We started of in the same pace our country and china in order to be known from a developing nation to a developed one. We had similar problems namely overpopulation and poverty. Although china as of now has emerged to be an economic superpower in order to understand why let us move into retrospect :After the communist revolution 1949 China adopted the communist form of government which was dictatorial in nature and only the state could own property and setup factories they had a huge population to support to support and food grain production was low their export volume too was low as well.
They needed technology and capital which was not coming by because of their adverse political system in late 70’s American economy faced slowdown because of their defeat in Vietnam war and instability in the gulf area. And on the other hand America was desperate to expand and china offered lucrative facilities. China setup huge export zones where Chinese law would not apply. So the west could penetrate to the huge Chinese market and also use their cheap labor.
Soon cheap Chinese products started getting flooded all over the world and china started becoming the worlds largest exporter most companies were forced to shut down their factories in the west and the service sector jobs got outsourced to places like India which resulted in large-scale unemployment and besides America faced the worst financial crisis because of the housing scam.
The Iraq war also resulted in huge financial burden to the American Economy and they had to go for a huge bailout package and the prices of American stock and the dollar depleted sharply .China on the other hand-built huge reserves of Foreign exchange and bought a stake in many of the major American companies and invested in huge American bond market which made them very aggressive in the economic front .Whereas India opened its economy very reluctantly in 1990’s after it had to fall in line with adverse condition set by World Bank and the IMF when India’s reserve was just sufficient to take care of its six months requirement and was in the brink of being a defaulter.
India having democratic system also made it very difficult for the government to open up as it met stiff resistance from the people and domestic entrepreneur also China adopted the one child policy in order to tackle overpopulation however this law was followed exhaustively which by no means should be a policy that India should adopt.
However since Indians had the advantage of a better command over the English Language they did better in the Service sector and also analytic for which they did better in the IT service sector .What one must not forget that the Chinese products indeed are very attractive which talks a lot about the Creative aspect of china which alone ends up being a Unique Selling products most of us believe that Chinese are good at copying but not at innovating. That’s just not true anymore.
So in order to sum it up India in the economic cycle is stagnant in being a Developing nation reason being poverty to a major extent but we have an example set in front of us who had to tackle the same problem and emerge as a developed nation – CHINA.
– Khyati Kotioyan