India and China – two emerging economies and potent superpowers of the future. Comparison between them is inevitable, and this comparison is not new. It goes way back to the 19th century!
Both these countries had a very rich economy. In fact this was one of the main reasons why both came under colonial rule of the West. India and China together, in the early 19th century, accounted for 45% of the global GDP – that is half the world economy! One common factor that till date goes in their favour was their manpower. The two most populous nations of the world were prosperous and peaceful, benefiting from good communication, effective government and its equally successful policies, and growing trade network.
But both made a common error. At a time when the entire world was speaking of globalisation and working their respective economies with one another’s, China, in tune with its socialist character, shut its doors to foreign traders. The famous opium wars later acted as fuel to the fire vis-à-vis China. The British, meanwhile, ruined India’s economy, and India too, like China, distrustful of foreign investors, followed socialism for a little more than 4 decades after its independence, bringing the economy close to a financial breakdown.
However, it is now time to recuperate. Both these once-huge economies, are today, as in the past, attracting foreign investors in plenty. As a matter of fact, western firms are establishing factories in China and call centres in India. Especially the Indian Stocks have been given high returns along with the top mutual funds of India. Moreover, if we look at the economic history of both these states, it will not take us time to realise that both India and China will, soon, start competing, if not pass, with the West.
Time is the greatest teacher. We all remember the time period 1870 to the beginning of the First World War, and 1929 to 1931-32 (this time period is also known as the Great Depression), when the world faced the greatest economic crisis of all times. Deflation was at its worst. Yet there were epochs of growth and prosperity. People had money to spend. This “time” taught us that as prices fall, people actually have more money to spend and buy more, and working people work better. It is those with high debts that suffer.
The biggest debate, at the end of the 19th century, in London was where to invest – Argentina or USA? Both the economies, then, were emerging equally well. But today, as we can see for ourselves, there is only one superpower today and that is the economy that delivered better then. Today too, investors are faced with this dilemma. The only difference being that instead of Argentina and USA, the countries, rather the economies in question are India and China. Making the right choice will guarantee good returns. It is possible that both India and China deliver equally well and both, together, tread on the path to becoming a superpower. However, it will do us good to remember the past and take our final lesson from it.
History repeats itself. India and China are both emerging strongly, and we hope, that both will rise to the heights of glory they once enjoyed. On this note we at NriInvestIndia.com would want our investors to be prudent about their investments and chose the right economy to invest their hard earned money.