Why is the Indian economy outperforming the Chinese economy?

Asked 11-Mar-2018
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1 Answer


India's GDP is close to $1.5 trillion. Simultaneously, China's GDP is approaching $7 trillion. China's economy is at least four times that of India. This means that even if China grows at a paltry 1.5% and India grows at 7%, the Chinese economy would have added the same amount of output as the Indian economy!

Comparing the GDP growth rates of India and Chinais thus pointless. Over the last three decades or so, China's growth rate has consistently outpaced India's. 

The Indian economy can outperform the Chinese economy for a variety of reasons.

First, India's democracy and rule of law are far superior to China's. This gives India an important advantage in attracting foreign investment and promoting economic growth.

Why is the Indian economy outperforming the Chinese economy

Second, India's population is much younger than China's, and its workforce is growing rapidly. This gives India a demographic advantage over China in the long run.

Third, India's economy is more diversified than China's, and it is less reliant on exports. This makes India more resilient to global economic shocks.

Fourth, India has a more flexible labor market than China, which makes it easier for Indian businesses to adapt to changing economic conditions.

Fifth, India's infrastructure is improving rapidly, while China's is beginning to show signs of strain. This gives India a further advantage in terms of promoting economic growth.

The Indian economy is expected to continue to outperform the Chinese economy in the future. India's population is projected to surpass China's in 2027, and India's economy is expected to be larger than China's by 2035. This will give India a larger domestic market, a more productive labor force, and a more business-friendly environment. All of these factors will continue to boost India's economic growth and make it a more attractive destination for investment.