Can India beat China ?

This article thinks so

Why India Will Beat China

An entrenched and vibrant democracy will ultimately drive India to outperform China socially and economically

by William Nobrega

Authoritarian regimes often yield impressive short-term economic results, as seen in Germany in the 1930s, the Soviet Union in the 1950s, Brazil in the 1960s, and China in the 1990s. Unencumbered by such things as property rights, legal recourse, and public debate, the authoritarian regime can harness significant economic and political resources to create impressive industrial and economic feats.

Conversely, democratic regimes tend to be sloppy affairs with loud public discourse, a vocal press, stubborn land owners, and a myriad of civil liberties. Far from being able to harness economic resources, the government often must act more as a regulator. The result is that there are very few grandiose government-sponsored projects. Instead, there are countless private-sector initiatives driven by the invisible hand of the market. While the authoritarian regime is envied by some, the fact is that longer term, this type of socioeconomic model has typically led to economic and social distortions.

That is the dilemma that China faces today. Since the 1980s, the Chinese government has focused on developing an export-driven economy supported by an artificially undervalued currency. Foreign direct investment was encouraged while domestic consumption was limited. Massive infrastructure projects were initiated, fueled by a growing trade surplus, with cities sprouting up in the hinterlands like some mythical phoenix. For years, the Chinese economy benefited from these policies with double-digit gross domestic product growth, vast foreign currency reserves, and ever increasing capital inflows.

Inflation Could Spark Social Unrest

But now the economic and social distortions have begun to appear with rising inflation rates, numerous asset bubbles, looming overcapacity, and rampant institutionalized corruption. The Chinese government finds itself in a quandary. If the government allows its currency to rapidly appreciate to reduce inflation it will drive down exports and fuel unemployment. If it fails to quell inflation, social unrest will quickly unfold.

But even if the hare is running into obstacles of its own design, how will it give India the competitive edge? The advantage comes in the form of an entrenched and vibrant democracy that will ultimately drive India to outperform China socially and economically. Messy, frustrating, and more often than not agonizingly slow, India's democracy would seem to be chaotic at the surface. But if you look deeper you will quickly see why the tortoise will win this race. Let's take a look at two of the major advantages that India's democracy provides:

• Property Rights: As India becomes urbanized many families will choose to sell or borrow against their land so that they can start businesses, buy apartments, or provide education opportunities for their children. India is at the beginning of a gradual migration that is being driven by the development of high-end manufacturing and other sunrise industries that will require a vast pool of semiskilled and skilled labor. This migration will create an increasingly urban India that is expected to attract more than 200 million rural inhabitants to urban centers by 2025, primarily in what are known as secondary or "B & C" cities.

This transition will facilitate the sale of land holdings by an estimated 30 million farmers and 170 million other individuals indirectly tied to the agricultural sector. The sale of these holdings is expected to generate more than $1 trillion in capital by 2025. This capital will have a multiplier effect on the Indian economy that could exceed $3 trillion. The development of the mortgage-backed security and asset-backed security markets, driven by financial institutions like Citigroup (C), will create the liquidity required to free up this capital.

China, by contrast, has no rural property rights. China's 750 million rural residents who lease land are at the mercy of the local and regional government as to what compensation they will receive, if any, when they are forced from the land as a result of development, infrastructure improvements, etc. Additionally they have no right to borrow against their lease, and as such they have no assets. In fact, the Chinese government's official figures state that more than 200,000 hectares of rural land are taken from rural residents every year with little or no compensation. According to some estimates, between 1992 and 2005 20 million farmers were evicted from agriculture due to land acquisition, and between 1996 and 2005 more than 21% of arable land in China has been put to non-agriculture use.

The result is not unexpected, with over 87,000 mass incidents (or riots) reported in 2005, a 50% increase from 2003. Many provincial governments in China have begun to use plainclothes policemen to beat, intimidate, or otherwise subdue any peasant that dares to oppose these land grabs. And, as would be expected, the beneficiaries from these policies are developers and corrupt government officials.

• Rule of Law: The rule of law is a fundamental cornerstone of any modern society. India has a legal system that has been in place for well over 100 years. This legal system is internationally respected and includes laws that protect intellectual property as well as physical property. The rule of law creates predictability and stability that allows entrepreneurial behavior to flourish. This is clearly evident in India, with more than 6,000 companies listed in the stock exchanges, compared to approximately 2,000 in China. More telling is the fact that of the 6,000 listed companies in India only approximately 100 are state-owned. This stands in stark contrast to China, where more than 1,200 of the 2,000 companies listed on the exchanges are state-owned.

Can there be any doubt as to where the next Microsoft (MSFT) or Intel (INTC) will be created? Certainly not China!

More than 100 Indian companies that completed initial public offerings as midcap companies now have a market capitalization of over $1 billion. Companies such as Jet Airways (JET.BO), Bharti Tele-Ventures, Infosys Technologies (INFY), Reliance Communications (RLCM.BO), Tata Motors (TTM) (which just acquired Jaguar), Wipro Technologies (WIT), and Hindalco Industries (HALC.BO) are becoming multinational competitors with globally recognized brands. China also has numerous companies that have a market capitalization of over $1 billion, but the majority of these are state-owned behemoths recognized by their sheer size and not their nimbleness.

When the rule of law is recognized by investors and foreign companies as something that is beyond question it serves to facilitate additional investments in research and development. For instance, 150 of the top global multinationals now have research and development bases in India. Additionally the U.S. Food & Drug Administration has certified more companies in India then in any other country outside the U.S., a testament to the innovation that free markets and the rule of law foster.

Little Protection for IP in China

China has a legal system that does little to protect intellectual and physical property rights, a fact highlighted in the 2007 edition of the International Property Rights Index, which ranks China with Nigeria in protecting intellectual property rights. In fact, China's illegal copying of movies, music, and software cost companies $2.2 billion in 2006 sales, according to an estimate by lobby groups representing Microsoft, Walt Disney (DIS), and Vivendi (VIV.PA). This figure may in fact be understated as it does not include pirated products that have been shipped to overseas markets by government-controlled Chinese companies.

The rule of law when applied evenly and justly in a democratic society also helps to ensure that wealth accumulation does not favor those individuals in political office or individuals connected to those in political office.

Democracy is a messy thing, especially when you have an electorate that exceeds 600 million people who are motivated to vote. However, democracy also helps to ensure that individual liberties are respected and that the government is responsive and beholden to the will of the people, rich or poor. A democracy also ensures accountability through impartial courts that help enforce and protect such things as property rights, environmental rights, human rights, and good governance.

India's democracy is far from perfect, but it is also quite young, and as incomes rise and the populace becomes more informed we can expect that India's government institutions will become more responsive and transparent.

And what about the hare? Consider this fact: A recent survey found that of the 20,000 richest men in China, more than 95% were directly related to Communist party officials. Where would you place your bet?

William Nobrega is president and founder of the Conrad Group, an emerging-market strategic planning and M&A facilitation firm based in Miami. He has more than 10 years experience in this field and is widely credited for initiating global business models in emerging geographies including Brazil, India, and China. He is co-author of the recently published book, Riding the Indian Tiger: Understanding India, the World's Fastest Growing Market.

Businessweek

 

Three of India's joke

First, the development of giant long period: from the years 1974 -1984, to complete a decade-like car manufacturing, is still unable to complete all tests.

Second, the number of giant less equipment: equipment 2005 a total of five.

Third, local production giant low: almost nothing on board India's own production. Because of the turret of the German Russian T72 chassis, this endowed with \ "genius \" as with imagination, so Arjun in the international There are \ "T-king \" of.

Fourth, the design of the level of huge difference: the driver window while driving, because of the rotating turret was killed; loaded ammunition, the guns must be adjusted to a certain elevation, not loading; artillery in front, the members were not able to get on and off.

Fifth, the performance of giant real comedy: 1 because of India's own production of 1100 kilowatts can not start the engine, so a last resort for 800 kilowatts of Germany engines, Arjun weight of 60 tons of thrust, only 800 kilowatts, which are typical of small thigh.

2. as a result of India has not been to Germany use in India, so the Germans could not build the engine to adapt to hot and humid climate of India, are often out of tanks 34 kilometers off the smoke.

3. as a result of India's T72 imitation poor artillery technology, which bore deep-fried as a routine phenomenon.

Second, the classic joke: LCA fighters

List the reasons

I, long R & D cycle: 22 years .... the first time the armed forces have to wait until after 2010, as a quasi-equipped at that time the 3rd generation fighter, the performance has lagged behind.

Second, ultra-poor aerodynamic layout: no end of complex delta-wing layout, single, single vertical, on both sides of the intake. Turning every effort, not to mention the mobility.

Third, super-hybrid combination of the des Nations: LCA of the aero-engine aircraft, flight control systems, electronic warfare systems, airborne radar and avionics systems, airborne electro-optic system, composite materials, air-to-air missiles, targeting pods, the cockpit display, brake , hydraulic technology and other key technologies are imported from different countries, even the flight control system is the source code of the old masters - the British wrote. led to talk about compatibility.

Fourth, cost-effective ultra-expensive: Indian aviation industry is very backward, but the basic technology related development cycle of the LCA resulted in severe overweight, a serious development cost in excess of budget, has been more than 70 billion dollars. If the apportionment of the expenses of this research, each Minimum prices for the 60 million U.S. dollars, is worthy of a quasi-three generations of the world than the worst fighter character.

Five, ultra-shameless self-anointed: Indian researchers: \ "LCA comparable with gusts!

Three classic joke: Admiral Gorshkov aircraft carrier

List for a reason - Super taken advantage of: It is said to buy an aircraft carrier in India, the United Kingdom to Spain and France have recommended their products, but prices are very expensive in any case, India can not afford to buy. Let it be this time Russia would only sell their own aircraft carrier in 2000 million dollars, the merciless Indian hastily turned down other sellers to finalize a contract with Russia. wait for the dock to see the so-called carrier no more than an empty shell, what equipment do not. quickly inquired about the matter to find the reasons for the Russian contact, the Russian word that you had equipment must be connected together to you, ah, 20 million of equipment you want? beautiful you! want additional money. speechless India, and Russia had no choice but had to ship the equipment purchase contract negotiations, resulting in more than 20 million United States yen advanced than other European carriers also expensive to find other vendors to turn around and they have ignored him, to say the white-breaking 20 million to buy a shell is really no way to go back to the people accountable, so India can not only brings up the Three of shamelessly smiling installed a strong character.

 

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Whats your point? India is respected all over world as a liberal democracy, all changes brought here will come slow but will be more stable as compared to state enforced development in china.

 

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GROW UP, Bird brain!!

Nothing makes sense!!!

 

China is like at lest 50 to 60 years ahead of us

 

If China can not sustain the growth, that doesn't really mean India can beat China because India is the largest democracy in the world. ...

 

India has already beaten China on many fronts, to count a few: Poverty, Malnutrition, Bad governance, corruption. We are No. one yo!!!

 

Stop degrading our own country dude.
we can improve only if we think so be +ve

 

@ ChineseAA

Before pointing to us peep into your place. i will just say a very small point chinese goods are banned in china itself but we with great hearts accept them.

 

Who is Chinese AA? Are u talking about me? I am a proud Indian, but that doesn't mean that I over-estimate my nation's capabilities. If we don't have enough courage to introspect and digest realities that hurt, only god can help us; but if we are courageous and motivated enough to identify our shortcomings and iradicate them, miracles do happen.

 

i m not talking about you. I am wrote for the person whom i quoted. I cant stand anyone outside India point towards us. Chinese AA name made me feel the person isnt Indian and even if he is Indian, he has no right to write about India in such blunt way.

 

Really? I thought it is the US who are the biggest democracy

really beyond my expectation

but i guess "india is the most populous democracy in the world" will be more accurate

 

back on topic

Hi guys, please back on topic. Can any one give some analytic comments how India is going to beat China?

 

hello

I know we are all proud 2 be indian but the fact is indian cannot beat china ..china tried a lot to get indian and pakistan war but that didnt work so now china is haressing india directly ... chinese cannot see the growth india is making in every sector..

 

definately we will beat china in next 15 years

we will beat china in next 15 to 20 years why because we are changing and we all think and talk about the new india . This positive attitude of ours has started showing results we have taken over china in automobiles sector we are ahead in IT softwares and we will take over china in many other sectors when we reach in 2025.

 

Democracy - Populous or Biggest ?

Democracy is concept based on people not territory. So biggest or largest or Most populous all refer to the number of people covered by a single administration. So India is largest or biggest or most populous democracy

 

Are u Joking Ha Ha Ha

India beating China - What a Joke???

India can never never never beat china . In the next 15 to 20 years, at least discussing such a thing is complete non-sense. People who are supporting India in this issue.... Guys grow up....Quick... Do you know which is sole super power in the World ?? USA. and Do you know which enemy country (According to USA) USA has not dared to spoke bad of? The Great Great Peoples Republic of China. Do you think at least Pakistan or even SriLanka or even Bangladesh is afraid of India.Read more about India. At least 30% of Indian population is living with less than 1$ per day. According to Bhook.com Hunger is the major cause of death in India and they say 7000 people are dying per day. This way we beat china. because there are no hunger deaths there. All our Welfare ministers should commit suicide. Read about 1962 war with china. they PLAYED with us. Its not a war. It is a game.

Then what about the first post in this thread. by William Nobrega. This is called fucking hipocracy of the west. The fucking white man wicked concept. They dont want to see the rise of another super power. So they want to THINK that we are going well infact very well. How many more years still we need to provide food for all. isn't it sick that our brothers (All indians are my brothers and sisters according to fucking ridiculous pledge.) dying of hunger and sisters selling their body for food. we all commit suicide if we still think we are developing. We are growing just growing. the rich are growing and the poor are growing, unfortunately the poor are growing more and more rapidly. why? because the amount of exports is far far less than the imports. so the influx of money is less and the out flux is more. We are still a colony of European powers. This time it may not be political conquering but it is economic conquering. So the west wants us to think we are going right always criticizing China which banged their bums. China is superb. It may have become hostile these days becos it also doesnt want to see a rise of superpower nearby.

China is the only Asian nation which got a place in UN security council. India is such a great country why it is not granted a permanent seat there?? Did you see how well china conducted Olympics. Do you think can India conduct Olympics at least 5 years from now??

There are so many things we need to do understand correctly and many more to do ... Democracy is the fucking concept invented for poor countries. Long Live India. short live Indian democracy.

 

Dear Sir,

Beating china may be difficult but not impossible and I believe we can because we focus more on innovation not just blindly copying any thing our focus on developing core technologies for both civil and military is our goal moreover being the largest democary in the world what ever development you see is comming from the people because of the vibrant democracy we follow and the recent reforms and liberelization of markets there will be further growth in markets and opening of new and more challenging markets which will encourage Forign investments we just have to be a little patient and have faith and lastly the standerd of living is relatively cheaper in india then in europe and the west i.e. what takes 1$ there will cost less then 50 cents here so these comparisions b/w us and west are mostly wrong and I agree hunger is a problem in india but I believe in the next 5-10 years that will be properly delt with

 

Pessimist - but can beat china in two things

Dear brothers,

As of now we can beat china in the following matters,

1) Firstly in " BHAGWAN KA DEEN........BACHAAAAAAAAA

2) Secondly in "KIRIKET" (provided Dravid is not playing).

Luving brother
MURALI MENON

 

In current situvation we cant beat the china but...

We have Man power,We have money power, We have Minds, we have technology and if our politiciance stop fighting with each other and put efforts into combine thinking then sure we can beat anyone in 5-10 years of time