So there?s another India-China comparison now: beating America, India has the second-largest wireless network after China. Hindi-Chini comparisons are the stuff of policy and seminar discourses. China unsurprisingly comes out better in most cases. But India has instructive advantages. This hypothesis is demonstrated even keeping aside usual data sets that favour India. Take the wireless telephony sector. China Mobile, the leading service provider alone had 306 million subscribers in 2006, which makes catching up with China a bit tough. But consider, Indian call charges are almost half those in China and returns on equity a third larger. This would seem to suggest India has a better business model. This kind of theme is repeated. China?s economy is almost three times India?s. And China towers over India in terms of infrastructure building. But guess what? India now gets more funds than China in private infrastructure projects. In foreign investment, there?s fascinating India-China data: China has higher FDI than India in absolute terms, but in terms of FDI as a share of gross fixed capital formation, India (8.7%) has overtaken China (8%). And in FIIs, while the BSE has 4,800 companies listed, Shanghai has less than 850. And India?s market capitalisation-to-GDP ratio is over 90% while in China?s case, it is less than 50%. So in terms of financial sophistication, India is probably ahead of China. This advantage makes the delay in wholesale financial reforms in India even more galling?the Chinese might catch up. In general, the Indian private sector is stronger and far more mature on the global stage?cross border mergers and acquistions by Indian companies are roughly double those made by Chinese companies, many of which are state-backed.
Okay, what about aam aadmi? China has less poverty and better education numbers. But there?s a side of this story that?s often not recognised. The share of consumption in China?s GDP is 39% while in India it is 62%. This is a huge difference?and is instructive. China has held down mass consumption and ramped up investment, especially in infrastructure and exports. India couldn?t do that even if it had wanted to because it?s a democracy. And it shouldn?t be done anyway. This is one statistic that may trouble China in coming years.
