The Rise of China & India

1. The Rise of China & India

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

3. Manufacturing • China is now the world’s manufacturing centre

4. Inflation fears • The rapid growth is leading to inflation

5. Monetary Policy • Beijing is taking measures to cool the economy from excessive liquidity and huge investment • 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) • China’s central bank has increased interest rates twice in 2006

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

7. Emerging East Asia • 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

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

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

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

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

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

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

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

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

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

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

18. Billionaires • India has 23 billionaires

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

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

21. 2005 • The border dispute was resolved

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

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

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

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

26. 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)

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