China and India's economic development factors analyzed to seek help from the gods

With the rapid development of the economies of mainland China and India and the enhancement of their international status, the study of the comparison between China and India has become an international science, India's Minister of Science and Technology not long ago when he visited China also made a comprehensive analysis and comparison of the two sides of the economy. In fact, the core of the question of comparison between China and India is actually whose development is more sustainable and who has more development potential. If we can clearly understand the advantages and shortcomings of the respective economic systems of the two countries, and in mutual cooperation to complement each other's strengths and weaknesses, China and India can fully in the exchanges and learning to maximize the release of the potential for cooperation. After a long period of exploration, China and India have each found a development path that suits their own national conditions, with different development models. China's socialist market economy model is mainly characterized by a manufacturing-driven model, accompanied by high domestic savings, large-scale infrastructure investment, foreign direct investment and foreign trade expansion, which is a development model that balances domestic demand and outward orientation. India's development model, on the other hand, is more unique in that it emphasizes consumption rather than investment, domestic demand rather than exports, services rather than manufacturing, and high-tech industries rather than labor-intensive and low-tech industries, an approach that has made India's economy more resistant to the impacts of the global economic downturn, and has demonstrated a relatively strong resilience and long-term cyclicality of smooth economic growth. There is indeed something to be said for the quality and efficiency of India's economic growth. For example, the level of savings within India is only half of that of China, the annual inflow of foreign direct investment into India is only about 10% of that of China, and India lags behind China by about 10 to 15 years in the development of infrastructure, yet India has achieved a relatively fast rate of economic growth, and more than 30% to 40% of its GNP is derived from growth in productivity, rather than from increases in capital or labor. However, the problems in India's economic model are equally evident. For example, India is inefficient and often fails to focus on a particular area of breakthrough. A World Bank study reports that it takes twice as long to start a business in India as in China, 67 days to register assets in India compared to 32 days in China, and 425 days to fulfill a contract in India compared to 241 days in China. India's socio-economic division is also very serious, modernization and backwardness **** exist, is a contrasting and full of contradictions in the country. India ranks among the world's economic powers, but a quarter of the world's poorest people live in India; it is the world's sixth-largest emitter of greenhouse gases, but hundreds of millions of Indians hijack the lack of electrical energy; its more than 250 universities have produced more than 3 million scientific elites, but 40 percent of the Indian population remains illiterate. In cities such as Delhi and Bangalore, thatched roofs are often intertwined with the skyscrapers of multinational corporations. Executive Summary As the world's two largest developing countries, China and India share many **** or similarities; as neighboring countries, agricultural and populous nations, and the fastest-growing economies in the world in recent years, the two countries' economic development has attracted the world's attention. China and India are also the most attractive countries for foreign direct investment (FDI). This paper compares the obvious differences in the pattern of utilizing FDI between the two countries: FDI flows more to the processing manufacturing industry in China and to the software service industry in India; the reasons for the differences in utilizing FDI between China and India are based on the differences in the overall investment attracting environment, the focus of the economic development strategy and so on; and the utilization of FDI in China and India has had different and important impacts on the economy. Therefore, the two countries should learn from each other's experience. Keywords China India FDI Comparative Analysis I. Overview of China and India's Utilization of FDI (I) Overview of China's Utilization of FDI In the nearly thirty years from the founding of New China to the reform and opening-up period, China's utilization of FDI was basically blank due to complicated historical reasons. Since the reform and opening up, China's development of absorbing FDI has roughly gone through the following stages of development: the starting stage in 1979-1986, the steady development stage in 1987-1991, the sustained and rapid development stage in 1992-1996, the adjustment stage in 1997-2001, and the development stage since the accession to the WTO in 2002. 2. Skilled and cheap labor resources are an important factor for the entry of foreign capital into China. Important factor for entering China Due to the increasing labor costs in developed countries, the cost advantage in traditional labor-intensive industries and resource-intensive manufacturing industries is lost, forcing the traditional labor-intensive manufacturing industries to shift to developing countries. results released by the Japan External Trade Organization (JETRO) in March 2003 showed that in the field of manufacturing, the per capita monthly salary in New York, Tokyo, and Shanghai were US$2,300, US$2,500, and US$207, respectively, 2500 dollars, 207 dollars. Obviously, Shanghai, China has more cost competitive advantage. 3. China has a huge potential market Dunning's theory of international production trade-offs points out that market factors, mainly market size, market growth, market patterns and types of customers, are important factors for multinational corporations to choose foreign direct investment. China is the world's largest country in terms of population, with more than 1.3 billion people, a huge market, profitable investment. China's economy has been expanding rapidly and its world ranking has been shifting rapidly. 2006 China's economy has surpassed the United Kingdom and France to become the fourth largest in the world (U.S.A., Japan, Germany, and China), and ranked the first among developing countries. From 2003 to 2006, China continued to maintain a growth rate of more than 10%. The rapid economic growth also makes China has an important weight to attract foreign investment and greater development potential. 4. Accession to the WTO for foreigners to provide a greater space for entry The first is China's software industry, the supply of talent compared with India, there is a gap. China's software talent gap, according to the latest survey shows that China in the future for a long time, there is at least 200,000 software talent gap each year, and this gap is still at an annual rate of about 200,000 increase. Comparatively speaking, India's software practitioners about 1.1 million, in addition, working overseas Indian software engineers up to 100,000 people, so that India has become second only to the United States of America's second-largest software talent country, for the development of India's software industry provides a rich pool of talent. Second, India's labor costs are currently lower than China. According to a survey released in mid-November 2005 by Mercer Consulting, the world's largest human resource management consulting firm, 95% of the 42 positions surveyed in China have higher base salary costs than in India (as shown in Table 3). The third is the aging population. India currently has a population of nearly one billion people, most of whom are young adults and children, with a very young age structure. Such a large number of labor (or quasi labor) resources is one of the most important factors of production for India's economic growth. Taking the data of 2003 as an example, the total number of elderly people over 65 years old in India is 54 million, accounting for 5.07% of its total population, while the total number of elderly people over 65 years old in China is 94.01 million, accounting for 7.27% of its total population. This shows that the trend of population aging in China is more serious than in India.