Why China is so ahead of India?
People often ask 40 years ago China and India had almost similar economy. So how China went ahead. I just want to describe below points -
1. India by demographics is much more complex than China, though almost same population India has more race, languages and religion. China is 90% Han population. This means India's ethnic and religious diversity is more than 4 times that of China. Hence it's tough to manage the Indian population.
2. India went through long 200 years (1757-1947) of British Imperialism, where in China "Qing dynasty" ruled there until 1912. Then came KMT and CCP hence China is running through a smooth transition (despite the civil war there was an economic structure), where India's economic backbone was destabilized long back due to roughly 45 trillion USD was looted from India.
3. China's economic reform started in the hands of Deng Xiaoping (1978) where the same change happened in India in 1991 after the fall of close ally Soviet Union and the Forex Reserve went historic low. (The then PM P.V. Narasimha Rao and Finance Minister Manmohan Singh were the key reformers). So there is roughly 15 year lag.
4. Chinese development is pretty smooth cause Government decision is the last one. Barely you can see people protesting against Governments decision. Example - For making 3 Gorges Dam in China, roughly 1.2 million people are displaced where as in similar project (Sardar Sarovar Dam) in India took long time due "Narmada Bachao Andolan" ("Save Narmada Protest"). Land acquisition is never an issue in China.
5. Corruption exists in China too. Infact current "Corruption Perception Index" [2019], both China and India ranked 80th position. But the corruption in India is deep rooted where as in China there is strict judicial system to minimize the issue. More people are executed in China than anywhere else in the World.
6. Chinese state can control the news. So when all bad things are filtered out, an outsider only see good things of a country. But one positive thing is as one party rule, any 5 year plan or long term plan is mostly completed within time. Whereas in Indian Democracy, the next govt may not show interest by any project happened during previous govt which causes delay.
7. China by size is 3 times bigger than India where majority of population lived in the Eastside of Heihe - Tengchong line (mostly the basin of Yangtze, Huang He and Pearl River delta). The western part of China mainly Xinjiang, Gansu, Qinghai, Tibet, Inner Mongolia has rich natural reserves (highest deposit of Rare Earth Material). This natural reserve is fueling the manufacturing industry in China. India too has reserves in Chota nagpur and Deccan plateau but that is much less compared to China.
8. Chinese entreprenuers after completing their education returned to their motherland and serve. Robin Lee, CEO of Baidu, got his Masters from University of Buffalo. Charles Zhang or Zhang Chaoyang, CEO of Sohu Inc., got his PhD from MIT. Mu Yan, founder of matchmaking site Baihe.com, completed his PhD also from MIT. Kai-Fu Lee, father of China's Artificial Intelligence and founder of Sinovation Ventures, got his PhD from Carnegie Mellon University. On the other hand, the CEO of Google (Sundar Pichai), Microsoft (Satya Nadela), IBM (Aravind Krishna), Palo Alto Networks (Nikesh Arora), Mastercard (Ajaypal Singh Banga) were born and brought up in India but serving in USA. Even the father of Pentium Chip (Mr. Vinod Dham), USB (Mr. Ajay Bhatt) are also born in India but invented these in USA. One major issue being the lack of opportunities and encouragement in India.
9. The most vital point is - There is a huge gap in skilled labour, education, bureaucracy, scalability, manufacturing environment between India and China.
- Scalability - When you are producing any item/product on large scale, the cost of the product tends to reduce.
- Environment - Take mobiles/smart phones as an example. In many country they just assemble the products but import the OEMs from China. Where as in China, the OEM production unit and assembly units are in close vicinity. So the production cost becomes less.
- Skilled labor - Even though the wages are more, the Chinese labors in general is more skillful than their Indian counterpart. Companies prefer skilled labor with high efficiency.
- Transportation - China probably has World’s 2nd longest 6-lane highway in the World. The smooth transportation network makes it hassle free to move any product from remote part of China to the nearest port.
- R & D - Though this point is slightly out of the original question, China invests roughly 8 times (USD 370.6 Billion) in R&D than that of India (USD 48.1 Billion). When you are investing more money, you tend to produce better product with state of the art technologies. This makes Chinese product fits compare to the cheap products of other country.
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