Indian economy poses major challenges: Chinese think tank

lcafanboy

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Indian economy poses major challenges: Chinese think tank

India's competitive economy may pose a challenge to China which may become an "unfortunate bystander" watching India succeed if it didn't develop a more effective growth strategy, a Chinese think-tank has warned.
By: IANS | Published: May 11, 2017 12:25 PM







India’s competitive economy may pose a challenge to China which may become an “unfortunate bystander” watching India succeed if it didn’t develop a more effective growth strategy, a Chinese think-tank has warned. (Image: Reuters)


India’s competitive economy may pose a challenge to China which may become an “unfortunate bystander” watching India succeed if it didn’t develop a more effective growth strategy, a Chinese think-tank has warned. The Beijing-based think tank Anbound also said that India could well become the next China because of low labour cost, young population and other factors. It pointed out that not enough studies were conducted on India and Beijing “cannot wait until India grows into an apparently promising competitor before discussing how to deal with the situation. “While Indian GDP may lag far behind (than that of China), the country remains a potential emerging market that has high attractiveness for global capital,” said the report, carried by the state-run Global Times on Thursday.

“Just as what happened with China in the past, the changes taking place in India may also point to a great potential for development. “In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China. “Moreover, there are growing signs that India is succeeding in attracting more and more investment, which China should take (note of) seriously. “As such, China should develop a more effective growth strategy for the new era or it may become an unfortunate bystander watching India’s success.

“The country’s vast domestic market, low labour costs and skilled labour market are its most attractive features. As China’s demographic dividend diminishes, India, with half of its population below the age of 25, is poised to take advantage.” An increasing number of Chinese companies had invested in India in recent years, covering such sectors as hardware, software and marketing. “It is noteworthy that Chinese companies’ investment in India has shifted from simply marketing to research and development (R&D),” it said. It cited the case of Chinese telecom company Huawei Technologies, which invested $170 million to open an R&D facility in Bengaluru, and has announced plans to join Prime Minister Narendra Modi’s “Make in India” campaign. “In other words, India may turn itself into China 2.0, and let global investors decide whether to invest in China or India.


“In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China. “China needs to ponder and study the rise of the Indian economy carefully. “With a young population, it is entirely possible for the emerging market economy to become China 2.0 to gain the attention of world capital.”

http://www.financialexpress.com/eco...s-major-challenges-chinese-think-tank/663476/

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From here to $20 trillion: India’s economic growth strategy
The NITI Aayog action plan to boost agriculture as well as job creation in modern activities fits well with what has happened over the past few decades

Niranjan Rajadhyaksha



The Economic Survey as well as the new NITI Aayog action plan could be read as a vote of confidence in the Asian development strategy. Photo: Pradeep Gaur/Mint
The NITI Aayog has put out an action plan for the next three years. The document has been severely criticized for being a laundry list of government policies. A strategy document is to follow. It should ideally have come before the action plan—to provide a strategic backdrop for individual policies listed out in the three-year action plan. The sequencing is a bit odd.

There are some elements of strategic thinking that can be gleaned from the action plan itself. The NITI Aayog, in its discussion on transforming Indian agriculture, has dealt at length with the challenge of increasing farm productivity. It has later backed a traditional Asian strategy of creating quality jobs through the expansion of the organized industrial sectors as well as a shift within it towards more labour-intensive goods and services.

Exports have been given a central role in the transformation plan. The export market is far bigger than the domestic market. The need to compete in competitive global markets creates incentives for higher productivity. Large firms also support an ecosystem of smaller firms that provide intermediate goods through supply chains.

The implicit NITI Aayog strategy should be seen against international development experience over the past six decades. In a new paper published in January, economists Xinshen Diao, Margaret McMillan and Dani Rodrik have empirically examined the drivers of economic transformation across the world. They have decomposed growth into two categories. The first driver of economic growth is labour productivity changes within a sector. The second driver is the change in labour productivity as people move from the traditional to modern sectors. Latin American growth is better explained by higher productivity within sectors. African growth is driven by structural change as labour is reallocated.

The odd thing in this growth decomposition is that both drivers do not kick in. Latin American growth has been accompanied by weak structural change as people have moved from high-productivity work to low-productivity work. African growth has been accompanied by deterioration in productivity growth in the individual sectors of the economy. This is paradoxical, since the Asian growth experience was based on both drivers—and powered by export growth. Productivity within sectors went up even as there was a structural shift of labour from farm to factory.



Diao, McMillan and Rodrik note that the Indian growth experience has been closer to what happened in Asia rather than the record in Latin America or Africa. The NITI Aayog strategy of boosting farm productivity on the one hand and creating new jobs in modern activities on the other fits well with what has happened in the past few decades. Interestingly, the Economic Survey written this year by Arvind Subramanian also notes that India has begun to resemble Asia in terms of its fiscal balances, high savings rate and trade openness.

The Indian development strategy is clearly influenced by the work of the West Indian economist W. Arthur Lewis, who won the Nobel Prize in 1979 for his description of the development process. Lewis drew an important distinction between the traditional and modern sectors of an economy. Productivity is higher in the latter. Economic growth thus depends on how rapidly resources, and especially labour, move from the traditional to the modern sectors of an economy.

The NITI Aayog needs to make some of these issues clear in its promised strategy document. It also needs to grapple with the undeniable fact that India has not been able to pull off a Lewisian transition. In his landmark 1992 budget speech, Manmohan Singh had clearly said that the policy goal over the long term was “to evolve a pattern of production which is labour intensive and generates larger employment opportunities in productive higher income jobs….” Twenty five years later, the NITI Aayog action plan seems to be informed by the same reasoning.

The Economic Survey as well as the new NITI Aayog action plan could be read as a vote of confidence in the Asian development strategy—and a counter to the quixotic ideas about using the millions of tiny enterprises in the informal sector to drive economic transformation.

But there are challenges as well. The ability to create jobs in modern enterprises will be tested by the increasing use of automation in factories and offices. The ability to push exports will depend on whether the global system remains open in the face of growing protectionist sentiment in the developed world. These two challenges—weak job creation as well as export pessimism—have cast a long shadow on Indian development strategy at least from the days of the second Five-Year Plan.

The past 25 years have seen the Indian economy grow more than eightfold in dollar terms between 1992 and 2017, according to data from the International Monetary Fund. A $293 billion economy is now a $2.4 trillion one. Average incomes have also gone up by a factor of six over the same period—from $318 to $1,850. The big question is if, assuming the same momentum, the next 25 years will end with a $20 trillion economy where the average Indian citizen earns $7,100.

What is the strategy to get there—or even beyond?
http://www.livemint.com/Opinion/rVW...trillion-Indias-economic-growth-strategy.html
 

IndianHawk

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Indian economy poses major challenges: Chinese think tank

India's competitive economy may pose a challenge to China which may become an "unfortunate bystander" watching India succeed if it didn't develop a more effective growth strategy, a Chinese think-tank has warned.
By: IANS | Published: May 11, 2017 12:25 PM







India’s competitive economy may pose a challenge to China which may become an “unfortunate bystander” watching India succeed if it didn’t develop a more effective growth strategy, a Chinese think-tank has warned. (Image: Reuters)


India’s competitive economy may pose a challenge to China which may become an “unfortunate bystander” watching India succeed if it didn’t develop a more effective growth strategy, a Chinese think-tank has warned. The Beijing-based think tank Anbound also said that India could well become the next China because of low labour cost, young population and other factors. It pointed out that not enough studies were conducted on India and Beijing “cannot wait until India grows into an apparently promising competitor before discussing how to deal with the situation. “While Indian GDP may lag far behind (than that of China), the country remains a potential emerging market that has high attractiveness for global capital,” said the report, carried by the state-run Global Times on Thursday.

“Just as what happened with China in the past, the changes taking place in India may also point to a great potential for development. “In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China. “Moreover, there are growing signs that India is succeeding in attracting more and more investment, which China should take (note of) seriously. “As such, China should develop a more effective growth strategy for the new era or it may become an unfortunate bystander watching India’s success.

“The country’s vast domestic market, low labour costs and skilled labour market are its most attractive features. As China’s demographic dividend diminishes, India, with half of its population below the age of 25, is poised to take advantage.” An increasing number of Chinese companies had invested in India in recent years, covering such sectors as hardware, software and marketing. “It is noteworthy that Chinese companies’ investment in India has shifted from simply marketing to research and development (R&D),” it said. It cited the case of Chinese telecom company Huawei Technologies, which invested $170 million to open an R&D facility in Bengaluru, and has announced plans to join Prime Minister Narendra Modi’s “Make in India” campaign. “In other words, India may turn itself into China 2.0, and let global investors decide whether to invest in China or India.


“In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China. “China needs to ponder and study the rise of the Indian economy carefully. “With a young population, it is entirely possible for the emerging market economy to become China 2.0 to gain the attention of world capital.”

http://www.financialexpress.com/eco...s-major-challenges-chinese-think-tank/663476/

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This think tank itself has failed miserably to read into india. While a growing Indian economy will pose competition to china in several sectors chiefly labour intensive manufacturing still India won't be china 2.0

India is already a service intensive economy and will grow faster into service sectors than any other.

China will soon face an ageing population (already avg Chinese is 10-15 years older than avg Indian) , low child birth and an acute labour shortage. Thus forcing it to dependent on younger nations such as Indonesia.

While India will soon surpass china in population and this growth will continue till 2060 when Indian population is expected to stabilize.

India has to focus on trade and China needs consumption from here on. Both can be very complimentary . But for that china needs to open market and there is nothing this think tank says about.
 

lcafanboy

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It's time to take economic competition from India seriously: China think tank
The report is an unusual contrast, arguing that the Narendra Modi government has been successful in raising India's profile among global investors.



Ananth Krishnan | Posted by Samiya Latief

Beijing, May 11, 2017 | UPDATED 09:08 IST

Narendra Modi government had been successful in raising India's profile among global investors - and even succeeding in bringing in Chinese companies - which could pose a long-term challenge to China, according to the think-tank.


"Generally speaking, India does have the conditions to copy China's economic growth model thanks to its vast size and market, low labour costs and large population, which are all similar to China's conditions. In fact, it added, "global investors are currently undecided. Moreover, there are growing signs that India is succeeding in attracting more and more investment, which China should take seriously."

"The country's vast domestic market, low labour costs and skilled labour market are its most attractive features. As China's demographic dividend diminishes, India, with half of its population below the age of 25, is poised to take advantage," the report said.

CHINESE COMPANIES INVESTING IN INDIA

It also pointed to "an increasing number of Chinese companies" investing in the Indian market, from smartphone firms Vivo, Oppo and Xiaomi, for whom India is emerging as the most important market after China, as well as Chinese technology companies that had been successful in introducing products in the Indian market, from UC Browser to SHAREit.

The report said, "It is noteworthy that Chinese companies' investment in India has shifted from simply marketing to research and development (R&D). For instance, Chinese telecom company Huawei Technologies Co invested $170 million to open an R&D facility in Bengaluru, and announced its plan to join Prime Minister Narendra Modi's 'Make in India' campaign."

INDIA A POTENTIAL CONSUMER GROUP

It drew a parallel with China's own growth story, suggesting that "the changes that are taking place in India may also point to great potential for development." "With a large population of young people, which is not only the labour force but also a potential consumer group, India has the possibility of seeing explosive economic growth in the future. Therefore, we must pay close attention to the development of this unfamiliar neighbour. One of our researchersraised a question: If India decided to copy China, what impact would it have and what should China do? By copying China, India may also develop an internet economy and boost its infrastructure construction, along with investment-driven growth. In other words, India may turn itself into China 2.0, and let global investors decide whether to invest in China or India."

It bemoaned the fact that few Chinese think-tanks or experts were taking India seriously enough. "It should be pointed out that China has not conducted enough studies on India," the think-tank said. "From the perspective of think tanks, China cannot wait until India grows into an apparently promising competitor before discussing how to deal with the situation. As such, China should develop a more effective growth strategy for the new era or it may become an unfortunate bystander watching India's success. China needs to ponder and study the rise of the Indian economy carefully. With a young population, it is entirely possible for the emerging market economy to become China 2.0 to gain the attention of world capital."



http://indiatoday.intoday.in/story/china-india-economic-competition-modi-make-in-india/1/950912.html
 

Srinivas_K

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It will be India which will become a true global player in the east.

Indian economy , with military and soft power are a good combination to become a super power. India needs technology development.
 

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Some sections of CCP think that they should ally with India rather than Pakistan.
 

The Ultranationalist

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Bullshit, India lags in manufacturing sector, we will never be able to compete with the chinese if we continue like this, the only thing that our foolish ecomic planners have achieve so far is stupid call centre jobs in India, you can never build an economy like china or south korea or japan with services sector. Modis make in India plan also doent seem to be working, its just that the things which were already being made in India got a new logo of make in India, this is very frustrating
 

square

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chinese should not worry , they have azer masood and cpec....
 

abu bakr

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india should focus on research and development. whats the use of big economy if u buy technology from smaller economies?
indian government should invest in science research and high quality science education. we are lagging far behind i believe
 

roma

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Bullshit, India lags in manufacturing sector, we will never be able to compete with the chinese if we continue like this, the only thing that our foolish ecomic planners have achieve so far is stupid call centre jobs in India, you can never build an economy like china or south korea or japan with services sector. Modis make in India plan also doent seem to be working, its just that the things which were already being made in India got a new logo of make in India, this is very frustrating
unfortunately what you have written is quite corect
India lags far behind …. Even our prime area for manufacturing which is the defence industry, we are so far behind china which makes its own 95% but we are the worlds largest importer …… its not that India cant do it but there are too many self interest groups around who stall and stymie the progress

Modi tried to make some changes in drdo for example and has it really delivered …. The way t go sis to break down large huge organisations I to the component parts and monitor closely each one ….isro succeeds partly because the mission is well defined and objectives are clear-cut

Besides that the mindset has to change as modi rightly said but not only towards technology but also towards nationalism
 

The Ultranationalist

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unfortunately what you have written is quite corect
India lags far behind …. Even our prime area for manufacturing which is the defence industry, we are so far behind china which makes its own 95% but we are the worlds largest importer …… its not that India cant do it but there are too many self interest groups around who stall and stymie the progress

Modi tried to make some changes in drdo for example and has it really delivered …. The way t go sis to break down large huge organisations I to the component parts and monitor closely each one ….isro succeeds partly because the mission is well defined and objectives are clear-cut

Besides that the mindset has to change as modi rightly said but not only towards technology but also towards nationalism
Forget defence, have you ever used the electronic items manufactured by Indian cos like hcl, micromax, karbonn etc? They are all crap when compared to the likes of samsung and motorola and even panasonic. Indias forex reservers are a little more than $350 billion while south korea holds a forex reserve of more than $500 billion and china, mind boggling $4 trillion plus. Now make comparison, all these countries have build their economy on manufacturing and not stupid call centre jobs, Tata Nano is not allowed to sell in european countries because it doesnt meet stiif european safety standards, low floor buses manufacture by tatas catch fire due to short circuits. We not only need to promote a manufacturing based economy but also improve the quality of our manufacturing.
 

Neo

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Space industry, Isro is something to be proud off. China and India will dominate this sector in decades to follow.
In other fields, India lags behind, despite huge potential specially from the private sector.
 

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There are fundamentally two areas which are holding us back:-

1) Inefficient Tax collection system
2) Creation of new consumer products domestically

In both areas work in progress, we will know by 2020, where we are heading..
 

aditya10r

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There are fundamentally two areas which are holding us back:-

1) Inefficient Tax collection system
2) Creation of new consumer products domestically

In both areas work in progress, we will know by 2020, where we are heading..
Our tax base is small and people who pay taxes try to evade it......Hope it changes from next year
 

IndianHawk

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Our tax base is small and people who pay taxes try to evade it......Hope it changes from next year
That is essentially why modi is working upon ease of doing business so that ideal money can transform into business creating jobs and existing businesses can expand further thus entering into formal economy and tax net.

We are progressing rapidly in manufacturing too just look at automobile industry where we are self sustaining and even exporting hugely. Similarly all most all low cost mobiles are now manufactured domestically.

GST would reduce costs of manufacturing and logistics significantly there by improving productivity.
Tata Nano is not allowed to sell in european countries because it doesnt meet stiif european safety standards,
Nano never meant to be sold in EU. The owners of Jaguar and Land Rover surely know a thing or two about European standard. Yes Indian safety norms are lax compared to west but that is deliberate policy because safety features increase cost and majority of indians can only afford barebon models .

Anyway a nano is anyday safer than a bike upon which millions of Indian Chinese still commute. Indian product quality is a function of cost just like any other advance economy same tata supplies critical components for boing and these planes fly with hundreds of people onboard without crashing!!!!
 

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Let me tell u , our 2.4 trillion economy will take several decades to reach China's 11.5 trillion and that is good. Trying to boost growth by taking more debt like what US and China have done has taken both economies to point of quasi bankruptcy. China's shadow banking system itself is 10 times Indian economy and total US unfunded liabilities are 50 times Indian economy. Ultimately both countries will try to solve this problem by printing more money and trying to boost output which is a failed strategy. Both US and China will end up like Zimbabwe with 10000%+inflation.
 

ezsasa

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Trying to boost growth by taking more debt like what US and China have done has taken both economies to point of quasi bankruptcy. China's shadow banking system itself is 10 times Indian economy and total US unfunded liabilities are 50 times Indian economy. Ultimately both countries will try to solve this problem by printing more money and trying to boost output which is a failed strategy. Both US and China will end up like Zimbabwe with 10000%+inflation.
i used to have a similar opinion about china couple of years back, now i don't think this will happen anymore. Now a days a new possibility is emerging that U.S will ensure chinese economy will not fail.
 

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Well let me give you some insight Chinese manufacturers especially Chinese brands don't even sell outside China hope you know that . Audi sells 100k vehicles in China and it's the domestic market but they don't export from China to Germany . Ford India exports more vehicles than it sells in India ,sales goes to Renault and even Hyundai the European models gets manufactured here in India and get exported . What we need is more Indian brands.. Nano is not selling even in India . When it comes to mobiles have you seen how Chinese mobile ecosystem evolved in last 5 years before that no one bothered to look at them . We were never an industrial economy we were Mix of agriculture and industrial. We can't just become big having one of those.



Forget defence, have you ever used the electronic items manufactured by Indian cos like hcl, micromax, karbonn etc? They are all crap when compared to the likes of samsung and motorola and even panasonic. Indias forex reservers are a little more than $350 billion while south korea holds a forex reserve of more than $500 billion and china, mind boggling $4 trillion plus. Now make comparison, all these countries have build their economy on manufacturing and not stupid call centre jobs, Tata Nano is not allowed to sell in european countries because it doesnt meet stiif european safety standards, low floor buses manufacture by tatas catch fire due to short circuits. We not only need to promote a manufacturing based economy but also improve the quality of our manufacturing.
 

IndianHawk

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Let me tell u , our 2.4 trillion economy will take several decades to reach China's 11.5 trillion and that is good.
i used to have a similar opinion about china couple of years back, now i don't think this will happen anymore. Now a days a new possibility is emerging that U.S will ensure chinese economy will not fail.
Nope it won't. US knows better otherwise it would have tried to save USSR from failing too. A failed china would hurt US growth in short term but it will secure US hegemony in long term . It will also free US to run riot in Korea in SCS and everywhere and make money by winning reconstruction contracts.
 

captscooby81

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They have to there is no other option for them . Look how uncle Trump who was screaming China currency manipulator few months ago now saying they are not . If the Chinese economy bubble burst it will severly affect the USA more than anyone else . Remember the Trade deficit they both have between themselves .


i used to have a similar opinion about china couple of years back, now i don't think this will happen anymore. Now a days a new possibility is emerging that U.S will ensure chinese economy will not fail.
 

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