Much ado about nothing but fantasy

Here comes the latest on China and India. This one’s from American financial services company Citi. It says India, thanks to its robust growth, is expected to surpass China ― and the United States ― by 2050 to become the largest economy in the world. Of course, China is expected to overtake the U.S. to become the largest economy by 2020.

The paeans India has received for its fast economic growth (and because it is a democracy) are not new. Nor are the global efforts to pit it against China. For years, the world has been speaking about China and India in the same breath. The comparisons have been flying thick and fast.

This time, Citi bases its projection on purchasing power parity, an economic growth indicator that considers the purchasing power of a country’s currency rather than the prevailing exchange rate conversion. It says the Indian economy would be worth $85.97 trillion on PPP basis by 2050 from $3.92 trillion in 2010.

The Citi report predicts India to overtake the U.S. ― the world’s largest economy at present ― to become the second largest by 2040. But before that, as early as 2015, it is predicted to surpass Japan as the third largest economy.

This calls for celebrations across India Inc. and should sound as a threat to China, economically at least. But should the two neighbors go through such emotions? Is there really a need for China to feel inferior to its southern (western, considering the classic Journey to the West) neighbor? And should India feel bloated?

The world has been trying to play China against India and vice-versa, because they are perhaps the greatest threat to the existing world economic order, not because they are the two fastest developing economies. The idea is that as long as the two neighbors are obsessed with each other’s economic and military prowess, business as usual can go on in the rest of the economic world.

The world knows that the two countries have been wary of each other since they fought a war in 1962. The world knows the two have a standing border dispute (the burden of a legacy left by colonial powers). And the world knows that as long as the two, despite their fast-growing trade relations, keep fighting over their differences, they will oversee the benefits of working together.

Despite the predictions of financial services companies, economists, and economic and market analysts, the fact is there is a huge difference between China and India in terms of their economies, in terms of their global influence, in terms of their infrastructure, in terms of everything except perhaps their population. The only possible area that India will overtake China is population.

The two countries have their own economic development trajectory, their own destinations, their own philosophies of life (though they are similar in some ways), and their own views of the world.

It’s true that India’s PPP is about $4 trillion, behind the U.S., China ($10.08 trillion) and Japan. But it is far behind China when it comes to different areas of the economy, except perhaps the services sector. (The share of services sector in the Indian economy is more than 55 percent compared to just over 42 percent in China.) Again, this is not to belittle India or to make China overtly proud. These are facts the world goes by and, hence, cannot be denied.

It’s not possible to produce the entire list of differences here, but we can take education as an example. Education plays one of the most important roles in the development of a country’s economy, and China has established a huge lead with its more than 93 percent literacy rate over its neighbor, where just about 65 percent of the population can be considered literate. The high dropout rate and severe disparities in literacy rates and educational opportunities between males and females, urban and rural areas, and among different social groups pose a big challenge to India.

China has its own problems just like India has its own. There are a lot more things that India and China need to do to give their peoples a better life than vying with each other to become the world’s largest economy. There are a lot more battles they can fight together, against climate change for example, than taking on one another in an economic or any other war. And there is a lot more at stake for them in tackling their present problems, national and international, than creating new ones, economic or otherwise, for each other.

By O.P. Rana

(China Daily)

(Asia News Network)