g-f(2)1870 Why India's Rise Will Be More Arduous Than China's

 

genioux Fact post by Fernando Machuca and Claude

Introduction

As China's economy falters, attention shifts to neighboring India as the next rising Asian powerhouse. However, while India's demographic and economic trajectory mirrors China's in the 1990s, structural barriers around labor dynamics and trade make India's path forward more arduous.

genioux GK Nugget

"India remains a primarily consumption and services-driven economy. Unless it can truly supercharge manufacturing FDI, it may struggle to match the ferocious takeoff trajectories of the onetime Asian tigers and dragon." — Fernando Machuca and Claude

genioux Foundational Fact

A host of obstacles inhibit connecting India's theoretically abundant labor pool with employers and consumers. Weak female workforce participation, agriculture subsidies limiting migration, restrictive trade policies, and already high public debt may hinder private investment and manufacturing-led growth.

Top 10 Relevant genioux Facts

1. India recently became the world's most populous nation and over 50% of Indians are under 25, conferring a demographic advantage.
2. India's age-dependency ratio has fallen drastically, which often spurs domestic savings and investments, yet multiple barriers exist to smoothly bringing workers into the labor force.
3. Female workforce participation in India languishes at only 33% versus 50% average for comparable economies and 71% for China, hampering urban factory staffing.
4. Generous rural subsidies may discourage migration to cities, with 45% of women citing childcare duties as their reason for not working.
5. High average import tariffs of 18.1% make India less attractive as a manufacturing export base reliant on imported components versus China's 7.5% duties.
6. While India has invested heavily in infrastructure recently, high existing public debt may necessitate private sector-led growth to sustain progress.
7. Foreign direct investment has declined after hitting record highs, explained partly by the global tech decline but worryingly also in computer manufacturing.
8. India needs to smooth barriers and encourage manufacturing FDI to boost its 15% GDP share toward its 25% target, critical for its geopolitical ascent.
9. Global electronics firms are investing billions despite issues like inflexible labor laws, but manufacturing remains below potential.
10. With consumption and services still dominant, supercharging manufacturing is essential for India to emulate Asian tiger economies.

Conclusion

India's positive story of economic emergence may be tempered by structural challenges around demographics, debt, and manufacturing. Sustaining competitive progress vis-à-vis China requires strategic reforms and investment facilitation.

REFERENCE

The GK Article

 

Megha Mandavia and Nathaniel Taplin, Why India Isn’t the New China, The Wall Street Journal, January 19, 2024.

Bing Chatbot's Summary

The article "Why India Isn’t the New China" discusses the differences between the growth trajectories of India and China⁴. While China's economy has been the dominant story of the 21st century, India is now emerging as a significant focus for investors and manufacturers⁴.

India's population surpassed China's last year, and more than half of Indians are under 25⁴. At current growth rates, India could become the world's third-largest economy in less than a decade⁴. India's equity market has seen eight straight years of gains, and worsening trade relations between the West and China only bolster India's case⁴.

However, the article suggests that India's path forward is likely to look very different—and more challenging—than China's⁴. Despite its plentiful labor resources, barriers still make it difficult to connect workers with employers⁴. This makes it hard for households and companies alike to build up the savings needed for the kind of investment booms that transformed East Asian tigers like Taiwan and South Korea⁴.

Furthermore, India's still-high barriers to trade are another problem, especially if India wants to become a gadget assembly hub like China⁴. The article concludes by stating that while India's population surpassed China's last year, its path forward is likely to look very different from its neighbor's⁴.

Source: Conversation with Bing, 1/19/2024

(1) Why India Isn’t the New China. https://www.msn.com/en-us/money/other/why-india-isn-t-the-new-china/ar-BB1gVyaw.

(2) Top Global Markets News of the Day - Friday at 5 AM ET - MarketScreener.com. https://www.marketscreener.com/news/latest/News-Highlights-Top-Global-Markets-News-of-the-Day-Friday-at-5-AM-ET-45774187/.

(3) Tech Likely to Lead Stocks Higher Again - MarketScreener.com. https://www.marketscreener.com/news/latest/North-American-Morning-Briefing-Tech-Likely-to-Lead-Stocks-Higher-Again-45774596/.

(4) Top Global Markets News of the Day - Friday at 7 AM ET - MarketScreener.com. https://www.marketscreener.com/news/latest/News-Highlights-Top-Global-Markets-News-of-the-Day-Friday-at-7-AM-ET-45775099/.

(5) The Daily Roundup - The Wire China. https://www.thewirechina.com/2024/01/19/the-daily-roundup-january-19-2024/.

(6) News Highlights: Top Global Markets News of the Day - Morningstar. https://www.morningstar.com/news/dow-jones/20240119168/news-highlights-top-global-markets-news-of-the-day-friday-at-1-am-et.

(7) India has plenty of reasons for... - The Wall Street Journal - Facebook. https://www.facebook.com/WSJ/posts/764804555506144/.

Megha Mandavia

Megha Mandavia is a columnist for Heard on the Street, based in Bengaluru, India, and she writes for The Wall Street Journal¹. She specializes in covering India’s technology sector and economy, as well as other topics throughout Asia¹. Before joining The Wall Street Journal, she was an assistant editor at India’s premier business paper, the Economic Times, where she closely tracked the booming internet economy in India¹. She wrote about everything from tech policy and social-media firms to internet culture and the emergence of homegrown competitors to Chinese apps¹. She is also a former JR Fellow at Chicago Booth².

Source: Conversation with Bing, 1/19/2024

(1) Megha Mandavia — Reporter at The Wall Street Journal. https://www.wsj.com/news/author/megha-mandavia.

(2) Megha Mandavia’s Profile | The Wall Street Journal Journalist - Muck Rack. https://muckrack.com/meghamandaviaet.

(3) Megha Mandavia - Journalist Profile - Intelligent Relations. https://intelligentrelations.com/journalist/megha-mandavia/.

Nathaniel Taplin

Nathaniel Taplin is the Asia Editor and main columnist on China's economy and political economy for Heard on the Street, The Wall Street Journal's economic and financial commentary section¹. He manages and edits other Asia-based columnists and covers key areas of concern including U.S.-China relations, technological competition, Taiwan and Hong Kong, and Chinese labor markets and demographics¹.

Before joining The Wall Street Journal, he spent five years in Beijing and Shanghai with Thomson Reuters and the independent macro consultancy Gavekal Dragonomics¹. During his time in China, he reported on a wide range of issues from local government debt to protests against financial products gone bust and the market crises of 2015 and 2016¹. At Gavekal, he headed up global commodities coverage and wrote extensively on China’s energy sector, industry, and trade¹.

Nathaniel Taplin is a two-time finalist for the Society of Publishers in Asia award for excellence¹. His insightful analysis and commentary on China's economy, financial markets, and geopolitical dynamics have made him a respected voice in the field⁴.

Source: Conversation with Bing, 1/19/2024

(1) Asia Editor, Heard on the Street, The Wall Street Journal. https://www.wsj.com/news/author/nathaniel-taplin.

(2) Nathaniel Taplin - Journalist Profile - Intelligent Relations. https://intelligentrelations.com/journalist/nathaniel-taplin/.

(3) China’s Economy Limps Into 2024 - MSN. https://www.msn.com/en-us/money/markets/china-s-economy-limps-into-2024/ar-AA1n7bk1.

(4) Nathaniel Taplin - The Wall Street Journal. https://www.wsj.com/news/author/nathaniel-taplin?page=8.

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Categorization

This genioux Fact post is classified as Breaking Knowledge which means: Insights for comprehending the forces molding our world and making sense of news and trends.

Type: Breaking Knowledge, Free Speech

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References

“genioux facts”: The online program on "MASTERING THE BIG PICTURE OF THE DIGITAL AGE”, g-f(2)1870, Fernando Machuca and Claude, January 19, 2024, Genioux.com Corporation.

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