'Chindia' threatens economic order
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'Chindia' threatens economic order

The 'China-India' juggernaut will be a $16 trillion economy - on a 'nominal' basis - by 2020, writes Arun Kumar.

india Updated: Oct 15, 2006 23:10 IST
Arun Kumar

'Chindia' is threatening the world's economic pecking order. The 'China-India' juggernaut will be a $16 trillion economy - on a 'nominal' basis - by 2020, predicts CLSA, a leading international securities research firm.

A single dollar fetches much more in India or China than in the United States. If, instead of 'nominal' basis, the 'purchasing power parity' (PPP) basis is used, Chindia's GDP is already 20.31 per cent of the world's, only slightly lower than the US's 20.34 per cent share. In absolute terms, the combined GPD was $ 3.1 trillion in 2005. But if adjustment for PPP is made, Chindia's GDP is already a whopping $ 12.4 trillion.

Here are some CLSA projections of what is to come:

By 2020, Chindia will have one-third of the world mobile subscribers and a $100 billion mobile handset market. Its packaged food market size will be $480 billion, which is one and a half times the present US market and five and a half times the present United Kingdom market. The aggregate of bank loans in Chindia will be $9 trillion in 2020 - twice the current GDP of Japan.

The annual insurance premium currently collected in India is $23 billion, which is expected to increase ten fold to $ 239 by 2020. Insurance penetration will rise from three per cent to seven per cent of the population. In the same period, China’s insurance premium will rise to $863 billion from the present level of $60 billion.

India’s software and BPO exports are set to reach $60 billion by 2010, up from $24 billion in 2005. China’s growth has primarily been investment-led, which will continue to drive it.

"Since FDI norms have been relaxed in India to attract investment, and the Chinese SEZ model is being adopted to speed up industrial growth, India is the case for investment. Schemes like Bharat Nirman with Rs 1,74,000 crore investment in the next five years, will give a fillip to rural infrastructure,” the report says.

In fact the per capita consumption of some key commodities clearly reflects that Chindia will be a gigantic markets. The per capita consumption of steel is expected to nearly double to 270 kg in 2020 from the current level of 146 Kg, as against the world average of 157 Kg. Similarly, per capita cement consumption in Chindia will increase to 696 Kg

Companies like Reliance, Bharti Airtel, ICICI Bank, BHEL, Hindustan Lever and Maruti from India and PteroChina, China Mobile, China Life, Datang Power Angang New Steel, and Shanghai Electric will be top the Chindia players in the emerging global order.

First Published: Oct 15, 2006 22:42 IST