Both are countries that has started dominating the world economy and will continue to dominate for many years to come. While many of you would think China and India are similar as both are in the same league taking center stage in the global economy, in reality both countries are very different.
Their political systems are also vastly different, with China being ruled by a single party and India being the world’s largest democracy. In fact India has benefited out of this misconception as the world sees China being the king of manufacturing and infrastructure and India is the leader in provision of information technology services.
Here are some stats between the 2 countries :
Stock Markets:
The market capitalization of the 10 largest companies today in China is $1.8 trillion, whereas the market capitalization of the 10 largest companies in India is only $0.5 trillion.
Similarly, at year-end 2006 the total stock market capitalization of China was $2.4 trillion versus India where it was only $0.8 trillion.
Direct Investment:
China has received more than 10 times the total foreign direct investment as India ($700 billion versus $68 billion).
China has made direct investments abroad that are more than 3 times that of India ($67 billion versus $21 billion).
GDP:
The Chinese GDP expressed in US dollars is three times the Indian GDP ($2.5 trillion versus $0.8 trillion). On a purchasing power parity basis, the Chinese GDP is two and a half times the Indian GDP ($10.2 trillion versus $4.2 trillion).
Current Account Balance:
China’s current account balance is positive and growing strongly, while India’s has meandered and recently gone negative.
Energy:
China produces 3 times the electricity of India; more than 4 times the oil; and more than 1.5 times the natural gas. On the consumption side, China consumes more than twice the oil of India and almost 1.5 times the natural gas.
Population:
Approximately 1/3 of the world’s population is either Indian or Chinese, but the populations of China and India are quite different from each other.
India’s population is smaller than China’s, but is growing more rapidly. In 1995, China had nearly 33% more people. By 2005, China had less than 20% more people. By 2025, their populations will be about equal. After that, India will have a larger population.
India has a population that is growing younger and that will continue to supply young people to the labor force for a long time. China has an aging population that will show labor supply problems without net inflow of migrants. India today has 6 times the number of people migrating out of the country as China. China has a 40% lower infant mortality rate than India, and a longer life expectancy.
Labor and Income Distribution:
China and India have roughly equal acreage of arable land, but China has a much smaller portion of its people in agriculture than India (45% versus 60%). China has twice the proportion in industrial jobs (24% versus 12%), and a similar portion in service jobs (31% versus 28%).
China has a lower rate of urban unemployment (4.2% versus 7.8%) and far fewer below the poverty line (10% versus 25%) – although we don’t know how reliable that may be. Both have about 1/3 of total income in the hands of the top 10% of households.
Literacy:
Literacy is dramatically different. Only 61% of Indians over the age of 15 can read and write, while nearly 91% of Chinese over 15 can read and write. The development and therefore economic value of women is higher in China where 86.5% are literate, whereas in India only 47.8% of women are literate.
Religion:
The religious composition is dissimilar.
Hindus account for over 80% of the Indian population, but are negligibly represented in China. Muslims account for over 13% of the India population, but are only about 1% to 2% of the China population. Christians are about 2.3% in India and 3% to 4% in China.
China does not report religious composition as thoroughly as India, but China is greatly influenced by Taoism and Confucianism which have ancient roots there. India and China do not have similar populations in terms of guiding belief systems.
Languages:
India has numerous regional languages with English as the official government and business language. China has one basic language with regional variations. Mandarin Chinese is the standard language.
Legal system:
India’s legal system is based on English common law while China’s is based on civil law derived from the Soviet Union and continental European legal principles. India’s judiciary reviews legislation, while China’s legislature retains the right to interpret its laws. India accepts compulsory International Court of Justice jurisdiction, while China does not.
Political System:
India is a multi-party democracy. China is a single-party controlled state.
Telecommunications:
China has more than 3 times as many cell phones as India and 7 times as many land lines as India.
China has more than 4 times as many internet users as India.
Military:
China spends 4.3% of its GDP on its military versus 2.5% by India. In total US dollars, the Chinese military budget is five times the size of the Indian military budget.
From almost every metric, China and India are very different countries. They are neighbors. They are important and disruptive to the old order of things. They are interesting investments, but they are a unified portfolio concept that could lead to unwarranted conclusions and allocations. Both have great investment values that need to be considered separately.
Data Source : U.S. Census Department, the CIA Factbook, the United Nations, the International Monetary Fund, the Economist Intelligence Unit and others.