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PS Commentators Respond: Could the “Chinese Century” Belong to India?

Jan 26, 2023

As India considers how to make the most of its demographic dividend, China has reported its first annual population decline since 1961. At the same time, the West is courting India for trade and security partnerships, and attempting to shift its supply chains away from China, in part to limit Chinese technological development. And while analysts predict that India will become the world’s third-largest economy by 2027, many are now questioning China’s ability to overtake the United States as the world’s largest within the next few decades.

In this Big Question, we ask Pranab Bardhan, Brahma Chellaney, Pinelopi Koujianou Goldberg, and Yi Fuxian whether the economic fortunes of India and China will continue to diverge, and what that could mean for the global economy.

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0 Comments on this paragraph, 8 Comments on this article

peter yeoh Feb 1, 2023

There are more countries subscribing to the democracy framework than those with hard socialist tendencies. This provides India with the right boost to be more competitive than China in many significant ways. India could only by potentially held back economically by domestic political tussles.
- P. Kamath Mar 3, 2023
  
  Again, you are right!
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j. von Hettlingen Jan 28, 2023

As India has overtaken China to become the world's most populous country, and one of the world’s youngest – with a median age of 28.4, it raises the question whether India will replace China to dominate the 21st century geoeconomically or geopolitically.

Due to its – now scrapped – one-child policy China has been grappling with a demographic crisis for decades as a result of low birth rates and an ageing population. Meanwhile experts warn that India’s youth bulge may turn out to be “a liability” instead of a “demographic dividend,” because the country struggles to “generate sufficient productive employment” to provide for jobs.

India has last year overtaken the UK as the world’s fifth largest economy. Its skill-intensive sectors – such as software, digital technology, and pharmaceuticals have done well. But much of its working-age population toils in unskilled labour-intensive industries, whose exports continue to drop, leaving many workers “un- or under-employed.”

When it comes to a country’s economic potential, it is more the quality than the quantity of its population that counts. Take the G7, which makes up of Western economies – the US, the UK, Canada, Japan, France, Germany and Italy – that account for 27% of global GDP and 14% of global GDP growth in the past 10 years. Their citizens are generally well educated and highly skilled. They are productive and competitive in many sectors globally.

As an aggregate China is the world’s second largest economy. Yet its GDP/per capita accounts for just $ 13.630 (IMF 2023). India – $2.690. The US – $78.420. Meanwhile Luxembourg with a population of some 640.000 has the highest GDP/per capita – $128.820.

Both India and China need to tackle their own domestic challenges before they can realise their global ambitions. In India’s case – poverty, low female labour-force participation, high levels of pollution, and simmering ethnic and religious tensions. In China, Xi Jinping is facing serious economic, social and political problems at home and embroiled in territorial disputes and geopolitical conflicts with many countries abroad. Last year its GDP growth is among the worst on record. Since Xi has tightened his grip on power, his zero tolerance for dissent and policies are responsible for undoing the phenomenal growth the world saw two decades ago. It remains to be seen what will happen to China and India in the coming years. Xi Jinping doesn't face elections and can remain in power indefinitely. Indians go to the polls in 2024. Will Narendra Modi be re-elected, given his past mistakes and failures?
- P. Kamath Mar 3, 2023
  
  True indeed!
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- Viswanathan Suresh Feb 1, 2023
  
  That would also depend on the internal political stability in India wouldn't it ?
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Joe Ryan Jan 27, 2023

The human population of a region shouldn't be treated by analysts as livestock whose role is to aggrandize the region, where "the region" is conceived of as a thing in analysts' imagination.

As an example of what not to do, take the "mine's bigger than yours" contest that analysts are holding about whether the GDP of "China" is bigger than the GDP of "the U.S."

The problem with this contest is that there's no "U.S." into whose bank account U.S. GDP is paid. There's a U.S. Government, but U.S. GDP doesn't belong to the USG. Analysts can imagine an aggregate of all the firms and households in the territory over which the USG is sovereign, but that aggregate is not an entity: it doesn't have a bank account (or walk, or talk).

Why subordinate the welfare of real persons to the fantasy of the welfare of something that's just an image in analysts' minds? Don't do it.

That said, Prof. Bardhan in particular makes excellent points about Indian government policy.
- P. Kamath Mar 3, 2023
  
  Well said!
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Lawrence Michael Jan 27, 2023

Quality vs quantity has quality always triumph viz preference. But that is a false opposition or dichotomy. Human population distributed between countries helps one discuss several things including migration & migration patterns.
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