Playing With Numbers

June 1, 2011

For centuries, China was the world’s largest economy (from tenth to fifteenth century) and if experts at the International Monetary Fund and others are correct, China will soon regain the title as the world’s largest (healthy) economy.

However, it is confusing. If we listen to The Economist in The X Factor, we are told that India’s economic growth may soon outpace China’s.

The Economist says, MORGAN STANLEY thinks it could happen in 2013; the World Bank thinks it might happen next year. Many pundits have speculated about when India’s growth might outpace China’s.

However, the International Monetary Fund’s (IMF) World Economic Outlook says that has already happened since China grew by 10.3% in 2010 and India by 10.4%.

Then from Yahoo Finance we learn the IMF says, “According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016.”

After reading the previous paragraphs, it sounds as if India will grow its economy past China and China will outgrow the United States leaving the US in third place.

In fact, India is far from growing a larger economy than China or the US.

In 2010, India’s economy ranked 10th globally or fourth depending how you stack the numbers.

India’s nominal GDP was placed tenth at $1.53 trillion, while another way of looking at the numbers says India ranked fourth at $4.06 trillion, but its public debt was $758 billion or 55.9% of GDP with $201 billion in exports and $327 billion in imports and a credit rating of $1.164 trillion.

This means India, like the US, is spending more than it earns.

China, on the other hand, had a nominal GDP of $5.88 trillion but a GDP (based on PPP) of $10.08 trillion placing it 2nd globally.  China’s public debt was 17.5% of GDP, which is a long way from India’s 55.9%.  Everything else about China leaves India far behind China’s economy.

India’s exports were more than seven times lower than China’s $1.506 trillion while its imports were almost four times lower than China’s $1.307 trillion and China has a credit rating of $8.156 trillion—much higher than India.


China is likely to resume its role as the world’s largest economy by 2015.

Any way we look at it, how can India beat China unless they are talking about the annual percent of economic growth?

Considering how much smaller India’s economy is, they would have to have a lot more growth to equal China dollar for dollar.  If India’s economy grew by 10.4% and its economy was either $1.53 trillion or $4.06 trillion (depending how one looks at it), that is still a far cry from China’s 10.3% economic growth based on a much larger GDP.

On the other hand, America, the world’s largest economy, looks like a cancer patient with six months to live.

America may have the world’s largest GDP at $14.66 trillion but having $14 trillion in public debt at 93% of GDP just about cancels that out.  Even India is doing better.

Then America’s exports were $1.280 trillion compared to $1.948 trillion for imports telling us more money is pouring out than coming in. How will America pay off its debt if losses outpace earnings?

The Economist seems to want people to think India is beating China but the numbers tell a different story. To beat China, India has to grow a much larger economy and reduce its public debt while erasing an illiteracy and poverty rate that’s embarrassing for a country touted as the world’s largest democracy.

Anyone that studies history knows that a democracy survives if the citizens are literate and understands the issues.

Discover India Falling Short

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

To subscribe to “iLook China”, look for the “Subscribe” button at the top of the screen in the menu bar, click on it then follow directions.


Mostly Free to be Poor

February 15, 2011

Riz Khan hosts a program for Al Jazeera English and in this twenty-two minute segment, he leads a discussion about the possibility that democracy hinders economic growth.

Khan asks, “Is a centralized system, such as China’s one party, better than democracy for growth?”

Both India and China became countries about the same time.  In 2008, India’s GDP was $1.16 trillion and China’s was about three times larger at $4.33 trillion.

There is a debate in India that China’s one party political system has allowed China to modernize and improve lifestyles easier and faster than India’s democracy.

His first guest speaker is Tarun Khanna, a professor of the Harvard School of Business, who does not agree with the argument that India’s democracy is the cause of slow growth.

His opinion is that democracy may be a faulty option but it is the best of the faulty options we have. However, he says it is true that India’s democracy has underperformed.

Then MIT Professor Yasheng Huang says in the last thirty years, the leadership in China has improved its decision-making and made many correct decisions regarding productivity.

A listener to the program sends a message from Facebook.  “All a country needs is purposeful leadership, security, vision, and justice for all. China has demonstrated all this, unlike India.”

Professor Huang disagrees with the Facebook comment.

Kahanna says that China’s strong leadership has been an asset and that even in the Communist Party there is a meritocracy of sorts, which is a system of advancement based on individual ability or achievement—something that India’s political system lacks at this time.

Regarding a dictatorship, Huang says a dictatorship wouldn’t work in India. The culture is too complex.

Kahanna agrees that a dictatorship wouldn’t work in India and says India has to improve its democracy.

Huang feels if China doesn’t change its economic structure and put more emphasis on private companies, India will be the better place to do business in regards to long-term growth.

Kahanna says India’s biggest challenge is to include as many people as possible to share in the economic growth and more than half of its population has been left in poverty.  He says the biggest challenge will be basic health care and education and there has to be more opportunities in India for more people. The caste system in India is also a problem. India’s politicians must stop politicizing the cast system.

Professor Huang then says that democracy is not a solution to solve all of society’s problems. There has to be more than free elections. However, an authoritarian system is also not the answer. He says, take the strengths of both India and China and figure a way to take advantage of them—to make them work.

Learn more at India Falling Short

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.


The India, China battle to eliminate poverty and illiteracy

November 2, 2010

Chris Devonshire-Ellis wrote a convincing piece at China Briefing that India‘s economic growth would speed past China in the near future. 

He says, “It (India’s) growth rate could overtake China’s by 2013… Some economists think India will grow faster than any other large country over the next 25 years.”

However, there are flaws in that opinion.

Once again, the foundation of this prediction is based on India being a democracy “where entrepreneurs are all furiously doing their own thing” while China is a culture of secrecy and censorship. Chris mentions a few of China’s other flaws too, which China is struggling to overcome.

What Chris doesn’t mention is the difference in poverty and illiteracy between India and China.

India and China both became independent about the same time—China in 1949 and India in 1947.  Due to Chairman Mao’s policies, China suffered horribly from 1949 to 1976 and little progress was made.

For China, most of the progress has taken place in the last three decades. India, on the other hand, has had more than 60 years to solve its problems.

Let’s see what each has accomplished.

The World Bank says, “that China’s record of poverty reduction and growth is enviable. Between 1981 and 2004 the fraction of the population consuming less than a dollar-a-day fell from 65% to 10% and more than half a billion people were lifted out of poverty.”

For India, the World Bank says, “poverty remains a major challenge. According to the revised official poverty line, 37.2% of the population (about 410 million people remains poor, making India home to one-third of the World’s poor people.” UNICEF shows the poverty in India to be 42%.

World Bank studies also established the direct and functional relationship between literacy and productivity on the one hand and literacy and the overall quality of human life on the other.

India’s literacy rate was about 12% when the British left in 1947. Today, literacy is 68%.

In China, literacy is more than 93% with a goal to reach 99% in the next few years.

This means that India has about 800 million literate people competing with 1.2 billion in China.

As for India succeeding, MeriNews.com says, “At a time when we (India) are poised on the threshold of becoming a superpower, the rampant malnutrition and prevalence of anemic children and women to the extent of 48 per cent of the population is a definitive indicator that we have failed as a democracy in ensuring the fundamental requirements of our citizens.”

It appears that China—with its censorship, secrecy and socialist government—has done a much better job of taking care of its citizens.

See the other posts on this topic at India Falling Short and Comparing India and China’s Economic Engines

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too. 

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.


India Falling Short

October 22, 2010

On October 13, I posted Comparing India and China’s Economic Engines, which referred to a flawed opinion piece in The Economist predicting that the future economic growth of India would eventually surpass China.

I felt that The Economist’s opinion was flawed because it was based primarily on a multi-party democracy being superior to the one-party republic in China.

However, reading that issue of The Economist painted a grim picture for India. It is as if The Economist were promising that India was going to sprout wings and fly – then the piece goes into a long list of facts that prove it cannot happen anytime soon.

The China Law Blog chastised me for being unfair to India. The Blog said, “that he wanted me to provide a super-quick summary of The Economist cover story comparing India with China, but it (I) did not,” which was correct.

In fact, I don’t see how I could have quickly summarized the complexity of India’s economy.

To create an in-depth profile of China, I’ve written hundreds of posts.  To talk about the reason India’s economy will not surpass China for a long time led to this post, which may be the longest single post I’ve written.

Sorry, it isn’t a super-quick summary. At thirteen hundred words, it’s just quick.

Next, Manjeet Pavarti challenged my opinion in a comment to the post.

It is obvious that Pavarti must be a nationalist who loves his country—an admirable trait except when a patriot is misguided and possibly misinformed.

In Pavarti’s last comment of October 16 at 01:33, he challenged my sources—a photojournalist (Tom Carter) with extensive experience traveling in China and India, and my use of evidence from The Economist.

To correct the shortcomings of the first post on this topic, I talked to Gurnam S. Brard, the author of East of Indus, My Memoires of Old Punjab. He agreed with my opinion and said there are many in India like Pavarti that refuse to see the problems that hold India back from achieving its potential.

I also talked to Alon Shalev, author of The Accidental Activist. Shalev told me of his extensive trip through India with his wife and his impressions were the same as Tom Carter and Gurnam Brard.

Next, is Foreign Policy magazine’s Prime Numbers, Mega Cities, where there are no opinions—just facts. I’m going to list “three” that are roadblocks to India future economic growth.

WATER — From National Geographic we have Mumbai’s Shadow City by Mark Jacobson—a slum holding 12 million people, who live in the middle of India’s financial capital.

Then there is Delhi with 17.3 million residents. One third of the city’s residents have little access to clean water. See Life in the Slums of Delhi, India

Foreign Policy magazine says, “In India, service delivery (of fresh water) will fall woefully short of demand in coming years across most urban infrastructure sectors.”

China, on the other hand, has long-term infrastructure projects and is drilling the world’s longest tunnel to carry water under hundreds of miles of mountains to reach Manchuria in the northeast from the Yangtze River.

Then in Tibet, China is building reservoirs to catch water from glaciers that are melting due to global warming while building villages to relocate Tibetan nomads who discover that the high altitude grasslands they once depended on to feed their herds has dried up and turned to desert due to lack of rainfall.

LITERACY — For a republic or democracy to thrive and survive the population must be literate to understand the issues and support a complex modern society.

However, only 66% of India’s 1.2 billion people are considered literate—that’s more than four hundred million people who cannot read.

In China, literacy is 93.3% up from 20% in 1978.

“Prior to 1978 … Adult literacy was given first priority in literacy campaigns designed to ‘sweep away illiteracy’ (saochu wenmang). Because 80% of adults were illiterate, they were targeted as crucial for securing new China’s economic security.”

It may sound cliché, but reading was (and continues to be) power, and leaders knew that the literate could have considerable influence.” Source: China Philanthropy

The World Illiteracy Map says, “Illiteracy is one of the major hindrances that come in the way of economic growth. Literate manpower helps a country in developing.”

POVERTY & THE MAOIST REVOLTForeign Policy magazine reports that rural poverty in India is turning a Communist Revolt in to a raging resource war. “For India this is no longer rural unrest, but a full-fledged guerrilla war.”

“Economic liberalization has not even nudged the lives of the country’s bottom 200 million people. India is now one of the most economically stratified societies on the planet… The number of people going hungry in India hasn’t budged in 20 years.…

“New Delhi, Mumbai, and Bangalore now boast gleaming glass-and steel IT centers and huge engineering projects. But India’s vaster hinterland remains dirt poor—”

China, on the other hand, has managed to contain the Falun Gong problem and the Tibetan and Islamic separatists over the objections of Western human rights activists that cannot stand how China manages unrest.

Due to what many in the West would call brutal measures, harmony and economic progress continue as planned for the vast majority of Chinese.

In addition, in rural China, “Living standards soared in the early 1980s—average incomes doubled in both the cities and the countryside, while there was a boom in both food consumption and the availability of consumer goods.” Source: Socialist Review Index.org.uk

“Growth in (China’s) peasant income, which had reached a rate of 15.2% a year from 1978 to 1984, dropped to 2.8% a year from 1986 to 1991. Some recovery occurred in the early 1990s, but stagnation of rural incomes marked the latter part of the decade.” Source: Asia Times

In fact, the last five-year plan extends electricity to rural China and subsidizes the cost of appliances for rural villages once the electricity is turned on

Tom Carter, one of my sources for this post, is currently living in a small rural village in the tea-producing region of China near Hangzhou and has internet access from a village of twenty people.

I agree that India has the potential to surpass China, but I doubt that will happen in the next few decades due to the economic long-term problems that have to be overcome.

I don’t know where Manjeet Pavarti lives, but I suspect it isn’t outside of the gleaming glass and steel cites like New Delhi, Mumbai or Bangalore.

People living inside these economic growth bubbles may have no idea how serious it is outside and probably don’t care or India would be dealing with these challenges as China has been doing since Mao died in 1976 when Deng Xiaoping and his supporters ended the Cultural Revolution and rejected Maoism.

India became a democracy in 1947, which means it has had more than sixty years to solve these problems, while China has had less than thirty since 1982 when the Republic got its new constitution.

Isn’t it ironic how the West seldom hears about India’s problems but always hears about every bit of negative news that happens in China.

See Democracy, Deceit and Mob Rule and Two Republics

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too. 

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.


Comparing India and China’s Economic Engines

October 13, 2010

The cover for The Economist of October 2 – 8, 2010, is betting on a race that cannot be won by India.


I opened the magazine and read the two pieces that the cover was about.  One is about India’s surprising economic miracle and the second piece was A bumpier but freer road.

On page 11, I read, “many observers think China has done a better job than India of curbing corruption…”

On page 77, a Western banker was quoted saying, “It’s much easier to deal with the well-understood ‘org chart’ of China Inc than the freewheeling chaos of India.”

After reading both pieces comparing China with India, it was obvious that India would never beat China economically.

The Economist wants India to win this race, because it is called a democracy as is the U.S., but what isn’t mentioned is that China is becoming a republic with a Chinese twist, which is what Dr. Sun Yat-sen wanted.

The reason The Economist is wrong about India is because America’s Founding Fathers hated democracy and they had a good reason.

The Live Journal goes into detail on this topic.  To quote the Live Journal, “It would be an understatement to say that the (U.S.) Founding Fathers hated democracy. They warned against it vehemently and relentlessly. They equated it – properly – with mob rule.

“in a democracy, two wolves and a sheep take a majority vote on what’s for supper, while in a constitutional republic (which China is becoming), the wolves are forbidden on voting on what’s for supper and the sheep are well armed.…

“The Founders, who hated democracy, gave us a free country (a republic). Our (meaning many Americans) ignorance of history, which has lead to a love of democracy, is causing us to surrender our freedoms at an alarming rate.”

Dr. Sun Yat-sen (1866 – 1925), known as the father of modern China, said he wanted to model China’s government after America but by combining Western thought with Chinese tradition.

When he said this, it was 1910, and America, by definition, was still a republic. Once you read the two pieces in The Economist, you may understand why India’s democracy cannot beat China’s evolving republic.

This topic is continued (with more details and facts) at India Falling Short

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Lloyd Lofthouse is the award-winning author of My Splendid Concubine [3rd edition]. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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