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“.
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 |
