A Tale of Two Countries

Due to similarity in their economic size, population, geographical location and level of initial conditions and economic development, China and India have been popular comparators in the field of economic research (Wu 2012). However, when it became quite apparent in the 1990s that both the countries were posting relatively higher growth rates of gross domestic product (GDP), they became the subject of intense debate at the global level. Both countries, by then, had undertaken substantial economic reforms and most experts attri­buted these reforms as the underlying factors behind their faster economic growth. Most experts were also quite optimistic that both were poised for a higher growth trajectory (Panagariya 2004; Srinivasan 2006; Basu 2009). In fact, Panagariya (2004) expressed the view that India had the potential to show better growth performance compared to China. Around the same time, Bardhan (2003), however, observed that China was ready for a great leap and India was lagging behind.

With time, however, it was becoming apparent that China was growing much faster than India. While it is noteworthy that Chinese data was, strictly speaking, not comparable to those of other countries, even alternative estimates show that Chinese manufacturing growth rates were substantially higher during the second half of the last century (Nagaraj 2005). In particular, China was emerging as a major global industrial power and was capturing a higher share in global merchandise trade with every passing month, but the Indian share virtually stagnated. With this, China came to be known as the world’s factory and the largest exporter of high-technology manufactures (Chandra 2012). However, those still willing to bet on India highlighted its capability in information techno­logy (IT) and it became almost like a cliché to reckon India as the world’s software developer or the world’s back office (Nagaraj 2017; Otchia and Otsubo 2022). So much so that when Chinese President Xi Jinping visited India in 2014, he observed, “the ‘world’s factory’ and the ‘world’s back office’ could together drive global economic growth” (Nair 2014).