Should India follow China?


The competition for Asian supremacy is a rich topic for debate in modern times. While India sits king of business services, China looms large with an unrivalled manufacturing sector.

China’s president, Xi Jinping, recently said “the combination of the world’s factory and the world’s back office will produce the most competitive production base”. He was referring to China and India, respectively.

The world’s two most populous economies have been growing at impressive rates, but China has been climbing the ladder faster and laid a more solid foundation for future development.

How? Well in short, China has expanded its manufacturing base while India has specialised in services. But whereas the former is a necessary precondition for sustained economic growth, the latter is a less certain development path.

Should India follow China?

Lets look at the key points.

  • Most technological tools we use originated from the manufacturing sector. The steam-engine, aeroplanes, the computer and chemical fertiliser to name a few.
  • Employment. Jobs in the manufacturing sector are considered less vulnerable by experts.
  • Most services still require the producer and the consumer to be in the same location (Cleaning, Education and many others) where in contrast all manufacturing  products can be traded.

The Future:

For the past 10 years, India has had a trade surplus in services that covers only one-fifth of its trade deficit in goods. This is a balance of trade constraint that the country will have to tackle eventually.

However, all is set to change. ‘Make in India’ as highlighted is already a hugely popular campaign and as the former chief minister of Gujarat, Indian PM Narendra Modi knows full well the importance of developing a diverse manufacturing sector from cars to toys, garments, ships, electronics and textiles. 

Clearly, for a developing nation to make huge economic strides and compete on the world stage they must transform into a producing powerhouse.

If you like this article you may be interested in “Bloomberg: Russia the Most Attractive BRICS Country for Investment, not China”.


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