China vs. India 2020

The scenario known as the “World according to Davos”

More than ten years ago the agents from the CIA came with a report which was then presented to the president George Bush and his administration. The focus of the report was the global tendencies in the next 15 years or until the year 2020. Parts of this report will be used for the purposes of this article.

“World according to Davos” is a chapter of the aforementioned report, which in general views the world in 2020 by using a scenario* in which China and India along with a few other Asian countries have optimized their economic potential and have become more independent from the Western world.

* – Scenario in this case is not an actual prediction by itself but a possible future outcome made on the basis of many factors;

Since the possibilities are virtually endless, we are going to focus only on the perspective of an economic rivalry between the PRC (People’s Republic of China) and India in the year 2020.

The two countries are having a population of respectfully 1, 4 (China) and 1, 3 (India) billion people. However, even if the general differences in the population to consist of several millions, from economic point of view, PRC is the better player. By all reports they are ahead with bigger GDP per capita, 16,7K for China and 7,2K for India. This is also valid for the comparison between salaries and foreign investments. However, the CIA report has included the possibility of India becoming the fastest growing economy of the new age. In defense of this the agents see the following advantages:

  • “Higher performance per capita in India, because of the fastest growing population, while in China, due to the one child per family law, the population will be progressively become more elderly. “
  • “India is recognized as having strong democratic relations within its population while in PRC, the growing number of people needs to be dealt with more care by the autocratic system.”
  • “Growing foreign capital and global enterprises in major sectors which China still hasn’t acquired.”

Still, even if these points are presented, they are only a small part of the big picture and the writers of the report have been careful to comment that “it would be hard for India to accelerate the dynamic of its growth and achieve what China have achieved in the last decade”.

As for foreign investments, China proves to have stable connections with other countries which tend to favor it more than India. One such company is Lindstrom Group. Lindstrom is a Finnish company with traditions in the textile rental service since 1848. They currently operate in 24 countries worldwide and are famous for their mats, hotels and restaurants textile. They have built their first operating factory in China in 2006. An interesting fact is that on the following year, the LG Management has decided to open factories in India and Turkey as well.

In terms of number of working people in PRC, 400 million Chinese are now economic active and providing for the employers (including the state). The plan of the government is to engage additional 400 million people, mainly from the Chinese villages and provinces to become part of the working machine in the years following 2013 (after Xi Jinping assumed office in PRC).

And while both nations are facing health issues as the threat of AIDS is growing rapidly in those countries, China seems to be the better from the two. Knowing were its strengths are and being realistically oriented, PRC has embraced the plan to achieve a 6,5-7% economic growth in the years following 2016.

In conclusion, China is much more prepared to develop its own internal structure and once again to prove its place as the second largest economy in the world while India is not at standstill point but still struggling to hold a major economic position in Asia.

Written by: Lyubomir S. Evtimov