07 October 2011


Three observations: Environmental pollution and devastation are so egregious in China they are already a drag on its economy. Human health is significantly impaired and will grow worse, requiring huge spending in health care and environmental remediation. India might grow its economy differently, without the worst of the pollution industries.

The transition to democracy in China is a giant question--about how it will play out. Already Chinese citizens launch protests at polluters who pay off local Party functionaries to bypass environmental regulations. The Chinese governmental system is corrupted at the local level and is the biggest complaint by citizens. So far, the Chinese economy has done well under the Chinese governmental system ("What does it matter the color of the cat, as long as it catches mice?" goes the big-poster slogan by Deng Xiao-Ping), but the future interplay of government (a one-party system) and the capitalistic economy is an unknown. Much instability could result, with capital fleeing the country. India, the world's largest democracy, could end up much more stable, although it has its sectrian troubles.

China is experiencing a worrisome aging of its population, and, I believe, will grow older in average age the fastest in the world, due to the demographic successes of its two-child policy (which it has loosened over the last decade). China's dependence ratio, then, will soon be a huge drag. Too many old people! India sits at a different, earlier, point along the demographic transition, so will have more workers longer than China (although India is in the midst of a population explosion it might not be able to handle well--too many young people!).

How to add up the pluses and minuses of China and India? Seems India looks better because of environment, democracy, and demographics.

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