Event ReportsPublished on Sep 04, 2019
Treat China as competitor than as rival: Business editor

The speed with which China implements political and economic decisions is mind-boggling. Also, there had been a phenomenal growth in administrational standards over the last 15-20 years. These should compel India to look at China as a competitor than as a rival, remarked S Viswanathan, Editor, The Industrial Economist, Chennai.

Initiating an interaction on “Impressions from China” at the Chennai Chapter of Observer Research Foundation on 31 August 2019, Viswanathan, who was on a recent trip to China, pointed out that in terms of area, China was much larger than India. Population-wise, India (134 crore) and China (140 crore) was almost on par. However, this was not the case 40 years ago. Some 30 years from now, China’s population would stabilize while India’s population would continue to grow, with attendant issues and problems, he said.

Economic might

Viswanathan said that China’s overall GDP and per capita GDP were five times that of India. The agriculture sector and secondary sector contribute 7.9 percent and 40 percent respectively to the Chinese economy. In India, the corresponding figures are 17.32 percent by agriculture and around 29 percent by the secondary sector. He also remarked that a shift from agriculture to manufacturing entails a good leap in earnings, savings and investments.

Viswanathan said that in 1985, India and China were on comparable terms with regards to steel production. However, in 2018, China’s contribution to world steel production had grown significantly while India’s contribution was very minimal.

He noted that China’s exports alone ($2.5 trillion) almost equalled India’s GDP ($2.9 trillion). China’s import value is around 80 percent of her exports, while India’s is around 70 percent. He stated that China’s forex surplus is more than $2.5 trillion. With such a surplus, China can think of massive capital investments in infrastructure and other major development projects. In addition, he pointed out that they can also use this surplus to fund various projects in other countries and acquire stakes in foreign companies.

Transport sector

Within China, the scale and size of infrastructural development has been massive. One example is the soon-to-be-opened second international airport in the national capital, namely, the Beijing Daxing International Airport. It can boast of the largest airport terminal in the world, he  pointed out. In terms of total railway track length, India was ahead of China at the time of Independence. Today, China has surpassed India. In fact, in 2018 alone, they added 4100 km of additional railway lines, he said.

Viswanathan also pointed out that China has over 29,000 km of 250 kmph high-speed rail lines. China’s cargo trains account for two-thirds of the world’s total freight tonnage. China has also built the world’s longest sea-crossing bridge at a cost of $20 billion, connecting mainland China with Hong Kong. However, this is open only for government vehicles and for contingencies like moving the army etc., he stated.

He also underscored the fact that Chinese companies were becoming global giants. In the year 2000, no Chinese company was to be found in the ‘top 10 companies in the world’ list. In 2010, three Chinese companies made it to the list. Today, the largest Chinese insurance company is bigger than the largest American counterpart, he added.

Energy leader

Viswanathan stated that Li Peng, former Premier of the People’s Republic of China, was instrumental in overseeing the gigantic Three Gorges Dam project. Built at a cost of $21 billion, the hydro-electric project could generate around 22,500 MW of power. China’s three largest hydro-electric power plants (in terms of installed capacity in MW) are the Three Gorges (22,500), Xiluodu (13,860) and Xiangjiaba (6448). In contrast, India’s are the Tehri Dam (2400), Koyna (1960) and Srisailam (1670), he noted.

Viswanathan also pointed out that China was a leader in harnessing the potential of solar power. According to him, China is the top in the list in terms of total installed capacity of photo voltaic cells, standing at 176,100 MWin 2018. This amounted to 32.3 percent of world’s total. In comparison, the US has an installed capacity of 62,600 MW (11.5 percent) and India, 32,900 MW (6.04 percent).

Besides these, Viswanathan said that China was also a leader in the early and quick adoption of Electric Vehicles (EVs). The country has around 99 percent of the world total of 250 million EVs. Almost all two-wheelers and buses in China are electric vehicles, he said. The government which had set a target for all cars to be electric by 2025 is now looking to advance it to 2023.

GenNext know-how

Viswanathan pointed out that after the size of its companies, China is now focusing on harnessing  next-generation technology. This, he believed, is one of the reasons for China’s increasing rivalry with the US. China has around 1.17 billion mobile-users and 829 million internet-users. In terms of the number of mobile-users, India and China are more or less equal, but not all Indians have a smart-phones yet, unlike China, he said.

R&D investments

Viswanathan also stated that the three giants Baidu, Alibaba and Tencent (otherwise also known as ‘BAT’) are building a mega-digital eco-system, and China in general is getting ready to introduce 5-G technology. China also spends mind-boggling amounts on Research and Development (R&D). He called upon the auto industries in India to ramp up efforts on their side and invest more in R&D to come up with innovative solutions, instead of expecting government’s intervention all the time.

Viswanathan said that the Indian economy could not compete with the Chinese for a few decades to come, due to the vastness in the gap between the two. He mentioned that dozens of projects in India had been stalled for years due to opposition to such projects, a lack of clear policy and political inaction. “We must dream big projects and build fast,” he said.

He believed that India needed proper and viable short, medium, and long-term plans and had to plough resources accordingly. Research too must transition from academic-orientation towards focus on goal-achievable and outcome-oriented ones, he said.

This report was prepared by Arjun Sundar, Research Associate, Observer Research Foundation, Chennai

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