China’s impressive. But India may have more long-term potential.

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http://www.csmonitor.com/Money/The-....-But-India-may-have-more-long-term-potential

China’s impressive. But India may have more long-term potential.

Mumbai, India

This weekend we went to a wedding reception in Mumbai.
There were beautiful women dressed in brightly colored traditional gowns. Men favored western business suits, but a few sported the outfits usually worn at Hindu weddings…with flowing, colored tunics, baggy white pants and little embroidered slippers.

These were the men and women who are leading the Indian economy in one of the most remarkable growth stories in economic history. India has been upstaged by China. The middle kingdom’s story…from communist rags to capitalist riches in a single generation has a lot of dramatic punch. But India’s story may have a longer run. Because India grows without relying too heavily on exports. And it seems to have a large class of people who may be capable of keeping that growth on track.

“I now work for Blackrock,” said a pretty young woman. “I did my undergraduate work at the University of Texas. Then I worked in New York for a while.

“My sister lives in Georgetown, not far from you…”

Another man was a Sikh, with a turban on his head.

“I’m a metallurgist. I believe in machines. When I have money, I buy machines. I don’t trust stocks…”

It was a Sikh who assassinated Indira Ghandi. The Sikhs – a military caste – were regarded with deep suspicion for a while. Incidentally, the French prohibit people from wearing a turban when they get an official photograph. This is to provide the government with an accurate picture of the person, presumably. But since the Sikhs wear their turbans all the time, a more accurate picture would show what the man looks like with his turban on…

“I went to the University of Nevada,” said one of the guests. “I went to MIT,” said another. “I went to the University of Pennsylvania…”

“I got a patent on…. I’m a biochemist… I’m on the board of… I run a business that…”

One after the other, the résumés were impressive. These are people who have money, training, ambition, manners…

“There is no Social Security in India,” explained a colleague. “And no welfare. We’re too poor for that. People know they have to work to support themselves and their families. And the economy is still an entrepreneurial economy. The people who have money usually run their own businesses. The money is still in the hands of entrepreneurs instead of professional managers. It’s more like the economy in the US during the early part of the 20th century, in other words, than like today’s US economy.”
 

Koji

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I'm tired of people using the excuse of an export economy has some kind of hinderance. South Korea, Japan, Germany and Taiwan all rode the export train all the way to riches and they remain rich.
 

Daredevil

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I'm tired of people using the excuse of an export economy has some kind of hinderance. South Korea, Japan, Germany and Taiwan all rode the export train all the way to riches and they remain rich.
The difference is that other East asian countries have a respectable domestic consumption as well unlike China which lacks in domestic consumption and relies, in majority, on export and its export ecosystem.
 

Koji

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The difference is that other East asian countries have a respectable domestic consumption as well unlike China which lacks in domestic consumption and relies, in majority, on export and its export ecosystem.
Then you are wholly unfamiliar with the Taiwanese economy during the 60's-80's.

By the way:
"It is often argued that China runs a current-account surplus because its consumer spending has been sluggish. On the contrary, China has the world’s fastest-growing consumer market, increasing by 8% a year in real terms in the past decade. Retail sales have leapt by 17% in real terms in the past 12 months, although this figure may be inflated by government purchases. Even so, China’s consumer spending has grown more slowly than the overall economy. As a result consumption as a share of GDP has fallen and is extremely low by international standards: only 35%, compared with 50-60% in most other Asian economies and 70% in America."

http://www.economist.com/blogs/freeexchange/2009/07/many_things_that_you_know_abou
 

Daredevil

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Then you are wholly unfamiliar with the Taiwanese economy during the 60's-80's.

By the way:
"It is often argued that China runs a current-account surplus because its consumer spending has been sluggish. On the contrary, China has the world’s fastest-growing consumer market, increasing by 8% a year in real terms in the past decade. Retail sales have leapt by 17% in real terms in the past 12 months, although this figure may be inflated by government purchases. Even so, China’s consumer spending has grown more slowly than the overall economy. As a result consumption as a share of GDP has fallen and is extremely low by international standards: only 35%, compared with 50-60% in most other Asian economies and 70% in America."

http://www.economist.com/blogs/freeexchange/2009/07/many_things_that_you_know_abou
Taiwan was unaffected in those times because there was no major recession or slump when its economy was majorly depending on exports but now their consumption is quite respectable hovering around 50% of GDP. Exports being a major part of economy is all good and dandy when there is boom in the world in general but problems arise when there is recession/deflation and that is exactly is what happening now and is affecting many mercantilistic countries such as China. Imagine how much stimulus China (highest in the world as a percentage of GDP) had to give to keep its GDP growth rates intact.
 

Armand2REP

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I'm tired of people using the excuse of an export economy has some kind of hinderance. South Korea, Japan, Germany and Taiwan all rode the export train all the way to riches and they remain rich.
Why are you tired of reality? All the economies you have listed have made the transition from low quality export economies to high quality export/consumer economies. The Chinois consumer levels as % of GDP have been falling the last decade while reliance on exports have only increased. The high cost of housing has driven the disposable income of urban dwellers to all time lows. Only massive stimulus cheques have spured domestic consumption but most of it is profligated by the state. Very little actually comes out of the consumer wallet. China is not only failing to make the transition into the economies you listed, they are headed in the opposite direction.
 

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Why are you tired of reality? All the economies you have listed have made the transition from low quality export economies to high quality export/consumer economies. The Chinois consumer levels as % of GDP have been falling the last decade while reliance on exports have only increased. The high cost of housing has driven the disposable income of urban dwellers to all time lows. Only massive stimulus cheques have spured domestic consumption but most of it is profligated by the state. Very little actually comes out of the consumer wallet. China is not only failing to make the transition into the economies you listed, they are headed in the opposite direction.
China cannot forever stay in the high volume/consumer goods export system. Costs eventually rise as the economy betters (wages etc). and when an efficient infrastructure system cannot keep prices low. Prior to the stimulus actually, which is a recent event, consumer spending has increased 8% a year for the past DECADE.

What proof do you have that the transition is not taking place? China is in the nascent stage of this transformation, witnessed by increased # of patents filed, increased # of PhD's and Engineers, and more companies like Huawei winning innovation awards and international contracts. You'll no doubt try to slyly belittle each point, but these are all signs of a shifting economy. It took Japan and Taiwan well over 20-40 years to shift.
 

Armand2REP

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China cannot forever stay in the high volume/consumer goods export system. Costs eventually rise as the economy betters (wages etc). and when an efficient infrastructure system cannot keep prices low. Prior to the stimulus actually, which is a recent event, consumer spending has increased 8% a year for the past DECADE.
Consumer spending hasn't increased as a percentage of GDP, it has dropped from 50% to 35% in the last 10 years. Most of China's economy is derived from exports and that dependence has only grown.

To put it another way, Chinese GDP has grown 10.5% on average for the last 10 years. Consumer spending has only increased 8% so it is declining as a percentage of income by 2.5% per year. As Chinese incomes rise, their disposable income percentage is only decreasing when it should be increasing.

What proof do you have that the transition is not taking place? China is in the nascent stage of this transformation, witnessed by increased # of patents filed, increased # of PhD's and Engineers, and more companies like Huawei winning innovation awards and international contracts. You'll no doubt try to slyly belittle each point, but these are all signs of a shifting economy. It took Japan and Taiwan well over 20-40 years to shift.
The proof is in the numbers. Disposable income is falling as a percentage of income. The cost of housing is sucking 2/3rds of urban residence paycheques. More people are aged and smoking is out of control raising healthcare costs. The increase in patents is a filing sham as well as the Chinese education system. Illiteracy is on the rise while cheating and grade inflation runs rampant. The children of 200 million migrant workers are denied access to public education every day. Huawei still relies on Western electronics to run their products. You can't buy one of their computers with Chinese CPU, RAM, or Graphics card. The quality of their laptops is abysmal with more battery recalls than any other notebook on earth. China has not made the transition to making quality products. Japan and Taiwan built their economies by making quality electronics and automobiles. Nothing about "made in China" shouts quality. It is only bought because it is cheap supplied by producers who only care about the bottom line, not customer satisfaction.
 

Koji

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1980's and early 1990's...have you ever purchased a Happy Meal from McDonald's? Ever look on the bottom of that cheap plastic toy and see the country of manufacture? MADE IN TAIWAN. Quality my ass..for Taiwan and earlier for Japan, it was all about low quality mass-produced cheap goods.
 

badguy2000

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China’s impressive. But India may have more long-term potentia
"may" is the key word here.

do you know the meaning of "may"....it is "maybe" "perhaps","possiblely" or " probabaly"...in a word, it can be "maybe", but it can be "may not be" too.

so," may" is a very smart world and We can use "may" to finish many impossbile missions.

For example:

Hilter "may" not died in Berlin in 1945.
Mussolini "may" just be a gay.

it " may" be just because Stalin was Hilter's rival in love that Hitler fought to death against Stanlin
 
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Armand2REP

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1980's and early 1990's...have you ever purchased a Happy Meal from McDonald's? Ever look on the bottom of that cheap plastic toy and see the country of manufacture? MADE IN TAIWAN. Quality my ass..for Taiwan and earlier for Japan, it was all about low quality mass-produced cheap goods.
I was a kid once and still have a couple collections of Happy Meal toys from the eighties. Never had one break on me, they were solid little toys. Now, talking about Chinese toys is a whole other issue. For paid toys they are not only cheap but they poison our children. Clearly China has not made the transition in even this simple product to make.
 
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Rage

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1980's and early 1990's...have you ever purchased a Happy Meal from McDonald's? Ever look on the bottom of that cheap plastic toy and see the country of manufacture? MADE IN TAIWAN. Quality my ass..for Taiwan and earlier for Japan, it was all about low quality mass-produced cheap goods.
Your A$$ may be quality, son, but that doesn't change the fact that we're talking about a largely export-oriented, and therefore export-dependent, economy.


Koji said:
What proof do you have that the transition is not taking place? China is in the nascent stage of this transformation, witnessed by increased # of patents filed, increased # of PhD's and Engineers, and more companies like Huawei winning innovation awards and international contracts. You'll no doubt try to slyly belittle each point, but these are all signs of a shifting economy. It took Japan and Taiwan well over 20-40 years to shift.

No doubt you will 'slyly' try to suggest we "will all try to slyly belittle each point", but the fact is, that the "increase" in Chinese patents, is due in large part to the "laws", passed in December 2008 requiring foreign-owned and foreign-licensed companies operating in China to patent their innovations in China first ; that the "news" of China producing "more" graduates or engineers or more engineering graduates than India loses its glittering sheen, when you consider the fact that they produced more engineers than India only in 2007, despite being a largely manufacturing economy and having decades of a head start; that despite receiving accolades for 'innovation', Huawei's "opaque ownership" and murky 'share ownership plan' ensure that foreign stock ex's are wary of listing it even as 'upstart' Indian telecom giants like Reliance receive clearance for the LSE, and that foreign intelligence agencies have it penetrated through and through [infact, it was US intelligence agencies that tipped India off to Huawei's caliginous ownership in 2005].


If proposed changes to China's patent law come into force this year, foreign companies run the risk of losing legal protection for their intellectual property if they don't patent local inventions in the nation first.
http://www.radio86.co.uk/china-insight/news-today/6979/patent-in-china-first-or-lose-ipr-protection


Applications Filed for Foreign Patents on Invention-Creations Made in China

Article 20.1 of the New Law provides that where any entity or individual(including companies solely invested by foreign investors, and their joint ventures or research institutes set up under Chinese law) intends to file an application in a foreign country for a patent for its domestic invention-creation, the entity or individual shall apply for confidential examination with the patent administrative organ under the State Council.
http://www.mwechinalaw.com/news/2009/chinalawalert0209c.htm


I'm tired of people using the excuse of an export economy has some kind of hinderance. South Korea, Japan, Germany and Taiwan all rode the export train all the way to riches and they remain rich.
It ain't just about that, Joki.

Since you love publishing 'articles', rather than qualitative analyses, here're a few recent ones that directly address the issue:

Rio Tinto predicts continued strong commodities demand from China, then India

By THE ASSOCIATED PRESS (Canadian Press) – 21 hours ago

MELBOURNE, Australia — China's demand for iron ore, copper, coal and aluminum will increase dramatically during the next 15 years before India takes the lead in its need for those commodities, global miner Rio Tinto Ltd. predicted in its annual report released Tuesday.

Rio Tinto chief executive Tom Albanese said the strong demand for iron ore clearly provided the most obvious option for production growth in Australia.

Albanese was optimistic about long-term growth prospects and said China's demand for iron ore, copper, coal and aluminum was expected to grow exponentially for the next 15 years.

"India is expected to follow, supporting a further potential wave of strong commodity demand," Albanese said.

He said Rio's move toward a joint venture with BHP Billiton to combine their massive iron ore operations in Western Australia's Pilbara region was a highlight of 2009.

The short-term outlook for mining and metals is also improving but will likely remain volatile, the report said.

Chairman Jan du Plessis said the company had turned itself around after what he called a "particularly testing" 2009.

Rio Tinto started 2009 with debt of around $38.7 billion, largely as a result of its 2007 takeover of Alcan but by Dec. 31 had cut that to $14.8 billion.

"It certainly felt at times as if we were experiencing an amplified version of the global financial crisis and its knock-on effect on business confidence, demand for commodities and availability of credit," du Plessis said.

Rio Tinto shares were up 21 cents, or 0.2 per cent, at AU$75.23.

Copyright © 2010 The Canadian Press. All rights reserved.

http://www.google.com/hostednews/canadianpress/article/ALeqM5h_lho2FvYuDVhALXwqvdsSBH9QsA

India to be fastest growing economy by 2018: Economist

New Delhi, March 16 (IANS) India is the second largest growing economy after China, but it will overtake its neighbouring country by 2018, the Economist Intelligence Unit (EIU), the research arm of London-based Economist magazine, said Tuesday.

'We forecast that India will overtake China as the fastest growing major economy by 2018. We expect India's growth on an average of eight percent in the next five years,' EIU senior analyst Anjalika Bardalai told reporters on the sidelines of 14th Business Roundtable here.

She said the Indian economy would grow at 6.8 percent during the current fiscal, at 7.7 percent in 2010-11, and 8 percent the year later.

But the statistical arm of the Indian government, the Central Statistical Organisation, has projected the economy to grow by 7.2 percent in the current fiscal.

'Our growth projection is based on expenditures in the economy and is not based on factor cost as done by the Indian government,' Bardalai explained.

The Indian government measures growth on the basis of factor cost. Factor cost is the cost of factors of production used to produce final goods and services.

India's GDP during the three quarters in the current fiscal grew at 6.1 percent, 7.9 percent and 6 percent. While during 2008-09 it grew at 6.7 percent and in 2007-08 at 9.1 percent.

'The GDP will not return back to 9 percent and more as it was during 2005-08. Also the monetary pressure may not go down as expected,' The Economist executive editor Daniel Franklin said.

Driven by increasing food prices, India's annual rate of inflation, based on the wholesale price index, rose to 9.89 percent in February from 8.56 percent in the previous month, according to an official data revealed Monday.

It also predicted inflow of investments through Foreign Institutional Investors (FII) at $75 billion by 2014.


http://www.khabarexpress.com/16/03/...ng-economy-by-2018-Economist-news_144475.html

Media, entertainment seen as $24 bn industry in India by 2014

MUMBAI: The $13 billion Indian media and entertainment industry is seen growing 13 percent annually over the next five years to net revenues of $24.25 billion by 2014, says a report released Tuesday.

The study by the Federation of Indian Chambers of Commerce and Industry (FICCI) made the projection based on the recovery staged by the industry in the last quarter of 2009, which, it feels, will continue in the future.

The growth will be driven by factors like favourable demographics, high economic growth, strong fundamentals, expected rise in advertising revenue and increasing penetration, adds the study, conducted jointly by consultancy KPMG.

"The media and entertainment industry represents the face of consumers in India," said FICCI secretary general Amit Mitra, after the study was released by Maharashtra Chief Minister Ashok Chavan at the Frames 2010 conference.

"It is a part of our daily life and touches maximum number of people. So despite the challenging last year, I'm excited by the potential of the industry to even grow beyond 13 percent per annum over the next few years," Mitra said.

Others who attended the inaugural event at India's commercial and entertainment hub included actors Shah Rukh Khan and Katrina Kaif and filmmakers Yash Chopra and Karan Johar.

Speaking on the session, Shah Rukh Khan said the three basic needs of every Indian -- food, clothing and shelter (roti, kapda aur makaan) -- appeared to have been fulfilled for most.

"There is now a fourth desire and that is entertainment and movies are a popular source of this fourth requirement. Another concept popularly emerging and posing to have a great future is sport entertainment," he said.

"We are at the threshold of a huge burst on the entertainment arena in India and entertainment is the packaging of a growing economy."

As per the FICCI-KPMG study several factors augur well for the industry, notably the potential for growth in media reach, impact of digitisation and convergence, better consumer understanding, innovation and enhanced penetration of regional markets.

The study also gives the following estimates of the size of various segments of media and entertainment industry in 2009 and the projection for 2014:

Television: From $5.71 billion to $11.58 billion

Filmed Entertainment: From $1.98 billion to $3.09 billion

Print Media: From $3.88 billion to $5.97 billion

Radio: From $173 million to $364 million

Music: From $184 million to $382 million

Animation: From just $71 million to $1.03 billion

According to the study, gaming will be the fastest growing sector in the media and entertainment industry. This sector grew 22 percent in 2009 and is expected to expand by 32 percent per annum to reach $711 million by 2014.
http://economictimes.indiatimes.com...stry-in-India-by-2014/articleshow/5689822.cms


badguy said:
"may" is the key word here.

do you know the meaning of "may"....it is "maybe" "perhaps","possiblely" or " probabaly"...in a word, it can be "maybe", but it can be "may not be" too.

so," may" is a very smart world and We can use "may" to finish many impossbile missions.

For example:

Hilter "may" not died in Berlin in 1945.
Mussolini "may" just be a gay.

it " may" be just because Stalin was Hilter's rival in love that Hitler fought to death against Stanlin

Read the news. Companies, and big ones, are already gearing up for the impending change.
 
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tony4562

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The difference is that other East asian countries have a respectable domestic consumption as well unlike China which lacks in domestic consumption and relies, in majority, on export and its export ecosystem.
Are you sure about what you are talking about? China is the largest car producer and the largest car market, do I need to say more?
 

Armand2REP

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Are you sure about what you are talking about? China is the largest car producer and the largest car market, do I need to say more?
If GoI paid out $18.7 billion in auto subsidy do you not think India too would become the largest car market and producer?
 

tony4562

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If GoI paid out $18.7 billion in auto subsidy do you not think India too would become the largest car market and producer?
No, first of all 18.7 billion is peanuts compared to the value of china's automobile market (worth 10 times more). Further more india does not have that many buyers at present, then you can not fit that many cars in india's roads today as expressway, high-raised beltways are still in its infancy in india.
 

Armand2REP

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No, first of all 18.7 billion is peanuts compared to the value of china's automobile market (worth 10 times more). Further more india does not have that many buyers at present, then you can not fit that many cars in india's roads today as expressway, high-raised beltways are still in its infancy in india.
Then lets add the 1.14 trillion RMB in reduced auto tax.
 

badguy2000

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Are you sure about what you are talking about? China is the largest car producer and the largest car market, do I need to say more?
this year, the auto sales in China will be about 20M ,that almost = USA's +Japan's.

in 3 years, the auto sales in CHiina will = EU's+USA's +Japan's.
 

Armand2REP

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this year, the auto sales in China will be about 20M ,that almost = USA's +Japan's.

in 3 years, the auto sales in CHiina will = EU's+USA's +Japan's.
Sure you will... Chinese auto exports in 2009 dropped 46%. Auto industry is only propped up by the state, once aid is withdrawn it will drop down to less than 10 million.
 

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Are you sure about what you are talking about? China is the largest car producer and the largest car market, do I need to say more?
All these spur in car sales is due to stimulus. Increase in car sales is consequent to stimulus. Just check the below articles.

http://www.bloomberg.com/apps/news?pid=20601089&sid=aQm2EpT73Krc

http://www.bloomberg.com/apps/news?pid=20601080&sid=aQ1e9ccOYGcU

http://www.businessweek.com/news/20...ger-car-sales-surge-on-stimulus-update1-.html

http://www.chinadaily.com.cn/china/2009-01/28/content_7430533.htm
 

badguy2000

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Sure you will... Chinese auto exports in 2009 dropped 46%. Auto industry is only propped up by the state, once aid is withdrawn it will drop down to less than 10 million.
when CHina itself is the global biggest auto market and it is very hard for auto companies to finish domestic auto orders, all auto companies in CHina are not so interested to oversea sales.
 

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