India Could Outpace China with Shifts in U.S. Policy

In a long article, supported ably by charts, the South China Morning Post compares the differences between the economies of India and China, and puts forth reasons why “India could trump China as U.S. policy shifts“.

China's A50 vs India Nifty 50

Highlights of the publication’s views:

SCMP Views on India China
Debt India’s debt ratios are only half of those of China and have not been growing during the past decade The country is awash in debt. China’s total debt (public + private) portends slower growth
Trade Much less export dependent: Exports account for 13 % of GDP Export dependent: Exports total 21 % of GDP
Exports to US: 1.6% of GDP Exports to US: 4% of GDP
India’s lack of dominance in the traded-goods sector may help avoid the ire of a more insular U.S. Vulnerable to any change in the mood in Washington
Politics India doesn’t appear to be on President Trump’s radar and… President Trump has focused his trade concerns on two countries: China and Mexico
… This is good news for India and worrisome for China A trade war with the US could destabilize China’s economy and augment the probability of a debt crisis and a currency devaluation
Currency The Indian rupee is probably about fairly valued Currency is overvalued
India’s FX reserves rose from $326 billion in early 2016 to $337 billion in early 2017 Spent one quarter of its currency reserves defending the renminbi
Equity Markets India’s Nifty Fifty Index has vastly outperformed the China A50 in recent years; trades at 18.6x earnings China A50 trades 12.8x earnings for Chinese shares
Demographics and Agriculture India’s per capita consumption is 2500 calories per day Chinese per capita consumption is now over 3,000 calories per day
India’s population will probably expand by 30% over the next 25 years China’s will probably stay about the same adding about 0.1 per cent to China’s population per year
India represents an enormous opportunity for the world’s farmers, especially those who can provide lentils, peas, chickpeas, almonds and other dietary staples. Also, as India grows richer, consumption of dairy and vegetable oils will probably grow considerably China, by contrast, has a mature diet and its food consumption needs may not change a great deal going forward
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Posted on by Gunjan Bagla
Gunjan Bagla
California-based management consultant Gunjan Bagla runs Amritt, a consulting firm helping American companies to succeed in India. Amritt is the trusted advisor for India market research, India business development, India market entry, Global Engineering, Global Technology Scouting, India R&D and Open Innovation. Gunjan is author of "Business in 21st Century India: How to Profit Today from Tomorrow’s Most Exciting Market" (Hachette Book Group, 2008), Amazon's top rated title on the subject. He has appeared as the India Expert on BBC Television, Bloomberg TV, Fox Cable Business and has been quoted in the New York Times, the Los Angeles Times, the Hollywood Reporter and Business Week for his expertise on India.

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