Comparative Economic Systems Of China And India

Presented By Shashank Agarwal, Ankit Aggarwal, Nivea Das, Vijay Singh & Saurabh Sinha

CHINA
...

CHINA: AN OVERVIEW
CAPITAL-BEIJING.

Second largest economy and is increasingly playing an important role in the world

economy. China had a population of 1.35bn in 2012 with GDP 7.298 trillion in 2012 and annual population growth rate 0.481% (2012 est.) Its the Largest Economy of the World and 3RD Largest Country by Area. Only 1/10 of the land is cultivated leaving 90% People Living On 16% Of the Land. No. 1 largest exporter and second largest importer.

ECONOMIC HISTORY OF CHINA

Pre Crisis (1949-1958):
1949: establishment of the peoples Republic of China. China followed on the footsteps of Soviets Union and concentrated on heavy industry

development strategy. 1953-57: First five year plan implemented. After the Sino-Soviet Dispute the Govt. Invested heavily on Agricultural Sector. 1956-1957: Hundred flowers campaign 1958: Experiment of Great leap forward.

ECONOMIC HISTORY OF CHINACONTD.

Post Crisis - Economic Reforms (1978 onwards): In late 1970 and early 1980 Trade with other countries were allowed. Economic zones created for attracting the Foreign Direct Investment (FDI). Privilege to farmers for selling out their surplus crop in the open market was allowed. Township Village Enterprises (TVE) were established. Creation of Special Economic Zones.

ECONOMIC HISTORY OF CHINACONTD.

Present Scenario: China is one of the fastest growing economies in the world ,at the same time , the

country faces complex economic, political , social and environmental challenges. China's economy grew at an average rate of 9% per year during the period 1990-20012. China have formed different planning forums to look after the dynamic and critical issues facing a region or a country.

1. GREAT LEAP FORWARD

Economic and Social campaign by the Communist party of China from 1958 to 1961.

Mao Zedong led the campaign and aimed to rapidly transform the country from an agrarian

economy into a communist society through rapid industrialization and collectivization.

The Great Leap ended in catastrophe, resulting in tens of millions of excess deaths.

2. ECONOMIC & TECHNOLOGICAL ZONES

The China National ETDZ are the special areas of the People's Republic of China.

To encourage FDI.
Started with the SEZ for 3 three cities in 1978, as part of Chinas economic reform and

were extended to the ETDZ in 14 cities in 1984.

regions 21.

Total 54 national-level ETDZ, among which, eastern coastal regions 34, Middle West

3. SPECIAL ECONOMIC ZONESEZ

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4. RURAL COLLECTIVENESS
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Framework For Evaluation Of Comparative Economic System

1. PRICE INFLATION
In economics, inflation is a rise in the general level of prices of goods and services in

an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money. effects on an economy simultaneously positive and negative. are various and can

Inflation's

be

CHINA & INDIA INFLATION RATE

2. UNEMPLOYMENT RATE
The unemployment rate can be defined as the number of people actively looking for a job

divided by the labour force.

Changes in unemployment depend mostly on inflows made up of non-employed people

starting to look for jobs, of employed people who lose their jobs and look for new ones and of people who stop looking for employment.

CHINA & INDIA UNEMPLOYENT RATE

3. BALANCE OF TRADE
The commercial balance or net exports (sometimes symbolized as NX), is the difference

between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. imported. A negative balance is referred to as a trade deficit or, informally, a trade gap.

A positive balance is known as a trade surplus if it consists of exporting more than is

CHINA & INDIA BALANCE OF TRADE

4. FOREX REGIME
An exchange-rate regime is the way an authority manages its currency in relation to other

currencies and the foreign exchange market. It is closely related to monetary policy and the two are generally dependent on many of the same factors.

The basic types are a floating exchange rate, where the market dictates movements in the

exchange rate; a pegged float, where a central bank keeps the rate from deviating too far from a target band or value; and a fixed exchange rate, which ties the currency to another currency, mostly more widespread currencies such as the U.S. dollar or the euro or a basket of currencies.

CHINA & INDIA FOREX REGIME

5. GROSS DOMESTIC PRODUCT

The gross domestic product (GDP) is one of the measures of national income and output.

GDP can be defined in three ways, which should give identical results.
the country in a specified period of time (usually a 365-day year). industries, plus taxes and minus subsidies on products.

First, it is equal to the total expenditures for all final goods and services produced within

Second, it is equal to the sum of the value added at every stage of production by all the
Third, it is equal to the sum of the income generated by production like compensation of

employees, taxes on production and imports less subsidies, and gross operating surplus.

CHINA & INDIA GDP

INDIA

1. LAISSEZ FAIRE ECONOMY

Laissez-faire is an economic environment in which transactions between private parties are

free from government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights.

The phrase laissez-faire is French and literally means "let [them] do", but it broadly

implies "let it be," "let them do as they will," or "leave it alone". Scholars generally believe a laissez-faire state or a completely free market has never existed.

2. LICENSE PERMIT RAZ

The Licence Raj was a result of India's decision to have a planned economy where all

aspects of the economy are controlled by the state and licences are given to a select few.

Private players could manufacture goods only with official licenses. The quantity of goods

they were allowed to produce was determined by the license regime, not by free-market demand.

LICENSE PERMIT RAZCONTD.

India had started out in the 1950s with:
Macro stability High growth rates A promotional state

However, by the 1980s, the country was

left with:

Low growth rates Closure to trade and investment

A license-obsessed, restrictive state

Inability to sustain social expenditures Macro instability, indeed crisis

Social expenditure awareness

Openness to trade and investment

3. PRESENT INDIAN ECONOMIC POLICY

The economy of India is the 10th largest in the world by nominal GDP and the 3rd largest

by purchasing power parity (PPP).

GDP 1.824 trillion

India is the 19th-largest exporter and the 10th-largest importer in the world. Exports - $309.1 billion Indias major export partners are UAE, China, USA and Singapore. Imports - $500.3 billion Indias major import partners are China, UAE, Saudi Arabia, US, Switzerland.

PRESENT INDIAN ECONOMIC POLICYCONTD.

Before 1947 1947 1991 1991 onwards Colonialism GAAT Era WTO Era (1995) Restrictive trade Transition period Free trade agreement British Controlled Economy Gov. Controlled Economy

Liberalization & Globalized Economy

Indian economic policy may be divided into 2 stages:

Stage I (1947 91)

Democratic Socialism Controlled Economy

Stage II (1991 Onwards)

Liberalized economic policy Competitive economic environment

4. HINDU RATE OF GROWTH

The Hindu rate of growth refers to the low annual growth rate of the socialist economy of

India before 1991, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%. liberalisation began in the 1990s.

The economy of India has been growing at rate of around 6-8% since economic In 1947, the average annual income in India was $439, compared with $619 for China,

$770 for South Korea, and $936 for Taiwan. By 1999, the numbers were $1,818; $3,259; $13,317; and $15,720.

HINDU RATE OF GROWTHCONTD

Per capita GDP of South Asian economies & S Korea (1950-1995)

5. MOVEMENT FROM LOCALIZATION TO GLOBALIZATION

The roduction and imports less subsidies, and gross operating surplus.

RECOMMENDATIONS

TO CHINA
There should be more financial subsidies to support the technological upgrading of

enterprises and individuals to start their own business so as to expand domestic demand and open up the market.

To adjust the distribution pattern of national revenue and raise the share of labour income

and raise the level of household consumption which will facilitate the formation of endogenous motivation for long-term economic growth. SMEs to enhance economic vitality.

We need to support the development of SMEs and improve the financing environment for

TO INDIA
Shift Focus slightly from National Income.

Focus on Agricultural Exports.

Limit Unnecessary Imports.

Deal with Corruption.

Create awareness.

THANK YOU!!