Back in August of last year, TNI described why India’s economic prospects are brighter than those of China (“Beware, China: India’s Economy Could Have an Even Brighter Future,”). That judgment seems to have been confirmed by subsequent events. As we noted at the time, “When all is said and done, the difference between India and China can be summed up in one word: freedom.”
India is now clearly outperforming the other emerging nations, particularly China, a nation hobbled by a command economy and one of the most corrupt political systems on the planet. “As Brazil, Russia and China hit hurdles, it’s the poorest member of Goldman Sachs Group Inc.’s emerging-market group that’s proving a darling of global investors,” Bloomberg News reported in February. “The International Monetary Fund is predicting India will next year grow faster than each of its BRIC counterparts for the first time since 1999.”
In January of this year, we noted that Western hopes of an economic “rebalancing” by China, from state-directed investment to a demand pull economy based upon private consumer activity, was without basis (“The False Hope of Chinese Economic Rebalancing”). India, on the other hand, has not needed to stoke private demand because it already has a vibrant private-sector economy, albeit one that still struggles with bureaucracy and official corruption on a large scale. Yet even with all of India’s structural problems, the fact that its people are free to compete economically and express themselves politically puts them light years ahead of their counterparts in authoritarian China.
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