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The Age if INDIA and China is Finally here.

March 25, 2008
 
 
          

 


Good Morning everybodySmile

Chindia is a term coined by Indian economist Jairam Ramesh, author of "Making Sense of Chindia," but beyond the compound name, what does Chindia mean to you?

To the uninitiated, China and India are places that are struggling to drag themselves into the 21st century, but nothing could be further from the truth.

If you haven’t seen Shanghai since the late 80s or early 90s, when the city was the poster child for socialist urban blight, a visit would quickly open your eyes. The new Shanghai has a futuristic skyline that, some say, puts Manhattan to shame. Skyscrapers have risen from the ashes and historic buildings have been restored to their former splendor. Once run-down neighborhoods are now swanky shopping districts, huge industrials 
zones and state-of-the-art R&D centers. A 287-mph bullet train whisks suburbanites from comfortable abodes to downtown workplaces. Granted, all of China isn’t as awe-inspiring as Shanghai, but things are changing throughout the country.

Now, take a trip to Bangalore, India and you won’t be nearly as impressed as you were with Shanghai, at least not at first glance. Nightmarish traffic, lacking infrastructure and outward signs of grinding poverty obscure the fact that the city is a hotbed of technological achievement. But enter any of a number of office towers and research parks that have cropped up in India’s version of Silicon Valley and elsewhere, and you’re likely to walk past someone who is quietly contributing to the success of Hewlett-Packard, Google or Cisco Systems. Really. This hub of innovation is also home to Indian companies that proudly serve such clients as GM, Boeing, Dell and American Express. You’ll find more engineers here than anywhere else in the world.

Recently, an Indian auto manufacturer shocked the automotive world when it unveiled a $2,500 sub-compact passenger car. And a Chinese computer maker defied convention when it built a $150 laptop. These achievements provide only a hint of what the unlikely pair could collectively bring to bear on the global balance of economic power in the future. It seems as though there’s no stopping a market-driven Chindia.

China and India. Never before has the economic growth of two still-predominantly poor nations been followed with so closely. Since the fall of the Soviet Union, most Americans envisioned a world that would forever be dominated by a sole superpower: the United States. No more. China’s supercharged economic growth (9.5% a year for the past 20 years) has transformed the Middle Kingdom into a powerhouse to reckon with and India is on track to follow in China’s footsteps. Most economists say China and India, without much contrived effort on their part, have just the right mix of fundamentals to maintain growth in the 7% to 8% range for the next several decades.

No matter what type of business you’re in or work you do, it’s difficult not to notice the impact being made by the Asian giants. It is apparent not only in the flood of inexpensive and high-tech products and outsourcing of previously domestic-handled services, but also in the trade imbalances and global competition that is often the subject of international news coverage.

China and India have economies that compliment each other’s strengths. While China has honed its skills in mass manufacturing, India specializes in information technology. As an example of the strength that the Chindia economy could someday possess, consider the following example. In joint ventures between Indian and Chinese IT service companies, Indian firms would bring to the table English-language skills, world-class programming and software expertise, and a reputation for excellence in the global marketplace. Chinese partners could take advantage of an almost limitless supply of competent, low-wage staff and vast experience working with clients and partners in Japan, South Korea and other East Asian countries.

Without a doubt, the two economies will be the dominant growth stories in the coming decades. By 2015, China’s GDP will surpass $6 trillion while India’s is on track to reach the $2 trillion mark, driven largely by an advantageous combination of favorable demographics, economic reforms and the tide of globalization. Barring catastrophe, within 30 years India will overtake Germany as the world’s third-largest economy and in 40 years China could surpass the United States as the world’s largest economy. The worldwide economic and political ramifications are undeniable. While the positives of this marriage outweigh the negatives, both countries face serious challenges ahead at this critical point in time. Both nations will need to reevaluate their growth models and initiate difficult policy reforms to keep their economic growth on track.

Ironically, perhaps each of their respective greatest challenges has historically been the secret to the others’ success. China’s growth has been fueled by investment, while India’s has been led by consumption. If they continue to work with and learn from each other, China and India have the size and dynamism to not only transform the global economy, but to shape the worldwide investment landscape throughout the remainder of the century. The closest parallel to the widespread impact of their emergence (and merging) is the height of the Industrial Revolution in 19th-century America, when a huge economy with entrepreneurial drive led the United States to the forefront of agricultural, industrial and technological achievement.

While the bilateral economy of the two nations is still in its embryonic stage, most experts agree that China and India’s growing integration translates to unprecedented potential for investors seeking high-growth emerging markets.

Chindia’s economic ascendancy provides one of the best opportunities in today’s competitive, globalized world. 

                                                  Anurag

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