The Special Interest Group (SIG) on Comparing Business in China and India organized a guest lecture at IIM Indore Campus on July 23, 2015. Mr. Mohan Guruswamy, Chairman & Founder, Centre for Policy Alternatives and former advisor to the Finance Minister (1998), Government of India delivered a speech on the topic The Future World and the Place of India and China.
Prof. G.Venkat Raman, Faculty, IIM Indore delivered the welcome speech and shared the objective of the Special Interest Group on Comparing Business in China and India.
In his informative presentation, Mr. Guruswamy shared basic information about China’s GDP share, its trading patterns and partners, economy, population, and workforce over recent past and forecasts. Comparing India’s and China’s GDP, he said that China’s per capita income was half of that of India in 1974 but China has excelled ahead very rapidly, particularly during last two decades. There have been many sectors where strategies are made about catching up with China. However, China remains far ahead of India in economic as well as most other parameters. Moreover, China has become a major trade partner for India in every sector, like automobiles, electronics, machines, pumps, furniture, plastics, toys etc. Most of the world, including the US relies mostly on China for the same. USA invests around 129.8 billion dollars today in importing from China.
Mentioning the changing patterns in Chinese trading history, he said that during the Confucian era, Chinese people traded salt, iron, fish, cattle etc. with the whole world. With the standardized width of Silk Road, they expanded their business to trade silk, glass, wood, and other goods externally too, connecting their country with all major civilizations up to Greece. In the last decade, the exports from China to other countries have increased from around 0.5 trillion to 4 trillion dollars, making it the world’s number one trader. Its trading partners include European Union, United States, Hong Kong, ASEAN, Japan, South Korea, Brazil, India, Russia and Taiwan.
He informed that this decade only 5 million people would be joining China’s workforce which is 50% less as compared to the last decade. He also said that although China is way richer than India, China’s economy has been driven by high inputs of cheap capital and labor, which cannot continue for long. He said that USA has decided to close its Current Account Deficit by the year 2050, which would slow down China’s economy.
Mr. Guruswamy explained that demography is very important for any country to attain a particular level in its economy. Japan and Western Europe have already aged and China is rapidly aging. Although, China is the most populated country, the 2010 census showed that population has slowed down much than expected. Hence, their workforce is decreasing. This makes India’s prospects more promising with huge demographic dividend. However, India has to be very proactive on all accounts for any success against the Chinese challenge.
The event was attended by the students, researchers, staff, and faculty of IIM Indore.