The authors of books and articles about tendencies of economic development in China and India regard the countries as giants among emerging markets. Moreover, the states represent more than one third of the world’s population. Both countries have been demonstrating the highest rates of economic growth among developing countries in the last ten years. The published information and statistic data shows the main trends and characteristics of current factors in the economic development of China and India. The average income in China has increased tenfold since the beginning of the 21st century, while in India, it has grown fourfold. The research shows that India and China chose different ways of economic development. China’s economic model is based on the orientation of manufacturing industries on the export to the rest of the world. On the contrary, India’s model is defined by the internal demand for goods and services. The paper analyzes current strategies of economic development of China and India and designates the key features through assessment of similarities and differences. Modern India is the most rapidly-increasing economy in the world; its GDP increased by 7,6 % in 2016. Thus, India’s growth has outrun China. The economic situation in India is stable and can be characterized by the positive dynamics of macroeconomic indices. Like in the case of China, the government of India defines gaining the status of global power as the key goal. In order to achieve the purpose, the following measures are offered. The country aims to maintain positive tendency of foreign investments inflow, decrease and stabilize the food inflation level, reduce the amount of national subsidies in agriculture sector. Also, the government reforms the tax system and increases the rate of infrastructure projects’ realization. The economic development of India is stimulated by the measures that facilitate access to foreign investments, support of exporters, and creation of the favorable conditions for business in special economic zones. Finally, the Indian government has launched the state-sponsored campaigns, such as 100 Smart Cities and Digital India (Agrawal, 2015).
Atkinson and Ezell (2014) affirm that India has implemented the strategy mainly focused on manufacturing-based growth in recent years. They also state that it should focus on productivity-based growth across all sectors of economy, including agriculture and services. However, the state’s contribution to the retirement shaping and financing of social security is smaller than in China. Indian market financial system enables it to distribute capital among companies in more effective way, with decreased interference of state in the private sectors. The biggest part of state investments in contemporary India is sent to the development of agriculture, small business, infrastructure products and cost-based economic spheres. Thus, it enables private capital to develop its initiative in dynamic sectors of the economy.
Rapid Indian economic growth in recent years can be explained by one more important factor. It is the foreign technology borrowing and its realization by means of innovation and development of national research and advanced development. The strategy is based on the foreign direct investments inflow. It continues transformation of sectoral structure, with service sector being the most dynamic segment of Indian economy. The key element of the Indian innovation system is the technological clusters aimed at developing and maintaining high technology export. The Indian innovative segment of economic development has the features of borrowing as it master the production previously located in the developed countries. The approach combines subsequent engineering and technical capacity building. Another important factor of current economic development of India is the significant increase in its foreign services trade, particularly connected with the production of program software.
In comparison to China, India has not been affected greatly by the world economic crisis. The reason is that its strategy to allocate biggest part of its national capital in the gross investments and persistent demand. The important tendencies of the current strategy of economic development are the growth of industrial manufacturing and increase of urban population. However, the phenomenon raises the question of Indian energy security. While the energy intensity has been decreasing over the last years, it is still higher than the world’s average (Bhaskar, 2013). Another problem is the disproportion between different energy sectors. Thus, current India’s efforts in the sphere are directed towards maintaining energy balance and decreasing the level of coal consumption. India also implemented the strategy of state companies’ consolidation to gain access to the projects of resources extraction on the territory of other countries.
According to Zhang (2015), China’s current 12thfive-year plan advocated accelerating the “going global” strategy. It mainly relates to its energy diplomacy, and the idea of enhancing the government’s supervision through guiding the plan. The main goal is to transform the status of China, thus changing it from the regional state with global influence into the global state. Subsequently, in 2010-2020, the tendency of China to be the main customer in the raw material market will continue. The problem of disproportion between country’s first place in the world trade and its smaller role in the international flaw of capital and knowledge sharing is to be solved. Moreover, China is open to foreign trade and FDI, which is an indicator of the country’s positive economic environment (Jiang, 2013). Also, there are tendencies of growing activity in the establishing free trade zones with the border countries. Thus, China is continuing its global economic expansion.
The internal side of economic strategy of China faced new problems concerning GDP growth rate reduction. Thus, it conducted a range of reforms, focusing on structural changes in many sectors, enhancing economic structure, increasing investments in basic capital funds and dealing with the overdependence on the goods’ export. In other words, the growth steadiness is given priority over the growth pickup trend. In addition, Chinese official sources highlight the declining state dominance in general, but the rapid development of certain sectors in particular (Brada, 2014). China has adopted strategy to 2025 that aims at simultaneous development of certain industry sectors and limitation of other sectors. It includes elimination of excess industry capacities and enhancement of enterprises’ merging.
Another important feature of China’s economic development is the replacement of its investment-driven extensive growth model. It is characterized by the waste of resources and imbalance between investment and consumption. Furthermore, it includes intensive development of innovative spheres on the basis of internal market demand’s expansion and increase in supply (Press, 2016). Modern China is on the way of the innovation development strategy, which aims to boost the economy by means of education modernization and commercialization of science and technology. The production of research-intensive products and globalization of knowledge-intensive industry should meet the market demands. The state plan of scientific and technical development of China, encompassing the period till 2020, has been adopted within the framework of the above mentioned strategy. It defines the following purposes. First approach is to transform China into the country with modern information society. Second aim is to decrease the level of dependence on import technologies. Third goal is to increase the level of the country’s scientific and innovation contribution to the economic growth of China. Final goal is to lay the grounds for China to become the global leader in the sphere of research and advanced development for the period up to 2050.
Among the key vectors of the strategy in question, the following are important. Special state programs aim at creating the elements of innovative infrastructure, in particular scientific and technical market, zones for implementation of new technologies and development of national high-tech industry. Moreover, China’s program provides for increasing the investments in public health service, social security, education, information service and science.
In conclusion, modern India and China are the leaders of economic development on the regional and global level, representing nearly half of world population. However, the development strategies chosen by the countries are entirely different. On the one hand, China has based its strategy on the widening economic relations with the countries of Asian region and key global actors. On the other hand, India has mostly focused on the demands of its internal market and establishing of special economic zones with certain countries of privileged relations. The energy sector is given the primary importance in the strategies of both countries. However, China diversifies its energy sources through its relations with African countries, while India is trying to direct its efforts on the development and improvement of its own sources of energy. China’s policy towards investments has implications of its global approach, as the state is trying to play a role of main investor throughout the world. On the contrary, India conserves investment through orientation on the attraction of financing. The approaches of India and China to the development of scientific and technological sectors of their strategies are similar, as both countries improve to meet new market demands.