A critical summary of India and China: Two Very Different Paths to

Development

DONG Haokun(5029611)

MA of China and Regional Studies, Lingnan University

CRS511 The Dragon and the Elephant

Date: 22/03/2023
 Abstract

This article provides an overview of the economic development trajectories of India

and China, two emerging superpowers in the 21st century. Despite their similarities in

terms of population and economic growth, the two countries have adopted different

political and economic systems. China has adopted a command economy while

occasionally utilizing market forces, whereas India has pursued a more traditional

free-market system. The article examines the historical and political contexts that

have led to these different economic systems and assesses their implications for the

two countries' international roles.

Introduction

In recent years, the world has witnessed India and China emerge as economic

superpowers in Asia. Politically, economically, demographically, and sociologically,

the global balance of power has been fundamentally altered by the enormous

populations and vast resources of these countries. While both nations have attained

rapid economic success, their differences are more significant. India is the world's

largest parliamentary democracy, whereas China is a one-party state. China's

economic reforms have produced a quasi-free-market command economy, while

India's reforms have reduced the number of state-run industries. These differences in

political and economic systems have substantial ramifications for their international

roles and the global community as a whole. This article will analyze the historical and

political contexts that led to these divergent economic systems and evaluate their

effects on the international roles of the two countries. The rise of India and China will
ultimately be the most significant event in the global political economy of the twenty-

first century.

The Rise of China and India

China's development path has been marked by major challenges and

transformations. China went on a failed state-led industrialization campaign headed

by Mao Zedong, which resulted in the Great Leap Forward and the Cultural

Revolution. These campaigns killed millions of people and caused major political and

economic turmoil. However, China implemented significant economic reforms that

resulted in modern China under Deng Xiaoping's leadership. The government

weakened collective farms, implemented the one-child policy, and created special

economic zones to test market-led policies. By 2006, the private economy had

surpassed the state economy in terms of GDP share. Despite China's progress toward

economic liberalization, the country remains a one-party dictatorship with a visible

presence in the market. State-owned enterprises continue to dominate the economy,

and the government continues to oppress opposition.

The economic history of India has been mainly turbulent. The socialist economic

policies implemented by Jawaharlal Nehru and his successors resulted in the creation

of highly inefficient state-owned enterprises that affected all major industries. From

the 1950s to the 1980s, India experienced substantial economic stagnation. Only after

the 1991 currency crisis did India float its currency and pursue substantial economic

reforms. India lowered its restrictions on foreign investment, privatized a portion of

its public sector, and reduced its fiscal deficit. Since the reforms, the real GDP per
capita has increased by a factor of 3.5, and India has assumed the position of the

world's third-largest economy by purchasing power parity.

China has recently taken a more assertive stance in foreign affairs, engaging in

territorial disputes with neighboring nations and promoting the One Belt One Road

initiative throughout Eurasia. As a result, China is positioning itself as an alternative

superpower to the capitalist West. However, its trade policies have come under

scrutiny, and countries like the United States have accused China of unfair trade

practices, including intellectual property theft and excessive steel production.

India, on the other hand, has adopted a more traditional capitalist economic

policy. Under the Trump administration, India has grown closer to the United States,

as Indian leaders are concerned about China's growing power.

Despite both countries adopting socialist economics in the mid-20th century, they

have diverged significantly. India is moving towards a more free-market system,

while China continues to embrace a command economy and uses capitalism when it is

expedient. They operate under vastly different political and economic systems and

pursue distinct international objectives. It is likely that once they attain superpower

status, they will become more adversaries than allies.

The ascent of China and India to the global political economy of the 21st century

is of immense significance. However, it remains to be seen what global effects their

ascent will have.

Critical discussion

The most crucial idea of the paper is the examination of the rise of India and
China as economic superpowers and the significant impact of their different political

and economic systems on their international roles and the world at large. (Hopewell,

K.,2015). The paper argues that the rise of India and China will be the most

significant event in the global political economy of the 21st century.

Overall, the arguments presented in the article are well-supported by evidence,

and the writer presents a clear and unbiased view of the topic. The article recognizes

the significant impact that China and India's rise to economic superpower status has

had on the global balance of power and emphasizes the importance of understanding

the differences between the two nations.

The writer demonstrates a strong understanding of the historical and political

contexts that have led to the different economic systems in China and India. They

provide a detailed overview of China's development trajectory under Mao Zedong's

leadership and Deng Xiaoping's economic reforms. Similarly, they outline India's

economic history under Jawaharlal Nehru's socialist economic policies and the

significant economic reforms that occurred after the currency crisis in 1991.

The article contends convincingly that the rise of India and China will be the

most significant event in the twenty-first century's global political economy. The

author suggests that once they attain superpower status, they will be more adversaries

than allies.

Overall, the writer does an excellent job of explaining the arguments and

presenting the evidence to support them. The article provides a comprehensive and

unbiased overview of the rise of India and China and their implications for the global
political economy.

Supporting examples

One supporting example that illustrates China's economic transformation is the

establishment of special economic zones (SEZs) in the 1980s. These zones allowed

China to experiment with market-led policies and attract foreign investment. The

success of these SEZs led to the expansion of market-oriented reforms throughout the

country, which ultimately contributed to China's rapid economic growth.

The 1991 currency crisis is a further illustration supporting India's economic

reforms. The crisis compelled the Indian government to float its currency and

implement extensive economic reforms. These reforms included the reduction of the

fiscal deficit, the easing of restrictions on foreign investment, and the privatization of

some public sector companies. As a result of these reforms, India's real GDP per

capita is now three-and-a-half times greater and the nation has assumed the position

of the world's third-largest economy by purchasing power parity.

In terms of foreign affairs, China's assertiveness in territorial disputes with

neighboring countries and the One Belt One Road initiative across Eurasia illustrate

its growing profile as an alternative superpower to the West. Meanwhile, India's

increasing closeness with the United States under the Trump administration, in part

due to fears of a more powerful China, is indicative of its more traditional capitalist

policies and alignment with Western powers.

These examples support the claim that India and China have adopted distinct

economic systems, operate under immensely distinct political and economic systems,
and pursue distinct international objectives. (Ikenberry, G. J., 2008).

References

Singh, A. (2019). India and China: Two very different paths to development. Berkeley

Economic Review.

Hopewell, K. (2015). Different paths to power: The rise of Brazil, India and China at

the World Trade Organization. Review of international political economy, 22(2), 311-

338.

Ikenberry, G. J. (2008). The rise of China and the future of the West-Can the liberal

system survive. Foreign Aff., 87, 23.