未来十年可能属于中国
Chindia: getting back together? (320 words)

by Lex, January 11, 2015 4:25 pm

The two economies have more in common, again

---------------------------

Celebrity couple elisions took off at the beginning of the 2000s, giving us Bennifer, Brangelina and Tomkat. Countries were not immune. And just like a celebrity couple, the halves of Chindia have gone separate ways. In common perception, China has had the better divorce, its economy realising its potential while India’s struggles.

The data tell a different story. In the decade since 2004, India’s economy in purchasing power parity terms has achieved an annual growth rate of 14 per cent, according to Bloomberg. China has only managed 12. Over the same timeframe, the MSCI India index has delivered a total return of 237 per cent to China’s 154.

India still has advantages. Its economy is more consumer-driven – according to World Bank data, consumption as a percentage of GDP was over 70 per cent in India, versus less than half in China. So India is less likely to suffer from the sort of fixed asset investment hangover that now besets China. And its young population is not ageing as fast: nearly a third of India’s people are below the age of 15. In China that figure is only one-fifth. CLSA estimates that China’s working age population as a proportion of the total began to decline from 2010. India’s worker proportion is still rising and should overtake China’s by 2030.

China and India still have common ground. The dominance of a slothful public sector is marked in both countries. The neglect of small and medium enterprises by mainstream lenders hampers both economies. And both are pushing their banking sectors to serve the smaller end of their economies – India through rural account openings and China by granting private banking licenses. And India aims to develop new industries in the manufacturing sector, reminiscent of China’s last five year plan, which focused on several sectors key to rebalancing the economy.

If Chindia is getting back together, perhaps the next decade belongs to China.