Can India learn from China?

China's rapid development since 1978 shows why govt support should be strongly directed at new starters and R&D

- 

In 1978, a new development approach was introduced by Deng Xiaoping in China. A centrally planned, public-sector oriented and inward-looking economy was transformed to one that relied on attracting foreign corporate investors, promoting local private corporations, and rapid export growth. In India, the major policy shift came later in 1991 with delicensing, major financial sector reforms, and enhanced links with the global economy.

The difference between the two economies has widened since these basic policy shifts. Until 1978, China's per capita gross domestic product (GDP) was below India's. Thereafter, it rose rapidly and had reached twice India's per capita GDP by 1992. This widening of the per capita GDP ratio continued even after India's liberalisation started in 1991 and tripled by 2000, quadrupled by 2007, was fivefold by 2012, and about five-and-a-half times in 2024. It is widely believed that China's growth forging ahead of India's growth is largely because of the exceptionally rapid expansion of the manufacturing sector, with its share in global manufacturing shooting up to 28-30 per cent in 2023, while India's share was just 3 per cent.