Why China has overtaken the Indian economy

Abstract

In Asia there are two counties India and China who share the two largest population of the world. Chinese and Indians alike, economic life is hard despite the fact that reforms and globalization have created various new opportunities and as such both countries have witnessed an emerging middle class with Americanized tastes and preferences, irrespective of this however, both countries remain very poor.  In 1995 for the first time trade had exceeded US$1 billion between them. They have lately received a lot of international attention being viewed as emerging giant economies as they both play key roles at the international level. For example China has been a permanent member of the Security Council at the UN, while India who has leads the Non-Aligned Movement for years and is still vying for a similar position. Furthermore, India has been one of the founding members of the WTO and has played a prominent role as one of the developing nations whereas China has had to fight for decades to obtain its admission into this international organization. They have lately received a lot of international attention being viewed as emerging giant economies as they both play key roles at the international level. While both China and India have an extended history of international trade going back centuries ago, both their economies were until recently highly protected and controlled to a large extent albeit that their political systems are very different. China is still a very unique case in the sense that while it has allowed its economy to be opened to Capitalists MNCs, it is still governed by the Communist Party with a strong leadership not giving away state power. The phenomenon of globalization has however affected both these countries. Given their large populations, big land mass and abundant resource bases, they have both relied on indigenous capabilities to a large extent to develop a wide range of goods for their internal markets. With the Japanese economy facing intense macroeconomic challenges and its Prime Minister publicly apologizing for Japanese misbehaviors towards China and South Korea in order not to close its doors for business opportunities in that region, and America after the 11th of September rallying support from India and China who until recently were particularly highly critical of American Foreign Policy, the importance of these two nations in world politics and in the globalization process are not to be neglected. In this paper I tried to discussed differences and similarities of these two countries and furthermore to know the reasons why China has overtaken the Indian economy is highlighted.