Ali’s blog

Mostly quant stuff with occasional digressions

China and India

Posted by alifinmath on January 16, 2008

Interesting piece in today’s FT on the trade imbalance between China and India:

Sino-Indian trade last year soared 56 per cent to $38.7bn (€26bn, £19.6bn), according to Chinese data, and could reach $60bn by 2010. But this is heavily tilted in China’s favour, with the deficit more than doubling to $9.17bn in the past fiscal year.

Western commentators often mention China and India in the same breath. But in my humble opinion there are significant differences. China is in a different league altogether, and moving on a different trajectory. India’s economy — with the exception of an export-oriented service sector (software, call centres, etc.) remains a basket case. Ignoramuses like Thomas Friedman who make brief sojourns to India, stay in five-star hotels, and go on company-sponsored tours and inspections, give a completely misleading picture on what’s occurring in India. There was an interesting essay on India, titled “Rendezvous in Mumbai,” in the periodical New Left Review about four years back, which caught my attention at the time because of a couple of interesting paragraphs. It can be downloaded as a PDF here. An excerpt:

There were 740,000 applicants for 20,000 posts in the lowest, Group dcategory on the Indian railways last year—essentially, gangmen’s jobs. Among the applicants were MBAs, post-graduates and engineers. The outsourcing of US white-collar work to Indian call centres, etc., currently exercising American voters, accounts for a tiny drop in this ocean. There were approximately four hundred call centres in India in 2003, employing around 100,000 people; 40 per cent of their business is domestic.

It was within this context that the hundred thousand delegates to the fourth World Social Forum gathered in Mumbai between 16th and 21st January 2004. The city itself is a heavily polluted, financial-commercial centre, a vast conurbation of some 17 million people, over 40 per cent of them living in slums.

There is an Indian “middle class” (not to be confused in income and wealth with European and North American middle classes), comprising maybe 50-60 million people. The kind of people, perhaps, who aspire to the new automobile designed by Tata. But for the other 950 million, life goes on as before. Maybe worse, as figures suggest calorific intake has actually gone down the last ten or fifteen years (I can’t presently find the source for this).

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