Don’t count out India for Asia’s top economy – by Gwynne Dyer (Sudbury Star – May 7, 2015)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The picture of the two Asian giants that most people carry around in their heads shows China racing ahead economically while India bumbles along, falling ever further behind.

People even talk about the 21st century as “China’s century”, just as they called the 20th century the “American century”. But it may turn out to be only China’s quarter-century.

The headline economic news this year is that India’s economy is growing faster than China’s. Not much faster yet, according to the official figures — a 7.5% annual rate for India vs. 7.4% for China — but there is good reason to suspect that the real Chinese growth rate is considerably lower than that.

Anybody who goes to both countries will see that India has a huge amount of catching up to do. The contrast in infrastructure is especially striking: China has 100,000 kilometres of expressways (freeways, motorways); India has only 1,000 km.

The differences in income and productivity are also very big: Gross domestic product per capita in China is between three and five times higher than in India, depending on how you calculate it.

But that is a snapshot of now. It was very different 35 years ago, when per-capita income in India was still higher than it was in China.

And it may be very different 25 years from now, if India’s economic growth rate is surging ahead of China’s.

There is good reason to believe that it is, because China’s declared growth rate for this year is pure fiction.

China avoided the global recession after the 2008 crash by opening the credit taps to full and embarking on the largest spending spree on infrastructure (roads, housing, railways and airports) that the world has ever seen.

But capitalist economies cannot avoid recessions forever.

The country is now full of empty apartment buildings, the private debt load has doubled in five years and the recession is coming.

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