The Rise of China & India

Rapid Economic Growth in China Economic Growth rates of 9.5% are expected to continue Economic Growth rates of 9.5% are expected to continue Economic growth of 10.7% from January to September, 2007 Economic growth of 10.7% from January to September, 2007

Manufacturing China is now the world’s manufacturing centre China is now the world’s manufacturing centre

Inflation fears The rapid growth is leading to inflation The rapid growth is leading to inflation

Monetary Policy Beijing is taking measures to cool the economy from excessive liquidity and huge investment Beijing is taking measures to cool the economy from excessive liquidity and huge investment Money growth leads to lots of money available for lending Money growth leads to lots of money available for lending Tight monetary policy is implemented by revaluating the currency (pushing up the value of the Yuan) Tight monetary policy is implemented by revaluating the currency (pushing up the value of the Yuan) China’s central bank has increased interest rates twice in 2006 China’s central bank has increased interest rates twice in 2006

Other attempts to slow down the Chinese economy Lending is being directed away from certain sectors Lending is being directed away from certain sectors The approval process for certain investment projects are being delayed The approval process for certain investment projects are being delayed

Emerging East Asia Comprised of China, Indonesia, Philippines, Thailand, Vietnam, and smaller economies which include Hong Kong, Singapore, South Korea, and Taiwan Comprised of China, Indonesia, Philippines, Thailand, Vietnam, and smaller economies which include Hong Kong, Singapore, South Korea, and Taiwan The number of people living in poverty (<$1/day) has reduced by 25 million since 2005 The number of people living in poverty (<$1/day) has reduced by 25 million since 2005

Outside factors Outside factors affecting growth, such as a recession in the U.S. Outside factors affecting growth, such as a recession in the U.S. Not expected to have a huge impact on Asian growth Not expected to have a huge impact on Asian growth Domestic consumption and domestic investment are expected to support growth Domestic consumption and domestic investment are expected to support growth

Rise in Income status East Asia is increasingly becoming a middle- income region East Asia is increasingly becoming a middle- income region

Challenges to the Asian Economies Rapid urbanization Rapid urbanization Delivery of services Delivery of services Social cohesion Social cohesion Corruption Corruption

India India is fast becoming the world’s main provider of services India is fast becoming the world’s main provider of services

India’s Economic Growth 8.1% annually since 2003 (second only to China’s) 8.1% annually since 2003 (second only to China’s)

India’s Rising Middle Class Since 1986, the middle class has quadrupled to about 250 million Since 1986, the middle class has quadrupled to about 250 million

Rising Income India’s per capita income has risen from $(US)1178 to $3051 over the past 25 years India’s per capita income has risen from $(US)1178 to $3051 over the past 25 years

Education India has the 3 rd largest concentration of educated labour in the world India has the 3 rd largest concentration of educated labour in the world The price of labour is 1/10 of that in the US The price of labour is 1/10 of that in the US

Manufacturing Indian corporations have become leaders in the production of steel, motorcycle, auto parts, pharmaceuticals, cement and footballs. Indian corporations have become leaders in the production of steel, motorcycle, auto parts, pharmaceuticals, cement and footballs.

Foreign Investment Over 80% of foreign investment goes towards manufacturing, which is growing at 9% per year. Over 80% of foreign investment goes towards manufacturing, which is growing at 9% per year.

Billionaires India has 23 billionaires India has 23 billionaires

India & China Make up 1/3 of the world’s population Make up 1/3 of the world’s population Represent the 2 economies with the largest potential for economic growth Represent the 2 economies with the largest potential for economic growth

History The 2 countries were rivals since 1962 over a border dispute The 2 countries were rivals since 1962 over a border dispute

2005 The border dispute was resolved The border dispute was resolved

Trade In 2004, Indian exports to China increased by 80% and trade between the two countries was worth $20(US) billion In 2004, Indian exports to China increased by 80% and trade between the two countries was worth $20(US) billion

Trading Partners In the next couple of years, China is expected to replace the US and the EU as India’s top trading partner In the next couple of years, China is expected to replace the US and the EU as India’s top trading partner

Energy In 2006, the two countries signed an energy cooperation agreement involving the countries’ state oil companies In 2006, the two countries signed an energy cooperation agreement involving the countries’ state oil companies

Share of Manufacturing China & India make up 57% of the world’s manufacturing output China & India make up 57% of the world’s manufacturing output Asia’s total share is 70% Asia’s total share is 70%

Prospects for Canada The economic rise of China & India offer Canada and other middle power countries an alternative market in which to trade (rather than the US) The economic rise of China & India offer Canada and other middle power countries an alternative market in which to trade (rather than the US)

Challenges for India India’s rural poor have benefited little from its economic boom India’s rural poor have benefited little from its economic boom India has fallen from 124th to 127 th on the HDI India has fallen from 124th to 127 th on the HDI