India Will Beat China In GDP Growth In 2 Yrs: Reliance Chairman

[J-10]

http://au.news.yahoo.com/051030/3/wkxj.html
India Will Beat China In GDP Growth In 2 Yrs: Reliance Chairman
Monday October 31, 10:25 AM

BANGALORE, Oct 31 Asia Pulse - Reliance Industries Chairman and Managing Director Mukesh Ambani on Friday said India will overtake China in GDP growth rate within the next two years.

"I believe that over the next two years...2006 or 2007, India will surpass China in terms of its annual GDP growth rate and consistently maintain that", he said in an address on the occasion of the 32nd Foundation Day of the Indian Institute of Management, Bangalore.

This would be a historic moment, he said. "For 15-20 years, we have been talking only about China. I am telling you by the time you enter the real world (professional career), India has absolute potential to surpass China. Not only that, over the next two decades...(India will be ahead of China)".

Noting that when he joined Reliance around 25 years back, opportunities for young people were limited, he said: "In 25 years, things have transformed and today, India is becoming one with the world.

"You can switch your career paths without a sense of anxiety," he told the students, pointing out that he, a chemical engineer, built infocomm business in the year 2000.

"There is excitement in the air", Ambani, who is the Chairman of Board of Governors of IIMB, said.

"Unlimited opportunities loom large on the horizon. That does not mean that the path ahead is easy. In fact, it's going to be full of challenges," he cautioned and exhorted the students to continuously renew knowledge and competency, nurture a global mindset and learn to adapt to different social and cultural environments.

[rajkhalsa]

I wish India the best but I think that this is too optimistic. I don't see how anyone can quote evidence to make a solid prediction like that

[liberation]

According to a prominent Indian politician India will be fully developed by 2020. This is a ludicrous thing to say considering that India only has a per capita income of US$600 per annum.

I hope India does overtake China in terms of economic and military strength, but this isn't likely to happen while India has an expanding trade deficit and slower economic growth than the PRC which already has two-and-a-half times India's GNP.

Good luck to India, but China is still walking all over them economically and, to a lesser extent, militarily.

[Flagg]

Rajkhalsa and Liberation,

I think you may have missed the most relevant point:

We're talking about GROWTH RATE.

The odds are actually in India's favour for accomplishing this.

China's economy is twice the size of India's. The larger China's economy gets, the more "gravity" kicks in....the bigger an economy gets, the harder it is to maintain a high growth rate.

So India has the advantage of having a smaller economy and lower per capita GDP to win the GDP growth "game". This could potentially result in India having a higher GDP growth % than China for decades and still not equal the size of the growing Chinese economy.

Also, India's service based economy is likely to generate higher returns faster requiring less capital to do so than China's more industrial based economy.

At the end of the day....both countries are likely to grow at a much higher rate than the global average for the next few decades.

If it comes to investing....I don't think you could go wrong with either as long as your time horizon is measured in decades.

But if I had to choose, I'd choose India's democracy, common law legal system, and service focus(with a crap infrastructure downside) over China's massive manufacturing scale and "China price"(with a complete lack of democracy, human rights, no 1st world legal system, or respect for intellectual property downside).

[catalyst]

Good post Flagg....

[liberation]

Japan and South Korea do not have rule of law as the western world knows it yet they are rich, technologically advanced countries. India's fixation with its civil service and judicial system is the torpid colonial legacy of the Raj, red tape clogging up the courts to the extent that it may take several years for a case to be heard let alone resolved. As for intellectual property rights and patency laws, they will be as good as dead in the coming decades; The Chinese don't care for them and any irate American administration that wants to initiate a trade war with the worlds greatest manufacturing power over copyright violations will probably come of second best.

China produces 90% of its wealth through internal trade; it doesn't need FDI any more than Japan did during its heady growth phase between the 1950's and 70's. India on the other hand cannot manufacture its way out of poverty so it must live of the crumbs of the service sector with its no promotion/payrise call center culture and lack of investment in harbours, highways and an assortment of other critical infrastructure essentials.

Any spectacular economic growth India experiences will be short term and weighed down by a child malnutrition rate of 52% and an illiteracy rate of 45%, produced by a rigidly stratified caste bound culture that spends all its resources educating Brahmins and condemning lower castes to destitution and ignorance.

[Flagg]

Japan and South Korea do not have rule of law as the western world knows it yet they are rich, technologically advanced countries.

The level of endemic corruption that exists there s significantly lower than in China. If the choice is between a country with a respected common law system and one that has a corrupt and highly politicized system, the answr is easy.


India's fixation with its civil service and judicial system is the torpid colonial legacy of the Raj, red tape clogging up the courts to the extent that it may take several years for a case to be heard let alone resolved. As for intellectual property rights and patency laws, they will be as good as dead in the coming decades; The Chinese don't care for them and any irate American administration that wants to initiate a trade war with the worlds greatest manufacturing power over copyright violations will probably come of second best.

Answering the IP crisis with a "get over it" attitude and just accepting parasitic countefeiting is oversimplistic...without founders rights and profits, there will be no founders.

China produces 90% of its wealth through internal trade;

90% internal?!? I think that's a bit of a stretch...China would be doomed if it's exports collapsed in the short-term.....period

it doesn't need FDI any more than Japan did during its heady growth phase between the 1950's and 70's. India on the other hand cannot manufacture its way out of poverty so it must live of the crumbs of the service sector with its no promotion/payrise call center culture and lack of investment in harbours, highways and an assortment of other critical infrastructure essentials.

Do you have any hands on experience with manufacturing and services?

Manufacturing is extremely capital intensive...services are not. Deploying capital in services has, in my experience, offered a significantly greater ROI sooner and at a perceived lower risk than ANY manufacturing operation..legal ones that is. Manufacturing today is an expensive race to the bottom to see who can offer the cheapest fake rubber dog ****e.....services(where wages are the single greatest portion of overheads) offer even greater competitive advantage over the wealthy west. I think it's safe to say that an Indian accounting CPA with US customers will contribute more with less deployed capital at lower risk than a Chinese mechanical engineer making counterfeit widgets.

Any spectacular economic growth India experiences will be short term and weighed down by a child malnutrition rate of 52% and an illiteracy rate of 45%, produced by a rigidly stratified caste bound culture that spends all its resources educating Brahmins and condemning lower castes to destitution and ignorance.

?!?! How ironic, you could very well be talking about China's nearly half billion dirt farmers in the same boat, but with a bigger hole in said boat(a big demographic pension black hole due to China's longstanding One Child policy).

[Esszett]

Japan and South Korea do not have rule of law as the western world knows it yet they are rich, technologically advanced countries.
I think you are wrong on that.
AFAIK do the Japanese use a derivate of the German civil law since early 20th century (German BGB was released in 1900).
Don't know about South Korea though.

EDIT: There are also influences of French law in the Japanese civil law.

[ed316]

"Japan and South Korea do not have rule of law as the western world knows it yet they are rich, technologically advanced countries."-Liberation

What Islamic paradise have you been living for the past 50 years. No rule of law, I guess they been like Somalia since the end of WW2.

[Wodan]

I think you are wrong on that.
AFAIK do the Japanese use a derivate of the German civil law since early 20th century (German BGB was released in 1900).
Don't know about South Korea though.

Well many parts of the Bürgerliches Gesetzbuch, aren't typical western (meaning they arent "roman" law), as example there are many parts of it, which come from the Sachsen Spiegel, which is over 1000 years old, and has germanic law in it.


Nicht nur in Redewendungen, auch in unserem heutigen Recht lassen sich Verbindungen zum mittelalterlichen Sachsenspiegel finden. Beispiele für Parallelen finden sich im Erbrecht, Nachbarschaftsrecht, Straßenverkehrsrecht oder Umweltrecht (Immissionen). Das bekannteste Beispiel aus dem Privatrecht ist wohl der sogenannte Überhang und Überfall. Das Überhängen von Bäumen und das Durchwachsen von Wurzeln über die Grundstücksgrenzen beziehungsweise das Herüberfallen von Obst in des Nachbarn Garten muss schon vor 800 Jahren zu Rechtsstreitigkeiten geführt haben. Interessant hierbei ist ein direkter Vergleich der Rechtstexte von Sachsenspiegel (Ldr. II 52 §§ 1, 2 Heidelberger Handschrift) und BGB (§§ 910 und 911).

[Esszett]

Well many parts of the Bürgerliches Gesetzbuch, aren't typical western (meaning they arent "roman" law), as example there are many parts of it, which come from the Sachsen Spiegel, which is over 1000 years old, and has germanic law in it.

Well, it depends on what you define as "western law".
It is right, the German law differs substantially from Anglo-Saxon law used in the USA and other English-speaking countries.
In fact the German law has more roots in the Roman law than the Anglo-Saxon.
There are three major "law-schools" in the western world: Anglo-Saxon law and the two Roman influenced law schools; the French and the German law.
AFAIK do all western nations use one of these three law systems.

So, to say the German law (which is also used in many other countries all over the world) is not a western one would not be correct. It just differs from the Anglo-Saxon one.

[Wodan]

Well, it depends on what you define as "western law".
It is right, the German law differs substantially from Anglo-Saxon law used in the USA and other English-speaking countries.
In fact the German law has more roots in the Roman law than the Anglo-Saxon.
There are three major "law-schools" in the western world: Anglo-Saxon law and the two Roman influenced law schools; the French and the German law.
AFAIK do all western nations use one of these three law systems.

So, to say the German law (which is also used in many other countries all over the world) is not a western one would not be correct. It just differs from the Anglo-Saxon one.


you know that the Sachsen Spiegel is totally different to the roman law of its time?

[Lokos]

There are three major "law-schools" in the western world: Anglo-Saxon law and the two Roman influenced law schools; the French and the German law.

Actually, there are two. The Common Law system (used throughout the Commonwealth and in the US) and the Civil Code system, used in most of continental Europe.

Lokos

[Esszett]

you know that the Sachsen Spiegel is totally different to the roman law of its time?
Yes I do know that.
But the Sachsenspiegel is not adopted in Germany as civil law. There are just some influences from it in the BGB.
The BGB is based on Roman law with some (note: some!) influences of ancient Germanic law.
If you don't believe me do some research about it.

[Esszett]

Actually, there are two. The Common Law system (used throughout the Commonwealth and in the US) and the Civil Code system, used in most of continental Europe.

Lokos

Right, but the Civil Code system (didn't know that expression) which is mainly based on Roman law is devided in the French (based on the Code Civil) and the German (based on the Bürgerliches Gesetzbuch) "schools".
The French and the German Civil Code systems differ very much from each other even though they are both mainly based on Roman law principles.
So much that they can't really be defined as one law system (or even similar).