Chindia

Chindia
What is ``Chindia``? ``Chindia`` is a portmanteau word that refers to China and India together. Indian Member of Parliament Jairam Ramesh had coined this term. It refers to the two nations together in economic and strategic terms. The word implies the idea that India and China could cooperate and work together to face challenges ahead. Both China and India share long borders and are regarded as two of the most rapidly growing economies of the world. Together, they house over one-third of the world's population and have been named as countries with the highest potential for growth in the next 50 years in a BRIC report. What are the strengths of China and India? The economic strengths of these two countries are considered to be complementary in nature. While China is perceived to be strong in the manufacturing and infrastructure sector, India is perceived to be strong in the human services and information technology sector. China is considered stronger in hardware while India is stronger in software. China is stronger in physical markets while India is stronger in financial markets. China's needs are of a variable nature with the maturing of the economy. China`s main focus on energy is decreasing as energy prices are plunging, renewable energy is being popularized and major energy producers are coming up. China's need to get more markets for its manufacturing base is growing at a high rate. India is a major importer of a vast number of Chinese products. China has assumed global leadership quality. Many countries in the world are hoping that China will lead the recovery from the recent US economic crisis and the European debt crisis. Citigroup has predicted that the economies of China and India will have surpassed that of the United States by the year 2030. Among the large emerging economies such as Brazil and Russia, the rise of Chindia is set to have huge business implications during the first half of this century. Both China and India will require enormous natural resources due to their rapidly expanding domestic consumer markets, in addition to them increasing their manufacturing and service sectors. Since a vast majority of these untapped resources are in Africa, the Caribbean and Latin America, the rise of Chindia will create an economic boom for these third world nations as well. The rapid aging of the Chinese population attributed to its one-child policy implemented over two generations will have a decisive impact on its domestic economic growth. While India is smaller than China, economists have said that it will experience accelerated growth in less than ten years with better infrastructure, political and financial reforms. India`s focus on manufacturing is both for global supply as well as for its domestic demand, which will be different from China`s manufacturing in the sense that it will be selective and largely concentrated on high-end aerospace, military, space and consumer durables including automobiles and appliances. Economists have predicted that the global integration of China and India will be radically different. India's economy and enterprises will be globally integrated especially with other advanced countries (Europe, US, Canada, UK, Australia, Singapore, Japan, South Korea) through large scale acquisitions of well established and foreign companies with technology, branding and manufacturing assets. This can be seen in Mittal Steel's acquisition of Arcelor, Tata Steel's acquisition of Corus Steel, and Hindalco's acquisition of Novelis. Many large PSUs of India such as Oil and Natural Gas Corporation, Indian Oil and State Bank of India, who have the domestic scale and large capital reserve, are starting to consider international acquisitions. Wipro has also made several worldwide acquisitions. Ranbaxy and Dr. Reddy's have become significant names in the global pharmaceutical industry largely through acquisitions. China's growth, however, has been thought to be more domestic and only on a selective basis through global acquisitions. This is because China focuses and capitalizes more on domestic demand. Developed countries are less willing to sell their assets to China (especially technology assets) due to myopic misperceptions about the peaceful rise of China (in contrast to rise of India), as believed by economists. Thus, Chinese enterprises that dominate the domestic Chinese markets will end up expanding globally by first going to other emerging economies in Africa, the Caribbean, Latin American and the ASEAN as well as in Central Asia and India, both through trade as well as foreign direct investment. This, in turn, will result in rapid growth in bilateral trade as well as reciprocal foreign direct investment between China and the countries mentioned above. Economists have predicted that this would give rise to a standard Asian currency. What are the drawbacks of the co-operation? There are several geopolitical, cultural, economic, linguistic and political differences between China and India which imply that the term has a weak association. The effects of the Indo-China War of 1962 and China`s claim to Arunachal Pradesh have led to cautious relations between the two nations. China is a single-party authoritarian communist state whereas India is a democracy with a multi-party system. India's culture is characterized by a high degree of pluralism whereas China has a more ethnically homogeneous population, though the concept of Han ethnicity is debatable to many scholars. Different sectors in the countries have developed in recent years- the service sector in China and the manufacturing sector in India. Due to its permanent membership in the UN Security Council, it is believed that China has a greater international influence than India. China`s vast investments in Pakistan have also been viewed with suspicion by India. Economists have stressed the role of mutual co-operation between China and India to achieve their goal to become developed nations, and for this, territorial and ideological differences should ideally be set aside for the sake of economic growth.
Source: http://econintersect.com/b2evolution/blog1.php/2012/01/12/chindia-50-of-global-growth



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