Economic Reforms and Global Integration

In the last two decades of the twentieth century, China and India enjoyed historically unprecedented average rates of growth of their real Gross Domestic Product (GDP) at 10% and 6% per year respectively. Fewer than 10 countries of the world exceeded India’s growth rate and none exceeded China’s during this period (World Bank, 2001: Table 4.1). The population of India was estimated at 1.027 billion on March 1, 2001 and that of China at 1.278 billion on February 1, 2000 (Banthia, 2001: 29). China’s per capita Gross National Income (GNI) in 1999 was US $780 and India’s US $440 (ibid: Table 1.1). Although still very poor, with their large populations and rapid growth of GDP, both constitute large domestic markets for a variety of agricultural and industrial products and services. The prospects of selling profitably in these huge markets have attracted exporters and investors of the industrialized countries. With both engaged in integrating their economies with the world economy, they now compete in markets in the rest of the world for their exports and for external capital. China is one of the five recognized nuclear powers. India, after its nuclear tests of 1998, aspires to be recognized as one. India fought a border conflict in 1962 with China, which is also the prime supplier of nuclear and missile technology to India’s archenemy, Pakistan. Any potential conflict between China and India has wider significance beyond the region. Given their emerging economic strength, as well as possible competition for dominance as the leading Asian power, it is important to analyze their recent economic performance in a comparative framework. After all, China and India, the two most populous and poorest countries of the world, have attempted to develop economically and alleviate poverty through similar development strategies, but under vastly different political frameworks, namely, a single party (communist) dictatorship in China and a multiparty democracy in India.