Articles Comments

Blog site of iVarta.com » America, China, Economy, India, NRI, Pakistan, World » Global Economic Powers Comparison: America, China and India

Global Economic Powers Comparison: America, China and India

Share:        
SocialTwist Tell-a-Friend



This blog covers the following topics and references and notes are offered at the end.

  1. A Multipolar C-I-A World
  2. Comparison of Select Data for C-I-A
  • Commentaries on China
  1. Select Facts for Two Emerging and A Developed
    Global Power
  • China and India at a Glance
  1. Political Capacity
  • Pakistan
  • China
  1. Democracy vs Autocracy
  • America
  • India
  • India vs China

A Multipolar C-I-A World

C-I-A (China, India and America) are compared to understand relative strengths of emerging powers. To be a global or a regional power depends on three factors: a strong economy, a powerful military and a deep rooted political capacity. Metaphorically, any global or regional power is three legged. Three legged stools on one (Pakistan) and two (China) legs by nature are unstable. With three relatively stable legs India at best an aspiring global power.

In a unipolar world, since the end of the Cold War in 1989, America became uncontested super power standing on three powerful legs. American supremacy in 21st century is challenged by two emerging powers.America has a deteriorating economy compared to peaks in the Clinton (1992 – 2000) and the Bush (2000 – 08) eras.

Important factor to note is that these three nations are achieving sustained growth through peaceful competitive process, not through imperial designs. Until mid-20th century, some Western democracies and Islamic dictatorships were engaged in building imperial powers through extraterritorial expansions and colonization. Muslim invaders colonized South Asia for about 900 years (950 to 1857). Proselytizers and religious fanatics seeking to build an Islamist Caliphate were looters and plunderers seeking riches in lands of non-believers. Industrializing European nations for about 500 years (16th to 20th century) colonized many poor nations of Middle East, Africa, Latin  America and South and East Asia rich in commodities supplies.India was a British colony from 1857 to 1947.

The blog presents select data on the growth of India relative to other two nations. In my opinion contrary to projections otherwise China is not likely to match or surpass America in less than two decades and in same period India is likely to be closing in on China.

Comparison of select parameters for C-I-A

Commentaries on China: China accounts for up to 60% of most and 90% of some industrially important globally produced commodities. Some hard facts about China touting its economic strength follow:

  1. China’s 19% of the world’s population; it consumes the world’s 53% of cement, 48% of iron ore and 47% of coal and the majority of just about every major commodity. By March 2011, China had accumulated US$3.04 trillion in foreign currency reserves – the largest stockpile on the entire globe.
  2. China set several new records: in 2010, China produced 11 times more steel than the US; it made and sold 18 million vehicles and for food supply it had more pigs than in the next 43 pork producing nations combined.
  3. In industrial sectors, China has the world’s fastest train and the largest high-speed rail network; it is world’s number one producer of wind and solar power and it controls more than 90% of the total global supply of rare earth elements.
  4. In technology and intellectual property, China possesses the fastest supercomputer on the entire globe and in the past 15 years, it has moved from 14th to 2nd place in the world in published scientific research articles.
  5. It also has dubious distinctions, e.g., Chinese consume 50,000 cigarettes per second.

Listed in references and notes are several recent commentaries on the impacts of China’s growth on global powers. The analysts are Fareed Zakaria (moderator of the GPS, a CNN weekly program), Ian Bremmer (an executive at Microsoft), Robert J. Herbold (WSJ, Op-ed) and Dr. Vikram Dalal (Professor of electrical and computer engineering, Iowa State University). Collectively, these authors present a picture of China that evaluates China’s progress and how it compares to that of America. As China continues to grow and the US continues to decline economically, speculators ask: when will China match or surpass American global dominance?

All analysts are well intentioned. Individually they presented a skewed picture of China’s growth. There is a need to develop a comprehensive picture that compares progress, or lack of it, by each of three nations. To put it in relative context the following data were assembled using Google searches.

Comparison of Select Data for C-I-A

In 2010 the populations of China at 1.3 billion and India with 1.2 billion were about 4 times higher than that of America at 310+ million, the third populous nation in the world. China also had largest workforce and America had the largest economy. China’s labor force was more than 5 times that of America and 1.7 times of India. Additional select facts are compared in the following table.

Select Facts for two emerging and one developed Global powers 0712 2011

Facts

China
(C)

India (I)

America (A)

2010 GDP (PPP), $ Trillions.Bracketed  are PPP estimates for 2020

9.71

(22.6)

4.07

(10.2)

14.8

(28.1)

Per Capita GDP, $ NominalPPP $PPP Factor (PPP/Nominal)

4,743

7,400

1.56

1,265

3,339

2.65

45,989

45,989

1.00

GDP Growth, %

9.1

8.5

2.4

Inflation, %

6.4

8.7

3.6

Labor Force, million

820

478

153

Unemployment, %

4.3

9.4

9.2

Fiscal Deficit, % of GDP

1.6

5.5

10.7

Gold Reserves, tonnes

1,054

615

8,134

Foreign Exchange Reserves

$3.2 trillion

$310 billion

NA

World Prosperity Index,
position

58th

88th

1st

Mobil Users, million

896

840

303

Internet Users

420

81

240

Life Expectancy, years

73

65

79

Literacy Rate, %

96

74

99

Infant Mortality Rate,%

20

50

6

Under 5 Mortality rate

21

66

8

 

Using nominal GDP numbers for each nation and its labor force in 2010 annually goods produced by each worker in China were worth $7,500, that for India $3,200 and Americans produced $96,730 per worker. For wealth generation Americans compared to Chinese were 13 times more productive and Chinese compared Indians were 2.3 times more productive.

Health in India has improved, but compares poorly not only to China and America but also to some economic peers (Brazil and Russia) and neighbors (Sri Lanka and Bangladesh).

Chinese are expected to experience a 30% demographic decline by 2050. Unless China improves its productivity by more than 30% and American suffers an additional significant economic decline it would be unlikely for China to catch up with American GDP by 2050.

ChinaIndia at a Glance

The following data suggests that India may substantially narrow the gap with China in about two decades. Labor force of India in 2010 was about 58% of China. Since population of India and China are comparable and China is expected to experience a demographic decline in next few decades, India can narrow the economic gap by accelerating its economic growth rate. It will have to increase its labor force and improve productivity comparable to that of China by adding more skilled and highly skilled workers to its manufacturing and high value added product sectors. The following data sizes up India and China.

ChinaIndia at a Glance

Source: “Sizing up Indiaand China”, IIFL via Thomson Research, 1 November 2010

Parameters

China to India ratio

India’s lag
in years

GDP

3.8

11.0

Industrial
output

8.0

18.0

Steel
production

12.3

18.0

Car
sales

5.0

6.0

 

Political Capacity

For this discussion the political capacity is defined as an ability to withstand internal and external political pressures by building a sustainable self-reliant economy to support a military power that is second to none.

  • China adopted market economy for development in 1978 and India is doing the same starting in 1991. Using rapid  economic growth China is developing as a military power. The institutional political capacity of communist China is weak, lagging behind India and America. The emerging China with double digit economic growth for 30+ years is building strong military to challenge American global dominance. It has potentially an internal political instability waiting on horizon.

Pakistan: A power with a strong military (Pakistan) is inherently unstable if it lacks internal stability and strong economy. The costs for maintaining its huge nuclear armed army are high. It lacks a sustainable self-reliant economy to support a “larger than life” military power (see references and notes).

China: China as a communist state for about 60 years (1948 to present) has attained a regional power status. It faces challenges to its power from the Pacific Rim nations to south and north-east, Russia to north-west, India to south-west and Islamist in the safe heavens of the Af-Pak region as well as Pakistan. Chinese army in last few years responded to several terrorist attacks in towns on the old Silk Road desert in China’s Xinjiang Province with Muslim majority population. China has warned Pakistan to come clean about support to anti-China forces within Pakistan (Taliban co-linked to al Qaeda).

  • An autocratic power with a strong economy (Communist China) is sustainable in a global market place as long as it keeps its supply chain pipelines flowing uninterrupted for exports of manufactured goods and imports of critical raw materials from commodity rich nations. Chinese economy is sustained by exports to most emerging and developed nations, America and Europe as long as it has assured sources of imported raw materials from commodity rich nations. Using its economic strength China has built a regional military power that dominates its neighbors in the Pacific Rim region.
  • To protect its supply chains Chinese navy is patrolling commercial sea lanes beyond South China seas into waters around ASIAN nations to Southeast China, Bay of Bengal and through Indian Ocean to Arabian Seas to reach Middle East, Africa and Latin America. To a degree with military assertiveness it may attempt to reach out through Pakistan to challenge regional hegemony of America in the Gulf of Arabia. It is also building its military strength to  challenge American power in the Pacific Ocean. As long as Chinese internal consumption remains low, its economy will not be self-reliant.
  • China politically may continue to be an autocratic nation. Once its economy generates a sustainable critical-mass of middle-class needed for increasing internal consumption and sustaining a strong self-reliant economy the authoritarian establishment is likely to face political pressures leading to internal political instability. In  such a situation China may be potentially unstable.

Democracy vs Autocracy: A contention appears to be that a middle class dominated society has a tendency to become politically democratic. May be. There is no guarantee that in long term democratic societies are any more
stable than autocratic societies.

  • Most of today’s democracies were mostly autocratic societies; Europeans colonized many autocratic nations for part or all of last few centuries. Autocratic societies were mostly poor, up to 90% ruled by 10+% of ruling establishments of royalty, warlords, clerics and merchant/landed-gentry classes. Collectively the ruling BACWAS (bureaucrats, army, clerics, warlords and scholars) establishment grew to be imperial powers through extra territorial expansions. European nations through colonization built imperial powers that lasted a few centuries and so did the Muslim Caliphates. Each of these societies to varying degrees managed with one or two of the three legs. In most cases they lacked adequate political capacity. Demise of a strong autocratic leader invariably led to political vacuum and chaos until the next savior arrived.
  • China’s GDPwas around $5 trillion in 2010 and it was less than $1 trillion before 1980s. With a double digit GDP growth rates it took China three decades to have a $5 trillion economy by concentrating on low paid manufacturing jobs.

America: Dr Dalal in ‘a diagnosis of the American decline’ offered a credible description of the economic activity cycle per decade. How likely is American economic decline to continue? According to Dalal the cycle has a life span of 10 years. With the market crash of 2007 – 08 the decline precipitated and it may last through most of current decade.

The following are my observation on diminishing political capacity of America. It is interesting to note that America has technological capacity to reverse trends of its economic decline seen in last few years. However for next few years its economy is likely to decline due to shrinkage of its manufacturing base and high employment rates.

  • Starting 2001, two wars in three Muslims heart lands (Iraq and the Af-Pak region of Afghanistan and Pakistan) have strained American economy. The decade long wars have cost America $4 trillion and it still has a few more years (2014 and beyond) to go to neutralize “the hub” of terrorism in the Af-Pak region by destroying the safe heavens protected by Pakistan army. Its economic growth is stagnating and may even be diminishing as it continues to struggle to extricate itself from the Af-Pak quick sand.
  • America started shifting jobs to China during Reagan administration in 1980s. Did we have a steady economic activity decline for 30 years? Not exactly as America successfully replaced low paying jobs with high value added technology products and services. In last 30 years, technology and housing market bubbles appeared and were busted. With both bubbles there were associated financial activities bubbles. It all came crashing down in 2008.
  • Given 9+% unemployment rates it is reasonable to assume a steady decline in American GDP. It would be interesting if Dr Dalal could or would predict America’s GDP, both annual rates and cumulative for a decade of      2011 – 21. In 2011 American economy is around $14.5 trillion.

India: India built its political capacity over last 64 years and now it is focused on building strong economy. India with 7% – 9% economic growth for two decades, overall as a global power is a distant third. For next few decades the best India can hope for is to be a regional power provided it effectively manages border disputes with China and Pakistan. It also needs to build economic interests with commodities rich nations, especially for an assured steady supply of energy and other raw materials to attain a double digit growth needed for augmenting capacity for steel, cement, technology and intellectual property based electronic industry.

  • India has been concentrating on building technology base and manufacture of high value added products. Indian economy being focused on high (up to 70%) internal consumption is less exposed to external political pressures.
  • To sustain its supply chains for exports of technology and high value added manufactured products and imports of raw materials it is building up its navy to  assert a dominance in waters all around India (Bay of Bengal, Indian ocean and Arabian Sea, etc).
  • Except in software developments the growth of manufacturing of high value products has been slow but steadily rising. It has moved up from the out sourcing services provider to technology dominated R&D activities in many industrial products.
  • In addition to being a major global generic drug provider its manufacturing industries include deployment of communications satellites and many advanced military products.
  • With 20 operating nuclear plants (4,780 MW in 2011) and more than dozen large plants at various stages of constructions (20,000 MW by 2020 and 63,000 MW by 2032) for completion in about two decades, India is getting ready to export indigenous designed and developed 220 and 540 MW heavy water nuclear power plants.
  • It is marketing Pratham series super computers.
  • Its economy in two decades grew to about $1.5 trillion.

India vs China: Both India and China have net job gains whereas America and Western nations have suffered job declines judging from near double digit unemployment rates.

  • China’s projected to suffer a demographic decline from 1.4 billion (2020) to less than a billion from 2020 to 2050. India added 180+ million populations in first decade of 21st century and at this rate of population growth it will be most populous nation after 2030. America has maintained its population growth rates by allowing immigrants to enter. If jobs decline in America is not arrested in near future, it may not see technology savvy immigrants coming to its shores to help it continue on with its established business plan of attracting skilled foreign workers.
  • For China demographic decline means its low paying jobs may disappear and to maintain production consistent with consumer demands it will be forced to improve productivity by offering better salaries to manufacturing workers. Without an edge in R&D, productivity can not rise. There may be all kinds of pressures and chief among it would be political capacity. As the numbers of middle class go up, its political structure may come under additional social pressures.
  • In 25 years (1990 -2015) poverty in India is expected to decline by 22% or about 1% a year assuming a 7% to 9% annual GDP growth. The poverty data represents declining population of illiterate old people due to natural attrition and increasing level of literacy as more and more youth get educated.
  • If the education system for youth is reformed to incorporate skills based education such as introduction to basic rural technology – engineering, math, and agricultural science – there is a possibility that with a rapid decline in      poverty rate economic growth may accelerate.
  • It is fallacious to claim that corruption and asymetric distribution of wealth is responsible for high poverty levels in India. Such claims ignore facts that generational cycle of poverty requires skilled based education for the poor to generate wealth.
  • Issues like Lokpal bill may bring down corruption but it may not have much influence on poverty reduction as with implementation of RTE (right to education) by nature takes about a decade to show improved results. The RTE was implemented a few years ago and there are many states that have resisted implementing the RTE reforms.
  • It took India two generations (40 years) of IIT and higher education to reap benefits of wealth generation. RTE presumably will have same effect in helping those who want to get in job market as soon as they complete 7th to 10th level high school education.

References and Notes:

  1. Some observations on the US –Pakistan relationship:
  • In South Asia for last 64+ years following Koranic concepts of wars with only one of a three legs in place Pakistan is trying hard to be not only a stable nation but also a regional power challenging its neighbor to east that is 8.5      times bigger and more powerful. My previous two blogs, references # 7 and  # 8, offered details.
  • Pakistanis in a process of getting ready to realign with a major power once America withdraws its support around 2014. Pakistan with a powerful army and terrorism infrastructure lacks strong economy and political capacity. It is at best a potential spoiler or an international migraine for the region and any major power that aligns itself with it judging from its history with America for last 60 years.
  • America was to a degree responsible for Pakistan’s jihad, terrorism and extremism during first Afghan war (1979 – 89). The one legged stool had leaned on a stool with three powerful legs. Once America pulled away (1990) Pakistan got busy to become what we see today. Starting 2001Pakistan has made life difficult for America.
  • President Obama in June 2011 in shifting focus from Afghanistan, labelled Pakistan “the hub” of safe heavens for terrorist. America and India for last decade or two were targeted by jihad, terrorism and extremism from Pakistan and Arab states (Somalia, Yemen, Saudi Arabia and Iran, etc). Islamists have established cells in America, India and many European nations. Unless the genie of jihad, terrorism and extremism is put back in a corked bottle, their growth may stagnate.
  1. When exactly will China take over the world 0708 2011 WSJ: China’s Bumpy Road Ahead by IAN BREMMER at http://online.wsj.com/article/SB10001424052702303544604576430103921843770.html
  • Unrest, inflation and an aging populace stand in the way of the Middle Kingdom’s touted domination.
  1. Some hard facts on China today,  http://tbk168.posterous.com/some-hard-facts-on-china-today
  2. Ten Thousand Talents “China vs America: Which Is the Developing Country?” by ROBERT J. HERBOLD http://online.wsj.com/a,rticle/SB10001424052702303544604576430162195057084.html?mod=WSJ_Opinion_LEADTop
  • From new roads to wise leadership, sound financials and five-year plans,Beijing has the winning approach.
  1. Why the 21st Century will not belong to China by Fareed Zakaria, CNN,  http://globalpublicsquare.blogs.cnn.com/2011/07/05/why-the-21st-century-will-not-belong-to-china/
  • Chinais not going to be the dominant power of the 21st century for three reasons: economic, political capacity and
    geo-political.
  1. Diagnosing the American decline 0707 2011 By Vikram Dalal Professor of electrical and computer engineering, Iowa State University at http://prestowitz.foreignpolicy.com/posts/2011/07/05/diagnosing_the_american_decline_a_guest_post
  2. Amol Sharma, Geeta Anand and Megha Bahree, “The Ailing Health of a Growing Nation,”  http://online.wsj.com/article/SB10001424053111903591104576466251010968520.html
  3. Pakistan Economy and Wars by Kishan Bhatia (2,461 words); Posted at http://www.indiacause.com/blog/2011/07/07/pakistan-economy-and-wars/
  4. Pakistan Sovereignty and Victimhood 0518 0527 2011 by Kishan Bhatia (2,011 words) http://www.indiacause.com/blog/2011/05/27/pakistan-sovereignty-victimhood/
  5. Aatish Taseer, the son of an assassinated Pakistani leader, explains the history and hysteria behind a deadly relationship: “Why My Father Hated India” http://online.wsj.com/article/SB10001424052702304911104576445862242908294.html?mod=WSJINDIA_hps_MIDDLEThirdNews
  6. The World bank, “Unleashing India’s Innovation: Toward Sustainable and Inclusive Growth”,  at http://www.scribd.com/doc/15739425/Unleashing-Indias-Innovation-Toward-Sustainable-and-Inclusive-Growth
  7. Remittances of $55 billion in 2010 by 21 million global desis in 190 countries “Indian diaspora tops remittance list:, ”http://timesofindia.indiatimes.com/india/Indian-diaspora-tops-remittance-list/articleshow/9329267.cms

 

SocialTwist Tell-a-Friend

Written by

Social activist, social entrepreneur and blogger on contemporary issues of interests to US and South Asia


Copyright and Disclaimer:
The views expressed in this blog/article are the author's own and not of this website. The author is solely responsible for the contents of this blog/article. This website does not represent or endorse the accuracy, completeness or reliability of any opinion, statement, appeal, advice, quotes from other reference materials or any other information in the blog/article. The same disclaimer applies to all the comments on this blog/article. Our visitors are free to forward this page URL (web address) to others in emails or put the links on individual facebook, twitter webpages strictly for non-commercial use. But the entire article should not be published/republished on other sites without the prior permission from us.
 

Filed under: America, China, Economy, India, NRI, Pakistan, World · Tags: , , , , ,

5 Responses to "Global Economic Powers Comparison: America, China and India"

  1. anon says:

    Another disgusting article. India vs China garbage. A Hindu blowing smoke. India national IQ: about 80. Hundreds of millions defecating out in the open. Probably 200 million are literate. Other 1 billion can’t read and write.

    Please cut it out. In 2050, there may be up to 1.8 trillion half-size Hindu hobbits with 1.5 trillion illiterates. Does exploding population mean anything to you? Do you see it as a catastrophic disaster?

    This whole business of India as some kind of economic superpower of the future was started by Wall Street types: bankers, economists and investment analysts and advisers and financial columnists from abroad. As usual, monkey-see, monkey-do Hindus have picked up on it and are now running away with it trumpeting they are on the way to becoming a superpower. This article is an example of Hindu brain dysfunction and megalomania in overdrive.

  2. anon says:

    Corrections:

    2050 population projection: up to 1.8 billion.

    The number of illiterates: up to 1.5 billion

  3. anon says:

    Hindus should stop comparing India to other countries or risk humiliation, ridicule, scorn and contempt. Please stop.

  4. anon says:

    Rather than writing about 2040 or 2050 now, wait until then. In 2050, India will be able to boast about having more illiterate and poor people without toilets than the rest of the world combined.

  5. Anon says:

    Anon: India has a literacy rate of 75% or 1 billion not including English compared to its neighbours.

Leave a Reply

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>