Home

India vs. China

Economy

IndiaChina
Economy - overview

India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly less than half of the workforce is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India's output but employing less than one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services, business outsourcing services, and software workers. Nevertheless, per capita income remains below the world average. India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and served to accelerate the country's growth, which averaged nearly 7% per year from 1997 to 2017.

India's economic growth slowed in 2011 because of a decline in investment caused by high interest rates, rising inflation, and investor pessimism about the government's commitment to further economic reforms and about slow world growth. Investors’ perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilization of the rupee. Growth rebounded in 2014 through 2016. Despite a high growth rate compared to the rest of the world, India’s government-owned banks faced mounting bad debt, resulting in low credit growth. Rising macroeconomic imbalances in India and improving economic conditions in Western countries led investors to shift capital away from India, prompting a sharp depreciation of the rupee through 2016.

The economy slowed again in 2017, due to shocks of "demonetizaton" in 2016 and introduction of GST in 2017. Since the election, the government has passed an important goods and services tax bill and raised foreign direct investment caps in some sectors, but most economic reforms have focused on administrative and governance changes, largely because the ruling party remains a minority in India’s upper house of Parliament, which must approve most bills.

India has a young population and corresponding low dependency ratio, healthy savings and investment rates, and is increasing integration into the global economy. However, long-term challenges remain significant, including: India's discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, high spending and poorly targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.

Since the late 1970s, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role. China has implemented reforms in a gradualist fashion, resulting in efficiency gains that have contributed to a more than tenfold increase in GDP since 1978. Reforms began with the phaseout of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China continues to pursue an industrial policy, state support of key sectors, and a restrictive investment regime. From 2013 to 2017, China had one of the fastest growing economies in the world, averaging slightly more than 7% real growth per year. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2017 stood as the largest economy in the world, surpassing the US in 2014 for the first time in modern history. China became the world's largest exporter in 2010, and the largest trading nation in 2013. Still, China's per capita income is below the world average.

In July 2005 moved to an exchange rate system that references a basket of currencies. From mid-2005 to late 2008, the renminbi (RMB) appreciated more than 20% against the US dollar, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing announced it would resume a gradual appreciation. From 2013 until early 2015, the renminbi held steady against the dollar, but it depreciated 13% from mid-2015 until end-2016 amid strong capital outflows; in 2017 the RMB resumed appreciating against the dollar – roughly 7% from end-of-2016 to end-of-2017. In 2015, the People’s Bank of China announced it would continue to carefully push for full convertibility of the renminbi, after the currency was accepted as part of the IMF’s special drawing rights basket. However, since late 2015 the Chinese Government has strengthened capital controls and oversight of overseas investments to better manage the exchange rate and maintain financial stability.

The Chinese Government faces numerous economic challenges including: (a) reducing its high domestic savings rate and correspondingly low domestic household consumption; (b) managing its high corporate debt burden to maintain financial stability; (c) controlling off-balance sheet local government debt used to finance infrastructure stimulus; (d) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and college graduates, while maintaining competitiveness; (e) dampening speculative investment in the real estate sector without sharply slowing the economy; (f) reducing industrial overcapacity; and (g) raising productivity growth rates through the more efficient allocation of capital and state-support for innovation. Economic development has progressed further in coastal provinces than in the interior, and by 2016 more than 169.3 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of China’s population control policy known as the "one-child policy" - which was relaxed in 2016 to permit all families to have two children - is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and urbanization. The Chinese Government is seeking to add energy production capacity from sources other than coal and oil, focusing on natural gas, nuclear, and clean energy development. In 2016, China ratified the Paris Agreement, a multilateral agreement to combat climate change, and committed to peak its carbon dioxide emissions between 2025 and 2030.

The government's 13th Five-Year Plan, unveiled in March 2016, emphasizes the need to increase innovation and boost domestic consumption to make the economy less dependent on government investment, exports, and heavy industry. However, China has made more progress on subsidizing innovation than rebalancing the economy. Beijing has committed to giving the market a more decisive role in allocating resources, but the Chinese Government’s policies continue to favor state-owned enterprises and emphasize stability. Chinese leaders in 2010 pledged to double China’s GDP by 2020, and the 13th Five Year Plan includes annual economic growth targets of at least 6.5% through 2020 to achieve that goal. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. Chinese leaders also have undermined some market-oriented reforms by reaffirming the "dominant" role of the state in the economy, a stance that threatens to discourage private initiative and make the economy less efficient over time. The slight acceleration in economic growth in 2017—the first such uptick since 2010—gives Beijing more latitude to pursue its economic reforms, focusing on financial sector deleveraging and its Supply-Side Structural Reform agenda, first announced in late 2015.

GDP (purchasing power parity)$9,155,083,000,000 (2019 est.)

$8,787,694,000,000 (2018 est.)

$8,280,935,000,000 (2017 est.)

note: data are in 2010 dollars
$22,526,502,000,000 (2019 est.)

$21,229,363,000,000 (2018 est.)

$19,887,033,000,000 (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate4.86% (2019 est.)

6.78% (2018 est.)

6.55% (2017 est.)
6.14% (2019 est.)

6.75% (2018 est.)

6.92% (2017 est.)
GDP - per capita (PPP)$6,700 (2019 est.)

$6,497 (2018 est.)

$6,186 (2017 est.)

note: data are in 2010 dollars
$16,117 (2019 est.)

$15,243 (2018 est.)

$14,344 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 15.4% (2016 est.)

industry: 23% (2016 est.)

services: 61.5% (2016 est.)
agriculture: 7.9% (2017 est.)

industry: 40.5% (2017 est.)

services: 51.6% (2017 est.)
Population below poverty line21.9% (2011 est.)0.6% (2019 est.)
Household income or consumption by percentage sharelowest 10%: 3.6%

highest 10%: 29.8% (2011)
lowest 10%: 2.1%

highest 10%: 31.4% (2012)

note: data are for urban households only
Inflation rate (consumer prices)3.7% (2019 est.)

3.9% (2018 est.)

3.3% (2017 est.)
2.8% (2019 est.)

2% (2018 est.)

1.5% (2017 est.)
Labor force521.9 million (2017 est.)774.71 million (2019 est.)

note: by the end of 2012, China's working age population (15-64 years) was 1.004 billion
Labor force - by occupationagriculture: 47%

industry: 22%

services: 31% (FY 2014 est.)
agriculture: 27.7%

industry: 28.8%

services: 43.5% (2016 est.)
Unemployment rate8.5% (2017 est.)

8.5% (2016 est.)
3.64% (2019 est.)

3.84% (2018 est.)

note: data are for registered urban unemployment, which excludes private enterprises and migrants
Distribution of family income - Gini index35.7 (2011 est.)

37.8 (1997)
38.5 (2016 est.)

46.2 (2015 est.)
Budgetrevenues: 238.2 billion (2017 est.)

expenditures: 329 billion (2017 est.)
revenues: 2.553 trillion (2017 est.)

expenditures: 3.008 trillion (2017 est.)
Industriestextiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticalsworld leader in gross value of industrial output; mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizer; consumer products (including footwear, toys, and electronics); food processing; transportation equipment, including automobiles, railcars and locomotives, ships, aircraft; telecommunications equipment, commercial space launch vehicles, satellites
Industrial production growth rate5.5% (2017 est.)6.1% (2017 est.)
Agriculture - productssugar cane, rice, wheat, buffalo milk, milk, potatoes, vegetables, bananas, maize, mangoes/guavasmaize, rice, vegetables, wheat, sugar cane, potatoes, cucumbers, tomatoes, watermelons, sweet potatoes
Exports$572.073 billion (2019 est.)

$564.165 billion (2018 est.)

$509.661 billion (2017 est.)
$2.49 trillion (2018)

$2.216 trillion (2017 est.)

$1.99 trillion (2016 est.)
Exports - commoditiesrefined petroleum, diamonds, packaged medicines, jewelry, cars (2019)broadcasting equipment, computers, integrated circuits, office machinery and parts, telephones (2019)
Exports - partnersUnited States 17%, United Arab Emirates 9%, China 5% (2019)United States 17%, Hong Kong 10%, Japan 6% (2019)
Imports$624.314 billion (2019 est.)

$656.529 billion (2018 est.)

$575.121 billion (2017 est.)
$2.14 trillion (2018)

$1.74 trillion (2017 est.)

$1.501 trillion (2016 est.)
Imports - commoditiescrude petroleum, gold, coal, diamonds, natural gas (2019)crude petroleum, integrated circuits, iron, natural gas, cars, gold (2019)
Imports - partnersChina 15%, United States 7%, United Arab Emirates 6%, Saudi Arabia 5% (2019)South Korea 9%, Japan 8%, Australia 7%, Germany 7%, US 7%, Taiwan 6% (2019)
Debt - external$555.388 billion (2019 est.)

$518.34 billion (2018 est.)
$2,027,950,000,000 (2019 est.)

$1,935,206,000,000 (2018 est.)
Exchange ratesIndian rupees (INR) per US dollar -

73.565 (2020 est.)

71.05 (2019 est.)

70.7675 (2018 est.)

64.152 (2014 est.)

61.03 (2013 est.)
Renminbi yuan (RMB) per US dollar -

6.5374 (2020 est.)

7.0403 (2019 est.)

6.8798 (2018 est.)

6.1434 (2014 est.)

6.1958 (2013 est.)
Fiscal year1 April - 31 Marchcalendar year
Public debt71.2% of GDP (2017 est.)

69.5% of GDP (2016 est.)

note: data cover central government debt, and exclude debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data exclude debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
47% of GDP (2017 est.)

44.2% of GDP (2016 est.)

note: official data; data cover both central and local government debt, including debt officially recognized by China's National Audit Office report in 2011; data exclude policy bank bonds, Ministry of Railway debt, and China Asset Management Company debt
Reserves of foreign exchange and gold$409.8 billion (31 December 2017 est.)

$359.7 billion (31 December 2016 est.)
$3.236 trillion (31 December 2017 est.)

$3.098 trillion (31 December 2016 est.)
Current Account Balance-$29.748 billion (2019 est.)

-$65.939 billion (2018 est.)
$141.335 billion (2019 est.)

$25.499 billion (2018 est.)
GDP (official exchange rate)$2,835,927,000,000 (2019 est.)$14,327,359,000,000 (2019 est.)

note: because China's exchange rate is determined by fiat rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries
Taxes and other revenues9.2% (of GDP) (2017 est.)21.3% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-3.5% (of GDP) (2017 est.)-3.8% (of GDP) (2017 est.)
GDP - composition, by end usehousehold consumption: 59.1% (2017 est.)

government consumption: 11.5% (2017 est.)

investment in fixed capital: 28.5% (2017 est.)

investment in inventories: 3.9% (2017 est.)

exports of goods and services: 19.1% (2017 est.)

imports of goods and services: -22% (2017 est.)
household consumption: 39.1% (2017 est.)

government consumption: 14.5% (2017 est.)

investment in fixed capital: 42.7% (2017 est.)

investment in inventories: 1.7% (2017 est.)

exports of goods and services: 20.4% (2017 est.)

imports of goods and services: -18.4% (2017 est.)
Gross national saving29.1% of GDP (2019 est.)

31.1% of GDP (2018 est.)

31.4% of GDP (2017 est.)
44.2% of GDP (2019 est.)

44.4% of GDP (2018 est.)

45% of GDP (2017 est.)

Source: CIA Factbook