INDIA AND CHINA

CHINA:

  • Historical:

  • Their economic development started with the ‘Great Leap Forward’ economic campaign started in 1958. People were encouraged to start industries on a massive scale. In the commune system, people collectively owned the lands.
  • ‘GLF’ campaign met with problems --> severe drought, 30 million deaths, and conflicts with Russia (hindered industrialization).
  • In 1965- Mao Ze Dong started the ‘Great Proletarian Cultural Revolution’. Professionals and students were sent to the countryside to learn and work.
  • Present day economic growth in China can be traced back to the reforms that were introduced in 1978.
  • Initially, reforms were introduced in agriculture, foreign trade and investment.
  • In agriculture, for instance, commune lands were divided into small plots and allocated to individual houses. Income could be kept after paying taxes.
  • In the later phase, reforms were introduced in the industrial sector. Private sector firms were allowed to produce goods and the state owned enterprises (SOE’s), which in India are called Public Sector Enterprises (PSE’s), were made to face competition.
  • In order to attract foreign investors, Special economic Zones (SEZ’s) were set up.
  • These reforms, introduced in 1978, were not because of any compulsion from the World Bank or IMF, as was the case in India-NEP in 1991. It was because the new leadership in China was not happy with the slow growth rate under the Maoist rule, which was based on de-centralization, self sufficiency and shunning foreign technology, goods and capital.

  • Present/Sectoral Contribution to GDP:

  • China has the second largest GDP (PPP) in the world, of 7.2 trillion dollars, while India’s GDP in PPP is 3.3 trillion dollars.
  • China has been able to maintain near double digit growth rate for more than 2 decades.
  • In China, due to topographic and climatic conditions, the area suitable for cultivation is relatively small, i.e. only 10% of its total land area.
  • Until the 1980’s, more than 80% of the people were dependant on agriculture. However, the govt. encouraged people to leave their fields and pursue other activities like handicrafts, commerce and transport.
  • In 2000, 54% of the workforce was engaged in agriculture and its contribution to GDP was only 15%.
  • In India 60% of the population is engaged in agricultural activities and its contribution to the GDP is 23%.
  • In China, manufacturing contributes the highest to GDP at 53%, whereas in India services sector accounts for more than 50%.
  • In the normal course of development, countries first shift their employment and output from agriculture to manufacturing and then to services. This is what is happening in China. However, in India, the proportion of workforce engaged in manufacturing is a low 16% and the shift is taking place directly towards the services sector. Hence, the services sector is emerging as a major player in the development process and a prospective employer as well.
  • Till late 1970’s, both the countries were maintaining the same level of low development, but after that, China has invested heavily in infrastructure, which has acted as an engine of economic growth, while infrastructure is lacking in many parts of India.
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  • HUMAN DEVELOPMENT INDEX (HDI):

  • China is moving ahead of India in terms of HDI. This is true of many indicators, such as GDP/capita, proportion of population below poverty line, mortality rates, access to sanitation, literacy, life expectation, etc.
  • In China, for 1 lakh births, only 50 women die, whereas in India, more than 500 women die. Health facilities in India poorly developed.
  • The proportion of people below the International poverty rate if $1/day is almost two times higher for India than China.
  • Although China is the largest nation in terms of population, ...

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