billion young but uneducated people? They will only end up as social problems. It is time for Indians to be a responsible stake holders in the future of the world. They need to realize that the world can't afford the wild baby boom like the one in India.

Posted by: Andy at August 4, 2006 06:28 PM

I dont think anyone in India, today, disagrees with the point that our huge population is more a problem, than a solution.

Till a few years ago, before she became the home of the world's call-centers, India was a third world country. Guess what - today, she still is; and will be for a few more years. The problems of poverty, unemployment, and all the other 'nasties' associated with being a 3rd world country, along with the culture-specific problems of India will not disappear overnight just because we have a couple of companies listed on the NASDAQ. Anyone who thinks otherwise should leave the funny cigarettes alone. Its a long journey which, as the Chinese say, begins with the first step.

It could take a generation, or it could take 2 generations; there are complications and there will be new ones: the point is - India will get there, and we'll get there using methods and systems that work for us and on a time-table that (like the Indian Railways) is diffecult to predict today. The most important thing, though - is that as a country we keep moving forward. In some ways we have. For example, who'd have thunk 10 years ago that a search for 'Infosys' on BW would yield over 20 pages of links? Or a seemingly incessant comparison with China, by commentators who really should know better?

Comparing which country tops the other is journalistic schtick. China is an old and wonderful country, and they have their methods and systems of development - we have ours. Neither of them may look pretty, but as long as they work for their people who am I to argue?

Posted by: eggs at August 5, 2006 03:20 AM

People are getting carried away just as they did when Japan witnessed a similar meteoric rise as that of China. China's success is purely cheap labour,this is not a long term sustainable advantage. One day Africa would build itself to compete with China on the same lines that is "Foreign Technology and Local Cheap Labour". Now tell me how many respected Chinese brands does one Know. Practically nothing comes to mind.On the contrary India multinationals keep investing in their brands This difference is seen in every industry one can name under the sun. Secondly Indians are more Globalised than the Chineese. They can assimilate into an environment much easier than the Chinese do. English is one major reason but the most important is the natural instincts emerging out of living in the most diverse country on the face of the planet. Now Indias caste system problem is something everyone acknowledges,in India we freely debate and discus s it, but nothing close to that sort happens in China. No Indian Government will ever dare to run tanks on protesting Indian youths.Does anyone know the level of suppression in China.. No one would ever Know ..Why.. Because there is nothing called a free press. There are provinces in China which would immediately secede once democracy touches the mainland just like what happened when soviet Union collapsed.Brace yourself for another drama!

Posted by: Vineet Chandran at August 5, 2006 10:02 AM

India is just in the beginning of a revolution.It started with IT and now you can see it catching up with other sectors in manufacturing, bio pharm etc..Dont forget brand "Mittal" your going to see more of this in the coming decades.Its just started.India will have more than enough to accomodate its billion plus people.

In India we control population not by forcing people to have just one child. Just imagine what good is economic prosperity without having the basic freedom of determining the number of children one has. I rather live in an impoverished African banana republic than live in a society where the Government pounces on such basic freedoms.

Posted by: Vineet Chandran at August 5, 2006 10:17 AM

Indian companies like Infosys and Wipro are only services companies working for the Western companies. Do they come out with original software of their own? Hardly any come to mind. Do they come out with their own branded software? Hardly any that I know of.

There's nothing original and innovative with India. Did India invented anything during their thousand of years of history? Nothing that I aware of except the '0'. (Yes!) Did they develop any polished arts during their thousand of years of history? Nothing that I know of comparable to Chinese porcelain, Western paintings, Japanese lacquer, etc.

Or coming back to more contemporary India, let's look at Bollywood. It may be the largest film industry in the world today but year in year out, they just churn out the same mindless song-dance routine films. It's low quality and there's hardly any variety, where's the innovation? Do Indian films win any International awards? If there are, it's must be very measly.

Some Indians like Vineet seems to like to live on wishful thinking. They like to boast about the supposed advantages of India before India has reached there. Achieve it before you talk. Otherwise it's all just talk and no work and you are only good for that.

Posted by: balloon_pricker at August 6, 2006 12:33 AM

Inida's call center is established "purely" because of cheap labor. If it's not cheap, why would American companies go there?!

Talking about brand names, lenovo and Haier are the names that would come to my mind. This just shows how ignorant you are. Show me one thing in the American household today that's made in India. None! In America, people use stuff made in America, China, Germany, Japan, South Korea, sweden, switzerland, Finland. Do you know how many multinational corporations there are in China, such as Siemens technology, Motorolla, volkswagen (Chinese use volkswagen cabs), audi, BMW, mercedes benz, sony, sam sung, LG? Do you know China has been the leading participants of cancer treatments in the world?! Look at the British industrial revolution, it starts with making general stuff then you can afford to build your brand names.

"The most diverse country on the face of the earth" is called the United States of America. Stop your shameless self promotoion.

Regarding assimilation, your extreme point of view will isolate you from the majority of the society. You can never assimilate in any society on the "face of the earth." You are not welcome anywhere because of your negativity, not even the impoverished African banana republic.

If you like to see drama, you should brace the drama that's going on in india, such as the bombing of train stations, killing innocent civilians. That shows you the decades of suppression and injustice in india. Talking about brand mittal, did you hear the comment made by CEO of the French steel company?

Regarding the freedom of press, China does need to work on that. The bottom line is China will transform economically and politically. Stability of China must be ensured before any drastic transformation. No countries in this world is free of problems, not even the U.S. However, it does not give you the rights to raise your ignorant comments regarding China.

Posted by: medical professor at August 6, 2006 12:57 AM

The infamous Gordon Chang once predicted that China will fall in the year of 2006 in his sold out book 'The coming collapase of China'. Upsurprisingly,there are a few who do not like to see the rise of China largely becuase of the ideological difference. Some are turning blind eyes on the progress and achivement in China, and they cook up something and make predication based upon some false illusion.

The democratic system can not guarantee the success of economy. Look at the South America, count how many countries are still struggling in their economic development since they decalared democracy. Some just recovered after a heavy price paid.

It is the captalism that drives the economy.

True, China is not democratic country yet, but underlining economy is very dynamic and it is even freer than many could imagine. The chinese governments (in particular local governments) are very business friendly and they do everything for you as long as you can bring in business and create jobs locally. The country has undergone great changes and is on the way to transform itself into one with market economy,advanced technology and harmonic society. Democracy will be materilized along its development.

Posted by: Mitchell at August 7, 2006 12:47 AM

Why you Americans always like making a meaningless comparison between the two totally different countries? We Chinese don’t care the development of India because we have far surpassed them for years.

Posted by: Zhang Wei at August 7, 2006 02:38 AM

Firstly let me make it very damn clear in 1821 India accounted for 16% of the world GDP, now what you are witnessing is a turn around or putting it more bluntly India's charge to reclaim that status.Simply attacking me or my country will not cover up the facts. Do you know there are 2 million Chinese in this world who have applied for asylum because of repression or fearing one. No Indians do that. Ask yours self Why? The Indian Civilization is one of the greatest of all time just like the Chinese which i acknowledge and admire. But present day China is reminiscent to the puppet shows my parents used to take me to when i was a kid.Everything in China is stage managed. They decide from what kind of image they have to potray to what culture the people should espouse. I have the freedom to criticize my Government and system on a public forum like this but i am pretty damn sure our Chinese Medical Professor can do this only at the risk of his very own life unless he is an immigrant living ina foreign country. Again my chinese friend very conveniently left out the issue of "one Child policy" forcibly unleashed on its people. Tell me again what good is your economic success for. India's great competency levels in services industry is acknowledged gloally. This why all the Americans and Europeans are wetting their pants over the prospect of loosing jobs to India. My point is we are just started on this inexorable path to reclaim the success that was once truly ours and then we went to an era that is comparable to the "Dark Ages". Like it or not we are in a phase of "Renaissance". Frankly the Chinese economic success makes me very happy because as a true internationalist it is my opinion that India and China which accounts for nearly 1/3rd of humanity should elevate the status of its people and carry its rightfull weight in the International arena.

But the way China has got about achieving its success is not sustainable in the long run and that is more painful.The ramifications are far reaching and catastrophic . Remember the Success of the Soviet Union.We knew nothing about it ,only when the veils were lifted after the collapse of Communism did we realise the hollowness of all the perceived political,economic,scientific and military success.

Now at this juncture i beg of the medical professor not to argue for the sake of argument. The train blasts were not orchestrated by the Government of India. It was remote controlled by elements in another country who are simply finding it difficult to digest Indias emergence. But Tienaman Square, the artificial famine of the 1970's were despicable acts commissioned by the state.

The most diverse country in the world is India not America. You know why? Because our diversity was not artificially created by issuing visas to talented people around the globe. America is a land of immigrants brought from regions spanning the globe to build a country severly lacking in manpower. They dont have an identity of their own. This is why most Americans woo for their country of origin rather than America in a sporting contest or any competition.

Now coming to Bollywood. We have an independent industry which doesnt thrive on aping the west just like the Chinese or some other asian films do shamelessly.However there are exceptions to this. Sooner or later we will pip Hollywood as the biggest in revenue terms. This shows how narrow minded some people can be. See Indians have the sensibility to understand different cultures and appreciate movies both West as well as East. Dancing as a way of narration is such an ingenuous style that is entertaining like hell and is a welcome whiff of fresh air from the stereotyped Hollywood or its other Asian clone movie craps.

Appealing to western sensibilities is not our objective. The market for Indian movies is increasing at the rate of noughts and sooner or later my dear friend your gonna take ur family out for a bollywood movie.

Coming to Mittal ...The French did everything to abuse Indians and Mittal just like the medical professor and the "bubble_pricker" are trying against me..What happened? Who won? Mitall got what he set out for. He took on the the largely French Arcelor and he beat them hand is glove. He kicked out the blabbering self proclaimed French Messiah "Guy Dole". This is India and Indians for you guys. Dont mess up. If you harbour some illusions of doing so do think abut what happened to Arcelor and its Ceo Mr Guy Doll.

Now coming to brands, Which world are you living in Lenovo doesnt have a brand name of ist own.. That is why it is still clinging on to the IBM tag on its PC's .Why would a company with a good solid brand name dilute itself to use another brand name inspite of acquiring it. Simple no one knows about Lenovo except for some press it got while acquiring IBM' hardware business. Snap out of this rubbish no common man recognizes Lenovo. But tell him about Raymonds Suitings and he or she wont blink just as they would on hearing Lenovo.

So here you have something to chew about.!!

India was the greatest civilization centuries back. We have done it before and we are doing it again. So it is no wishfull thinking. Just wait and watch.

A Proud Indian

Posted by: Vineet at August 7, 2006 02:46 AM

I think the parameters that are being considered to debate the development of both China and India are grossly wrong and unfair to people and policy makers of the respective nations. The debate seem to lack concrete facts and are personal in a childish way if not anything else. Two societies with histories to back them have been progressing in the new global order. In fact they are progressing from the status of being third world countries to come up in the highest order- quite fast given their breadth.Historically the societies have had so many weird norms that if we dig up we would find hundreds of such norms which would be considered ills today. And that is true for each and every country.

Nothing happens overnight and that is why it is wrong to expect that things would change like that. How can one measure and compare two countries with completely different set-up and progress path? And how can one judge the progress and compare them if we are unaware of the history.

The debate between whether one is better than others has been misconstructed mostly for the sake of having a debate and waste of time and it is never going to yield any result whatsoever. What might yield result to my mind is, to trace their paths of development and see whether it is beneficial to the global economic order, the individual countries and the region as a whole or not. Which i guess all would agree that yes it is helping the nations and the global economic order at large.

Posted by: Tan at August 7, 2006 04:17 AM

Friends,

India was and is a poor country. No indian denies that. And surely enough, it is miles behind China. We are more interested in developing than overtaking china. If China develops, thats fine, but we would like to develop too. There itself is the mindset difference between the two. Compare us with Mr.Medical professor's comments which are so vitriolic and ill mannered. The biggest difference in India and china are 2 things. China is a manufacturing giant and india cannot compete with that. But on the other hand, the banking and finance in India is transparent (you can check out with any known economist regd that). In china, how many are aware of bad loans? How many are aware of the financial dealings happening? How can anyo0ne verify what the chinese are saying is true ? no democracy and free press, remember ?

Posted by: Pavan at August 7, 2006 03:55 PM

Although it is an interesting topic, this debate will not do us any good. We are running into a dead end as the Earth villagers if we keep following the economic model that the US has developed over the 20th century, which is based on the unlimited exploit to our natural resources. The world simply cannot support another economy like this, no matter who tops whom. We need a turning point in the way the world economic works. If we failed, we are all doomed no matter which country tops the world, the US, India, China, you name it.

Posted by: polo90 at August 7, 2006 07:34 PM

As a statistician who work on population growth models, I can tell you India is facing a big spike in population growth in the next 20 years. China's population control policy has been in place for 30+ years, but the biggest increments occured in recent years. How? Let's do the math.

China's life expenctancy in the 1970's was around 65 coupled with high infant death rate, more or less like India's situation today. According to most recent China's census report, its life expenctancy stands around 73 and infant death rate was reduced by more than 70%, thanks to its ever improved heatlh care and quality of life. The effect of these two factors alone accounts for 150 milion more people in China today.

India will go through the same process. The old formula used for calculating population growth was wrong. Unless you assume that 90% of the India population will never get benefit from this economic boom, and their life quality will never be improved. If that's the case, what is the point to grow the economy?

China (finally) did the right thing in a very brutal and controversial way. Simply speaking, it is swallowing a bullet now to dodge a bomb later. It's a painful experience, but there is really no easy way out.

There is no doubt that India has a younger work force, but they will grow older and live longer. As a result, they will need a larger next generation to support them when they grow old. This is a bad cycle and will lead to disaster at some point.

Contradict to what most people believe, population alone contribute very little to the economy growth. That explains why China and India were and still are among the poorest countries in the world. The key is the productivity of its work force. Productivity is correlated neither to the size nor to the age of its population. Surprisingly, it is closely related to the quality (as measured by development index of the nation) of its population.

Posted by: Ben at August 8, 2006 01:39 AM

See I totally agree that a huge population however young is of no point if the country's economy cant support it. But in India's case the advantage is we are getting younger in a time and age when an overwhelming majority of the world is greying. Does this ring a bell? Indian manpower is going to be the biggest export of India in the coming decades.

The world at large and the west in particular are going to need everyone from plumbers to engineers,accountants to highly sophisticated managers. Where are they going to come from. India has a big role to play in this context.

Secondly with all due respect to Chinese enterprise ,it is very obvious that Chinese Management has a long way to go when it comes to competing with that of India and the world. Most Chinese companies today are looking towards the west to give them direction. But in India's case this is entirely different. Our managers are globally acknowleged for their prowness,insight and business acumen.

But what China has going for itself right now is a very investment friendly Government and policies aligned to help foreign enterprise.

The Indian model of growth may appear a bit slow but it is a more stable and pragmatic one. But most importantly it is a strategy build around consensus.

There is so much work to be done especially in the manufacturing space but we are watching China carefully and formulating a methodology which will help us to assimilate the positives and weed out the negatives.

Another point worthy of note is the quality of Human Capital in both countries. All MNC's claim indisputably that though China may have superior infrastructure Human Capital wise India pips them.

The bottomline is when you judge a country you have to get the whole picture rather than just looking at growth statistics. They are indicators no doubt but dont potray the larger picture.

There must be competition between India and China. Because this is a Win-Win scenario for the people of both our countries.

Wishing both countries the very best in this aspect.

Posted by: Vineet at August 9, 2006 03:00 AM

What are we trying to convey here? Sure the conversations here (well most of them) aren't portraying us (India and China) as developing nations. Ask yourself a question, what does it require for a country to be called a “developing one”? Does any of the data we have put up here help in this regard? On a serious note, what is the point in we calling ourselves a developing one? We can even say ‘we are the Developed countries’, but everyone know what we are, of course unless they are dumb enough to believe us. Each one of us will have the love towards their country, no matter how bad it is. Every Indian will say ‘I love India’ even if they have suffered from its corrupted politics and every Chinese will say ‘China is the Best’ even if he is struggling to earn single_meal_a_day. It is this affection that makes us to showcase our nation as the best. But it shouldn’t be we who should say we are developed, it should be the people from round_the_globe.

It is nice to see the positives of both the countries brought out in the discussion, but why are we so primitive while receiving the criticism? We know the critics the other party is putting forward are valid. Why can’t we accept the fact and go about finding the solution for our negatives (the opponent is mentioning)? Why are we trying to burry our failures underneath the others?

Until when will we be pulling others leg to showcase ourselves as superior? We (India and China) are in the same step of development. Why can’t we work together and help each other reach the top?

Posted by: Chetan at August 9, 2006 09:25 AM

I agree with Ben's comment on China's population policy. A large population is never a solution for the stable growth of the economy. China's population was only 400 million people in China when it won its independence. Mao reached the conclusion that China would be more powerful if it had a larger population. Thus, very soon, the population in China more than doubled. In begining of the 1980s, people found it's not right. That's the time the the "one child policy" was carried out. China actually has contributed a lot to the world on this problem. Imagine, if China had not carried out this policy decades ago, there might be 1 billion more people consuming oil, gas and many other things. India should learn from China on the population policy. It would be an even bigger problem for India to keep growing at the current speed in population. They will realize it one day, but it may be too late when they have already reached 2 billion people.

Posted by: Janet at August 10, 2006 05:25 PM

It makes no sense comparing the two. India is in the same league as Pakistan, Bangladesh, and Sri Lanka, while China competes against Japan, Korea, and Taiwan.

You can always compare apples with oranges, but you just never will get anywhere.

Andrew

Posted by: Andrew Smith at August 10, 2006 06:31 PM

No good is acheived if one country tries to show the other in poor light. Work together and we will all prosper. Let the Zhangs and Vineets work together and Chindia will prosper.

Posted by: suresh at August 10, 2006 06:42 PM

China's population was only 400 million people in China when it won its independence.

--------------------------------------

Janet, "China won its independence" is totally wrong because China never was a colonial country. Mao built up the People's Republic of China after he overthrew the Republic of China. The Republic of China was built by Sun Yat-sen (Sun Zhongshan).

Posted by: zhang wei at August 11, 2006 01:13 AM

China was not a colonial country? Then what is the "cutting of the Chinese melon" all about? It was ruled by multiple countries. Get your facts right, Zhang.

Posted by: Vineet at August 11, 2006 08:32 AM

I agree with Bruce Einhorn that China has the momentum and there is no sign that it will yield its lead over to India in the near future.

If theory can win business and deveop a nation, India would have been one of the wealthiest country 20 years ago. It has almost exactly the same political system, infrastructure, and education as it had 50 years ago. It just never worked the way it was supposed to. That explains why FDI did not flow to India as politicians touted. Money is always smarter than politics. It always finds places that offer faster growth than any politicians can predict. It's a good thing that politicians don't run investment banks.

Democracy is an insurance for social and economical stability, but it rarely supports sensational economy growth. From that stand point, India will enjoy slow and stable growth in the years to come. China faces a bumpy road. Historically speaking, all the major economies adopted democracy after their countries were developed. Fast growth is not as desirable as stability for the developed countries. Some recent examples include Taiwan and Korea. That also projected that China will also have to adopt democracy at some point. China followed the same path as Japan, Korea, Taiwan, and Singapore. It's tried and true.

India is an interesting example and no nation in the world had gone through its phases of development. From that stand point, it's facing more uncertainties. But as I said before, the worst case scenario for India is slow growth. It's still mind boglling how you feed 1 billion people and lift a nation with softwares.

Posted by: Andrew at August 11, 2006 01:35 PM

China lags behind India in micro-economic parameters which is the base for a country to sustain its advantageous growth in the long term. India has just started to grow and is catching up to China in the areas where it lags behind, while in certain areas it is already ahead of China. So in the next 10 yrs China will find it hard to compete with India when it will lose its advantages to other cheap-labor countries and India will grow at the high end.

Check-out...growth has just started for India.

Posted by: INDIAN STUDENT at August 12, 2006 10:36 AM

Both India and China have in the past considered their large populations as liabilities. But now they provide both with competitive advantage. Let's not start the old era of British Raj where the principle was "Divide and Conquer" and then start all over again from scratch. As people in both countries prosper, innovation will come automatically. This will eventually teach the rest of the world the "utilitarian principle" and save for future generations Mother Earth, which has been endangered for the last 200 years by so-called economically advanced peoples. That is sustainable thinking.

Posted by: Arun Patel at August 14, 2006 10:20 PM

First things first. The return on capital in India is much higher than that of China. Secondly India's growth has been led by homegrown Indian entrepreneurs. That is why one hears of so many big Indian industrial houses not just in IT but also manufacturing and petrochemicals. In China no doubt there are massive exports. But just pause a moment to think who are these companies that are leading the way. They are essentially Western, Japanese and other East Asian Companies. In India its not the GM's or GE's that are triggering success, it is the likes of Tatas, Reliance, Birlas etc etc who have come of age and exploited globalization to the hilt. India to this date is not open to foreign investment in many sectors like China is. The retail sector is a perfect example. We are not allowing the Wal Marts and Tescos of the world yet. Why? Because we are laying the ground for competition by developing our local players like Pantaloon and lately even Reliance. So when India decides to open up there will be massive foreign investment.

Then there is the infrastructure conundrum as far as India is concerned. We spend only 1/5th of what China does. But 5 years back we used to spend only 1/10th of what China does. So you can see the gap closing in the next decade.

Now when it comes to democracy it has to be understood that without it one cannot preserve the integrity of the diverse community India is home to. Our democratic system allows voices of different sections of the society to be heard. If nations try to accelerate their economic successes by turning a blind eye on different political considerations the fallout can be catastrophic. This is what we witnessed with the late USSR. Though a superpower the USSR never gave a damn to the views and perceptions of its multiple communities. So we witnessed a complete collapse and disintegration. Most Communist nations have collapsed. All nations that have adhered to the ideology are today in dire straits.

When China transforms politically (which is inevitable) there are issues they will have to address. This transformation is going to be a long and a bitter ride. By then India's strong fundamentals will ensure not just catching up but in fact overtaking China.

Democracy has fostered creative thinking in India and not a mechanical way of operations. This is why we are so successful in knowledge-based industries. The bottomline is that, in India the People control the economy. In China the state controls everything.

Posted by: Vineet at August 16, 2006 02:55 AM

A couple months back, my friend and I had the same debate that is going on here. My friend is Chinese and I am Indian. We were just doing it because it would give us a chance to learn about each other's country in a more fun and involved way. Funny thing is that at the same exact time, my friend and I came across this issue on the Internet about how China and India are improving their relationship with each other. Here we were trying to find out which country is better while in reality both of our countries were becoming allies. What I'm trying to say is that instead of arguing which country is better, we need to work together to improve both countries' conditions. My dad says that if India and China become allies, then we will become the two most powerful countries in the world. Perhaps then our conditions will become better.

Posted by: Reetika at August 16, 2006 06:00 PM

Let's not misconstrue what this debate constitutes. It's not about either China or India. It's about two different models of growth and the sustainabiity of it. China and India have to coexist in peace and will be forced to find middle ground on foreign policy issues in the decades ahead because there is no other alternative. The world is heading for disaster of an unprecedented scale if these two giant neighbours lock horns.

Now for heaven's sake we need healthy economic rivalry between the two nations as its works in the favour of both India as well as China.

The best part of this whole India-China rise is the gradual but unmistakable shift of power from the west to the east.

Regarding becoming allies: Well, I doubt if it's a good move. Allies should have a confluence of values and interests. In this regard I think it suits India best to ally with the likes of United States because we stand for the same cause of democracy, freedom, tolerance and entreprenuership. Let's not racially ally ourselves but look at the larger picture and make decisions with a broader perspective. There is no partnership to match an India-US understanding. It's both logical as well as practical to do so.

Posted by: Vineet at August 20, 2006 10:42 AM

It is good to have a debate but let us not make it personal. There is an important point to think about: the difference between China and the USSR. The USSR was a great military power but an economic midget and this was the major cause of its downfall and breakup.

The Chinese learned from them and are today showing the world that even a centralized system, in combination with capitalism, can be highly effective.

Same holds true of India albeit a different path. We chose a democratic federal system and are also making great strides after abandoning our protectionist policy. The percentage of poor Indians has reduced by 10% over the last five years.

Regarding India's population growth: It is a problem but the growth rate is coming down (0.9 percent by 2021) and the population is expected to stabilize at 1.7 billion by 2060 as per a UN study.

http://countrystudies.us/india/33.htm

The fact is both China and India are rising. The 21st century belongs to both these Asian giants. In my view comparisons must only be made to learn from each other and not belittle each other's economy, political structure or culture.

Posted by: Akshay at August 28, 2006 02:50 PM

I just wonder about the ability of the Indian government to provide jobs for its future less-educated billion citizens. Will they end up crossing the border to neighboring countries, such as China, to look for jobs? That would not be that bad for China since China could then focus its younger citizens to pursue hi-tech jobs and leave the factory-worker positions to the Indians.

Posted by: Andy at September 13, 2006 02:41 PM

Vineet, It is true that China was NEVER TOTALLY colonized like India. Even at the golden time of European colonization, the Chinese empire managed to maintain most of its sovereignty, though some small places like Hong Kong were ceded to the British and some unfair treaties were signed. Later the Japanese took the Northeast part of the empire. This triggered a 14-year bloody war. After the Japanese surrendered at 1945, a Chinese civil war broke out, the Mao-led Communist army won. This is the now well-known "People's Republic of China" I hope this post help you improve your knowledge about Asian history.

Posted by: stone at September 22, 2006 08:56 AM

Stone, the chinese were colonized like no nation ever before in what is historically termed as the "Cutting of the Chinese Melon" when their provinces were shared by western powers for exclusive "Spheres of Influence".. it never ceases to amaze me how people like you can be so selective in your reading about the past and history.

Posted by: Vineet at September 27, 2006 01:59 AM

I don't think Stone and Vineet contradict each other. Stone used "never totally", and Vineet used "shared by western powers". But Vineet contradicts himself by saying "colonized like no nation ever before".

Western influences didn't reach inland China. They did have full authority in "Rented Districts" in many cities of the coastline.

Posted by: outofin at September 28, 2006 06:31 PM

Here is a thought for "medical professor." There is a city called as Pune in the midwestern part of India. Guess what, Chinese students have applied for Indian visas and are planning to stay in India. In fact, in Pune some Chinese have opened up authentic Chinese restaurants and cannot go back to China. So here is another thought: Would it be that Indian-born Chinese-Indians will help India to accelerate the expansion of markets into China for Indian companies? :) :)

Posted by: SmartOpinion at October 3, 2006 05:22 PM

The language and culture speak for colonialism. China maintained its culture and language during its turbulant time in history. Indians today speak fluent English as a result of surrendering to their British masters for centuries.

Chinese moved to India and worked there. It is not big news. China is nation full of people not afraid of expanding. Does it mean that they prefer India to China? Nope. Indians are living and working in Hong Kong, Shenzhen and Shanghai. Does it mean they prefer China too? I don't think so. The only reason is it is just a business.

Posted by: Andy at October 5, 2006 06:50 PM

India started becoming a British colony via the Regulating Act of 1773, the India Act of 1784, and the Charter Act of 1813 after losing two major wars with the Empire (Wikipedia, Indian Independence).

China, while "carved up" by several nations due to their sphere of influence, managed to maintain its national sovereignty. This was an issue between 1870-1910 (Wikipedia, Sphere of Influence).

So, Vineet, which is worse? Losing complete control of one's nation to another country; or, losing costal trading zones to several countries but maintaining overall independence?

On topic: Why is this worth arguing about? Does it really matter which country is #1? Why do we need to feel such pride about our countries? So long as there is peace and prosperity, shouldn't we all be happy?

Posted by: Nobody at October 6, 2006 09:33 AM

Another thing I wanted to point about concerning China's lack of global namebrand recognition is that a Chinese car company called Chery will be introducing a line of cars in America within the next 3 years. Source: http://www.detnews.com/2005/autosinsider/0501/02/A01-47455.htm

And considering how much commerical time cars get, people will take notice - be it good or bad. India does have some multinational companies, but unless they produce goods rather than provide services they will likely never become a household name (if you think that's important).

As for the cars themselves, like practically all foreign cars in the beginning, they will be low quality and very cheap. My history professor told me that Japanese cars were referred to as "Jap Crap" back in the 1970s when they first made it to America. Similar feelings were held for Hyundai. But, after a decade of so, these companies at least have been performing well. Some, like Toyota and Honda are exceptional.

Posted by: Nobody at October 6, 2006 09:50 AM

Andy, now that you understand a little bit of how business works here is some enlightenment for you.

For economic success an atmosphere of innovation coupled with access to capital markets is required. Do capital markets exist in China? No. The Indian stock market is more than 50 years old. Innovation primarily occurs either in universities or by individuals or by business competition. India clearly has an advantage if you compare the three. Here is a classical example of problems in Communism. The world famous PC game Tetris was invented in Communist Russia by a Russian engineer. Their rights were sold to Nintendo by the Communist state for $300,000. The Chinese may not sell that cheap, but the point is that the State expectations are totally different from that of an individual’s expectation. That is where an atmosphere of democracy in business decision is required. People complain about the lack of infrastructure in India. But guess what, that is a blessing in disguise. Poor infrastructure gives breathing time for the newcomers. Already the whole IT market is captured by just 4 – 5 large Indian corporations.

The Chinese argument for not transitioning to democracy is that a faster transition would be disruptive and harmful for the country. But guess what? There can never be a smooth transition from Communism to Democracy. It will always be disruptive. Only democratic values understand smooth transition; one cannot imagine Communist leaders vacating power “smoothly.”

On a lighter note, one has to remember that there is going to be the largest migration of people that has occurred in any historical time. That would be North-South between China and India. The demographics of the future India and China are going to be very different. India and China would be the place where everybody wants to be unless the West invents technology to colonize the moon :) :)

Posted by: SmartOpinion at October 6, 2006 10:56 AM

I personally think the world has so much at stake when it comes to India's success. Evidently the only counter to an increasingly belligerent and very shady Chinese regime is India. If China overtakes India, expect the law of the Jungle with the likes of North Korea and Iran playing key allies. China has political ambitions which can cost the world dearly. The peaceful rise of China is a sham until they demcratize. I'm glad India's growth has been steadily rising and now is in position to overtake that of China. It will be a victory for the free world if India can achieve World Power status and challenge China. I think just like the Americans the whole of Europe should back India's climb to the top.

Posted by: Stephen at October 10, 2006 04:54 AM

Our Indian friend here likes to claim that democracy will ensure India's success in the imaginary race for Number 1. India has been a democracy for more than five decades and still is a very poor country. Why will democracy work now and not work before? Also, there are many poor democratic countries in the world, such as many of the Latin American countries and several African countries. India is included in that group.

Also, Indians in this forum like to mention Tiananmen Square. Well, I have got news for you: "Operation Blue Star" in which the Golden Temple of the Sikhs was destroyed by the Indian government. See link http://www.sikhspectrum.com/052004/ahluwalia_ms_3.htm

Also, there are many separatist movements that want to separate from the so-called "Greatest Democracy" in the face of the planet such as:

http://www.indiadaily.com/editorial/2936.asp

http://en.wikipedia.org/wiki/Insurgent_groups_in_Northeast_India

Also, India has the greatest number of under-weight child, number of child labor working in slave-like conditions, discrimination, corruption etc. In short India is more akin to the poorest country of Africa.

Besides, Indian companies such as Tata and some other protected India companies could only survive in India due to government protection.

Posted by: jcage at October 13, 2006 04:48 PM

That is actually the crux of the situation. The West is goading India to challenge China because India is seen as benign and can't threaten them while China's rise is seen as belligerent and threatening to their status. Wait until India turns on them and bites their hands and then they will not think so.

Posted by: Jimmy at October 14, 2006 03:16 AM

I beg to differ on that Jimmy. India today is an open story. We see India the way it is, but when it comes to China we see only what the regime there wants us to see. India may and w


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