Will India overtake China?

According to a recent report by Goldman Sachs, India is likely to surpass China in terms of GDP growth by 2016. That is less than 14 months away if you play with dates! The forecast is that during that year, India will see growth of 6.8% whilst China will be at 6.7%. Of course, its just a prediction and its currently just one bank making it. However, a Goldman forecast usually carries a lot of weight. If you take the recent reports in China Daily this week as well they are interviewing government economists who are suggesting growth slowing to 7.3% and then reducing further as the economy shifts more away from its dependency on government funded infrastructure projects to domestic consumption and services. It’s not a big step down to at least 7.0% at the least.
 
If we think back fifteen years, there wasn’t that much between these two great nations. The terms BRICs had not yet been invented, but the world was waking up the fact that both were going to be economic giants. In that time, India has grown but the growth of China’s economy has exceeded all expectations. All forecasters agree that China is now firmly established as the second largest economy in the world but that in a few years, it will be the largest.
 
As someone who is now based in China but has taken an active interest as well as done business in India, I think there are some similarities but also some fundamental differences. A myriad of books hail stories proposing change based on the theory of the Chinese Hare and the Indian Tortoise. There may be some truth in this as the youthful age profile in India emerges as the next middle aged wealth generators and Chinas ageing population causes the strictures of age care and health to dominate economic thinking. However, both are dynamic countries full of people who aspire to great things in their personal and professional lives and will work unbelievably hard to achieve them.
 
Business leaders in India are well educated, intelligent, international in outlook and, not surprisingly, quite Western in outlook and behaviour. There is an energy and excitement around business in the major cities that is infectious. However, whilst India’s significant social issues and economic disparity have begun to be addressed, they have of course impacted on economic growth.
 
China is different and unlike anywhere else. It’s frame of reference is its own history and as my book, Thoughts of Chairmen Now shows, business thought, practice and behaviour is absolutely connected to culture. Prior to moving to China, I assumed that the norms of doing business would apply here. In particular, a glass ceiling for women, a professional hierarchy based on social class and a belief that as the fastest growing economy in the world, the west did not have much to offer.
 
All of these perceptions were wrong. Business in China is hugely meritocratic and all the business people I speak to believe that there is much they can learn from the west even though it needs to be applied and blended in a Chinese context. 
 
I am not in a position to argue with Goldman’s GDP forecasts but I honestly believe that the totality of China’s approach to business means in a macro sense, it’s in a league of its own.