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Economical giants: China and India essay

Essay Topic:

The increasing influence of the economies of China and India as two contemporary economical giants.

Essay Questions:

Why are India and China countries with the most developed economy? What is the essence of Chinas economy? How does Indias economy influence the Worlds economy?

Thesis Statement:

The increasing influence of China and India and their future as economic giants makes it necessary to evaluate the strength of the influence over the world they can possibly gain.

 

 Economical giants: China and India essay

Table of contents:
1.    Introduction
2.    China’s economy
3.    India’s economy
4.    Possible impact of India and China on the world’s development
5.    Conclusion


Introduction:

The contemporary world with constant economic difficulties has stimulated a lot of countries to develop economically and politically. Of course, this kind of development is not “available” to any country because it has certain requirements to the developing country. Not so many countries can claim themselves to be “economic giants”. The United States of America occupies the position of the first “economic giant” in the economy-chart of the planet. The leadership of the USA is unchallengeable; nevertheless two other countries are expected to become USA’s main economic partners to share this primacy. They are China and India. The analysts make the boldest predictions over the growing potential of these two countries. All the predictions are reduced to viewing the XXI century as the century of Asian economic and political expansion. The increasing influence of China and India and their future as “economic” giants makes it necessary to evaluate the strength of the influence over the world they can possibly gain. It is also necessary to evaluate the possible impact of India and China on the strategic development of planet in general. Both of the giants at the present moment work together in order to grow economically and therefore exchange different experiences useful for both of the sides. Being partners makes them even stronger as their alliance makes them develop faster in comparison to their solitary development. To situation requires a deep analysis of the economic activity of each these countries, because China and India are not just about huge populations, but also about bright history and future.
2. China’s economy
What capacity does China have in order to gain the position of an “economic giant” and to become almost equal to the USA. “As a first step toward understanding China, one can hardly do better than to spend some time with a good atlas. It is vital to understand China’s diversity. And a key element in that diversity is its geography…1”[Starr, 3]. China’s power is growing every day but still this is not the main factor indicating its potential as an economic giant. The reason that makes the USA pay a lot of attention toward the economical and political development of China is very important: “China’s rise has more in common with the rise of the United States a century earlier”[Shenkar, 1]. This similarity of the economic processes makes a solid base for all the “giant” predictions that China gets. For 26 years of reforms the annual increase of the Chinese economy made 9,4% at the average. This numeral exceeds the economic increase of the developed countries in 4 times, the rate of growth of world economy in 3 times and the economic growth of the developing countries in 2 times. Almost every country in the world gets the products, which claim: “Made in China”. China shows its “increased dominance in many product markets”[Shenkar, 18]. According to the information of the World bank throughout the period from 1980 till 2000, China’s impact into the world’s economy made 14%2. The primary reasons for the growing economy of China are the strong increase of investments and growing amount of export.
The industrial production index has grown for 16%[Burstein, 54]. The main problem that China is facing is the constantly growing amount of foreign investments, which the government constantly needs to control and sometimes to suspend. “China ranks as the second largest economy in terms of GPD in PPP dollars3”[3]. According to the World Bank China’s poverty has dropped from 280 million to 120 million starting in 1997 and it was a big step towards the stabilization of the economy. As China deals with foreign companies working on its territory and finances this companies million of people living in China get jobs and therefore increase their incomes, stabilizing the economy, too. China has also all the possibilities to control the “energetic flow” of the planet as it is especially interested in natural gas and oil. As it is also known the general secretary of Communist party of Chin- Hu Zdintao, has declared that China is going to enlarge the economy of the country to 4 trillions of dollars before the year of 2020. Such and 4-trillion economy will allow 1,3 milliard Chinese citizens to increase their income from $1230 till $3000[3].
3. India’s economy
The present-day India does not stop amazing the mind of the population of the planet with its achievements, converting into one of the two largest economic giants in the world. India is a developing industrial country, whose potential in certain important moments is sometimes even higher than the potential of China. India learns very fast to take the best it can from the experience that China has had on the world market. The population of India is 1,1 milliard people4[Jha, 64]. India’s per capita GDP is $4805. “Most recently, India has launched its first serious economic reforms” and it surely has given a push towards the development of the Asian country [Shenkar, 42]. The boldest predictions state that soon India us going to catch up with China and their partnership will become the strongest economic alliance that has ever existed. India started exporting programming products and became very successful in it. As it is common knowledge that India is good at producing technological products the country itself decided to make an accent on this particular field. India’s economy is quickly integrating into the world economy. Such companies, as GE Capital, PepsiCo, Motorola and others seem to have strong expectations from India as a future “economic” giant. According to CSO India’s GDP is growing. India’s development is easy to observe: the stable growth of the sector of services, and especially in the sphere of informational technologies. India has also allowed foreign investments in the sphere of insurance [McGuire, 39]. One of the most important factors, defining the interest of foreign investors towards India –is the size and the potential of growth of the “home” market. Radical social changes in India caused quick urbanization, the “breakout” in electronic media, in education, the growth of internal and foreign tourism and changes in the origin and composition of India’s expenses. All these factors all together make India an economically strong state with high future potential. This is already causing the growth of attention towards India’s trademarks, quality of products, their characteristics and comfort for the consumers.
4. Possible impact of India and China on the world’s development
According to the analysis made above it is possible to conclude that both Indian and especially China have already become worthy pretenders for the position of “economic giants”. Certainly, both of the countries have put serious efforts into the development of economy, nevertheless they also posses other characteristics that distinguish these two countries from the others. Among the countless amount of these factors the most important ones, excluding the economical growth is – in the first place the population. The population of the country is a labor reserve of any country. India and China represent the biggest market of working force in the world. At the same time the amount of populations form the army, therefore the military potential of both of the countries are huge. If India unites its technological knowledge with the number of military trained population it will get almost the most powerful army in the world. It is also well known that the bigger the territory of the country is the better it is. This is especially important due to the location of natural resources and also the ability to obtain them. For instance China, according to BBC, has made huge investments in Kazakhstan. Its main plan is to build an export oil pipeline. This will being immense income to China and it will also increase the income of citizens of Kazakhstan working there. It shows that these two “young economic giants” are constantly looking for places containing oil and other natural resources in order to make investments and control them. In the world’s trading pattern that already exists India and China appear to occupy a strong position and other countries reveal high demand on their products. China has already become an economical adversary for the United States of America. The possession of strong positions in the world economy – providing high GDP and in the world market allows the countries even to dictate the terms of cooperation, making the countries leaders in the sphere of the world economy. India and China together make 36,5% of the world’s population [3]. This number does give the countries certain political advantages. As the military potential of both of the countries is high and productive and their impact to the world’s economy is huge, then the role of both of the countries in the political processes is undoubted. Other countries will need to have India and China as alliances and not enemies, because in case of war affecting the interests of India and China their power may be fatal for any country and they will start with economic blockade. Some countries are against the communist regime in China; nevertheless they do not put away the hope to change it. Such a mismatch may cause serious arguments on the world politics arena propagandizing democracy. The possible impact of these two countries on the world’s existing trade pattern, economics and politics is weighty. China and India need to spread their products world wide. For instance,” the Association of Southeast Asian Nations (ASEAN) have a trade surplus with China, supplying anything from food to raw materials and intermediate inputs”[Shenkar, 113]. This surplus needs to spread and make China’s impact into the world economy even bigger.
6.    Conclusion
"Economists and editorial writers often paint China’s ascent as one more case of an emerging economy on its way up” and India is already catching up with it. The world economy is about it get two “economical” giants and together with the United States of America will form the base of the world’s economy. Other countries participating in the world economic activity may take advantages from cooperation with China and India. China and India are countries with outstanding history and traditions this will make an awesome addition to the economical expansion, making them more reliable, then young countries. India with its world-class textile industry, technologies and machinery is a brilliant partner to China, with its an accent over heavy and light industries. The productivity of both of the countries is constantly growing, increasing their possibilities in the world economy and making an irreplaceable impact into the development of the world trading and poilitics.
1 China covering some 3,7 million square miles, is nearly identical to the united States which covers just over 3,6 million square miles (according to Starr).
2 Yielding the USA (20,7%) and showing results better than Japan (7%).
3 China’s GPD – 11,5%
4 It is 0,2 milliard people lesser then China.
5 The GDP per capita in China is $1000

 

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