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.China is a one-party

government. while India is the largest parliamentary democracy in the world. China's

economic reforms have created a quasi-free-market command economy, whereas

India's reforms have reduced the number of state-owned 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. India's and China's rise will be
the most important 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, as a consequence, the Great Leap Forward and the Cultural

Revolution occurred. 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, instituted the one-child policy, and

established special economic zones to test market-oriented policies. In terms of GDP

proportion, the private economy had surpassed the state economy by 2006. Despite

China's economic liberalization progress, the country remains a one-party dictatorship

with a visible market presence. State-owned enterprises continue to dominate the

economy, and the government continues to oppress opposition.

India's economic history has been predominantly turbulent. The socialist

economic policies implemented by Jawaharlal Nehru and his successors resulted in

the establishment of incredibly inefficient state-owned enterprises that impacted all

major industries. From the 1950s to the 1980s, India experienced substantial

economic stagnation. Only after the currency crisis of 1991 did India float its currency

and implement significant economic reforms. India has reduced its budget imbalance,

relaxed limits on foreign investment, and sold a portion of its public sector. Since the

changes, India's real GDP per individual has grown by a factor of 3.5, making it the
third-largest economy in the world by buying power parity.

Recently, China has acted more assertively in international relations, participating

in border conflicts with nearby countries and advancing the One Belt One Road plan

across Eurasia. Consequently, China is positioning itself as a superpower alternative

to the capitalist West. However, its trade policies have been called into question, with

countries such as the United States accusing China of unjust trade practices such as

intellectual property stealing and extra steel output.

In contrast, India has adopted a more conventional capitalist economic strategy.

India has grown closer to the United States under the Trump administration, as Indian

leaders are concerned about China's rising power.

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

have diverged significantly. In contrast to China, which continues to support a

military economy and occasionally employs capitalism, India is heading toward a

more free-market system. They function under drastically dissimilar political and

economic frameworks and seek various global goals. It is likely that once they attain

superpower status, they will become more adversaries than allies.

It is extremely important that China and India become major players in the world

political economy of the twenty-first century. 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 report argues that the most important development in the global

political economy of the twenty-first century will be the ascent of China and India.

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 illustration of China's economic change is the creation of special economic

zones (SEZs) in the 1980s. These zones allowed China to test market-driven policies

while also attracting foreign investment. The success of these SEZs resulted in the

nationwide expansion of market-oriented reforms, which ultimately contributed to

China's accelerated economic growth.

The currency crisis of 1991 is another example supporting India's economic

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

implement extensive economic reforms. These reforms included lowering the fiscal

imbalance, relaxing restrictions on foreign investment, and privatizing some public-

sector enterprises. India's real GDP per individual is now three and a half times

greater as a result of these changes, and the country has climbed to third position in

the world in terms of buying power parity.

Foreign policy-wise, China's assertiveness in territorial disputes with neighboring

nations and the One Belt One Road initiative across Eurasia demonstrate its rising

status as a rival superpower to the United States. 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).

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.