Saturday, February 18, 2006

Chinese demographics - reliable figures?

Andy Mukherjee of Bloomberg has some interesting comments on the topic of China's demographics, most notably that those figures are also suspect. It could be that the reports of China's aging are somewhat premature.

India and the United States

Parag Khanna and C. Raja Mohan competently survey the current state of play in the emerging Indo-US relationship. Selfishly, I am pleased to note that most of what I had to say on this topic in 2001 and 2002 (concluding remarks on the subcontinent) has stood the test of time. The ingredient that I missed, and which is yet to establish itself fully, is the convergence between Indian and Chinese growth rates which as reduced the pressure that India feels from China and generally given the Indian state greater room for maneuver.

Falun Gong versus the Chinese State

Two recent pieces in Forbes detail the ongoing contest between the Falun Gong movement and the Chinese state. The Falun Gong have attempted to use the internet and international phone calls to bolster dissent against the CCP with some success - they claim credit for 7 million CCP members having renounced party membership. In response, the CCP appears to have extended a campaign of violent intimidation to the United States. The persecution of the Falun Gong illustrates, perhaps better than any other single fact, the limits to any propensity to political reform in China.

Monday, February 13, 2006

No Sino-Indian Rapprochment, It's All Containment

Mohan Malik argues that notwithstanding the recent hype about the improving Sino-Indian relations, “India-China ties remain fragile and as vulnerable as ever to a sudden deterioration. The combination of internal issues of stability and external overlapping spheres of influence forestall the chances for a genuine Sino-Indian rapprochement.” His entire piece can be found here.

Thursday, February 02, 2006

Savings and efficiency in India and China - a tipping point in sight?

The evidence of the last three years is that India's economic growth has moved into a higher bracket, optimistically to something close to 8%. While China's rate of growth, on a large base, is still higher the narrowing of the gap is bringing the strengths of the Indian economy into sharper focus and prompting more detailed comparisons between the two countries. At a very gross level two features stand out: China's investment rate is much higher, and India's utilization of capital is much more efficient. Currently, the first effect is winning but one can wonder (and I would guess) that this cannot last for ever.

Two recent pieces shed light on these matters.

Andy Mukherjee of Bloomberg summarizes a recent Fitch report which discusses why the Chinese save much more (absence of decent returns on savings) and how India's government deficits (dissaving) are at the root of lower investment. Mukherjee himself is not convinced that the Chinese "model" is sustainable as much of the extra investment is channeled into state enterprises.

Separately, Yasheng Huang of MIT revisits his work with Tarun Khanna on the strengths of India's private sector and notes that the intervening two year have been kind to them.

What all of this suggests to the politically minded is that we look for a "tipping point" where India's rising rate of growth edges above a declining rate of growth in China. While this will not redress the actual size of the two economies, it will certainly cause a shift in perceptions of considerable consequence.