Dec 7, 2007

India vs. China Markets

In the Goldman Sachs BRIC (Brazil, Russia, India, China) portfolio, China and India are often compared and contrasted. China is clearly ahead in terms of industrial output and current account deficit. China has been the factory of the world and the basic numbers would always make China look formidable in the BRIC countries.

I would pay attention to the following.

  1. India has a much larger percentage of younger population.
  2. Both countries have economic disparities in their population, but India is already a democracy. When China becomes a democratic country, we don't know how these disparities will play out. Could there be another social revolution?
  3. China's industrial pollution problem.
  4. India is building a service economy. China is building a labor and manufacturing economy.
  5. Chinese population also has a thrifty-gene. Westernization and fast food will create a similar metabolic syndrome based health care crisis as in the US.
  6. China does not have an open media.
  7. China is a military superpower. Transfer of technology from the western world is limited to non dual use nature. India just got the nuclear accord with the US.

If India can get out of in attitude of being satisfied with the Hindu growth rate and accept that there is no limit to the productivity increase and compete, India will come ahead.

Mumbai is microcosm of India. Granted, it does not have the farmers, but it has a fair percentage of displaced farmers traveling for jobs. I like the way it works. I am studying how Mumbai works.

So far, I like it what I have seen.