the-south-asian.com July / August 2006
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China & India - Major global economic players by 2025
First published in January 2002
Foreign Investments in India & China.
Last year China attracted more than $50 billion in foreign direct investments — the second-biggest FDI destination in the world after the United States. Hong Kong-based Goldman Sachs economist Fred Hu Qiliu forecasts that by 2005 the inflow of capital for China's industries could double; so would its foreign trade, to $600 billion.
The middle class, though less than 2% of the population, already totals 20 million people earning an average of $12,000 or more a year. Those numbers are just a little less than Taiwan's entire population and per-capita income.
Information Technology statistics on China & India
According to a Gartner group research study in 2001, China’s hardware industry alone is eight times larger than India’s in 2000. China recorded hardware sales worth $ 16 billion while India barely managed a sales figure of $2.2 billion. In 2000, China’s hardware market grew by 18 % compared to India’s 6 percent.
Personal Computer [PC] sales in India in 2000 were 1.7 million units and in China PC sales were 7.2 million against a world total of 140 million units. Computer penetration per 1000 people in India is 6.2 as compared to 13.2 units in China. IT spending as a percentage of GDP in China is 1.1 percent while in India it is 0.8 percent.
In IT Services India leads with a total gross figure of $ 5.9 billion in 2000 . China had a figure of $ 3.42 billion.
In domestic Software market sales, China at $ 4.2 billion outpaces India at $ 1 billion.
China’s Telecom market is $ 111 billion - about five times larger than India’s at $ 23 billion. India has 2.5 million Internet users China has 22.5 million Internet users ; it is for this reason that Charles Schwab, the retail stock broker in USA, when launching their Internet stock trading web site in 1997, simultaneously launched a similar Chinese language web site. Among world cultures the Argentineans, West Indians, Pakistanis, Indians and the Chinese are known for their cultural bias towards trading.
In Mobile phones China, with 130 million and over 160 million fixed line phones has overtaken the USA. Growth rates in Chinese mobile phones are 30 million per year and fixed line phones are growing at 20 million per year.
In India the mobile phones total as of October 2001 was at about 5 million. Fixed line phones in India are at about 35 million.
Telecom Policies in China versus India / Pakistan.
Local Equipment production in China ensures that about 80 % of the Telecom equipment is locally produced with foreign technology transfer. China has allowed Voice over Internet Protocol [ VOIP] - a technology that has still not been allowed in India and Pakistan . Pakistan PTCL has recently awarded a contract to a US company to enter this area.
In India the Department of Telecom [DOT] strongly resisted the creation by Sam Pitroda of Center for Development of Telematics C-DOT, which manufactured the first Indian made local exchanges [see details on December The-South-Asian issue on Sam Pitroda].
Currently DOT is resisting the Indian made wireless in Local Loop technology by the University of Madras called cor-DECT.
The Chinese government dissolved the MPT because it was obstructing deregulation. The equivalent body is the DOT in India. In India and Pakistan the regulatory bodies TRAI and the PTA are full of old retired officers from the DOT and the PTCL. These officers have no mind set with which to deregulate the old monopolies. The DOT and the PTCL burden the new telecommunication companies and Internet Service Providers [ISPs] with entrance and license fees, revenue shares, etc. Small private IT entrepreneurs who, despite poor finances, introduced Email , Radio Paging, and Cellular phone networks and took revenue streams away from the National Carriers are thus paralyzed. In China it is the opposite policy.
In India the DOT which owns the BSNL [ local long distance ] , VSNL [ international long distance and MTNL is also the policy making body. The boss of these Public Sector Telecoms companies is the Minister of Communications [ remember Mr. Sukh Ram- more about him later ] -- how is he supposed to look [ benignly or favour ?] at the Private sector competitive Telecom companies ?
In the words of Professor Christensen what actually has to be practiced is the creative destruction of these companies - a task which is beyond a politically appointed Minister of Communications.
Forecast of Future economic growth in India & China.
According to Shahid Javed Burki, former World Bank economist, India and China will become major players in the world economic arena in the next 25 years, surging ahead of the industrial US and European powers. At present growth rates, China will overtake the United States in the global output, with India becoming the third largest economy in the world ahead of Japan and Germany.
In 2025, "China’s and India’s share in global output will be about equal to the present share of US and Europe. The main significance of this development is that these two Asian economies would have climbed to the top of the league, displacing a number of European countries," he said.
"The size of the Indian economy at 12 trillion dollars will be nearly forty per cent larger than that of the US economy in 2000. Japan and Germany will fourth and fifth place while Brazil and Mexico would have overtaken France and UK to be in sixth and seventh places," speaking at the United Nations.
Also, at the 2000 prices, the value of global output would have increased from forty trillion dollars to ninety-five trillion dollars by 2025.
By then China, with output of 25 trillion dollars, which would be three times the current US economy will account for 26 per cent of global product while share of America will remain at the same level of 21 per cent. India, presently with less than six per cent of the global product, would see its share more than double to 13 per cent, he said.
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