Demographics put India in front of China – one day
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Demographics put India in front of China – one day

China has long been seen as the king of the developing world, and the second most powerful country on the globe after the U.S. But that may be set to change. For many years, China has boasted the world’s largest population. But new figures suggest that India may have overtaken it, with 1.33 billion people against China’s 1.30 billion. Digging into demographics, it is also true that India’s population doesn’t face the same threats China’s does. Due to the one-child policy (now retired, and replaced with a two-child policy that hasn’t really caught on) China’s population is aging far more rapidly than that of its Asian neighbor.

Has India overtaken China in population earlier than expected?

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 You only need to look across the water to Japan to see the difficulties that an aging and shrinking population presents: growth becomes elusive. Unlike their Chinese peers, Indians are younger, having more children, and better balanced between male and female. In China, not only are their too few young people, but there are too few women: under a one-child policy, many low-income agricultural workers felt pressure to have a son instead of a daughter, who could contribute to their financial stability in old age. This, of course, leads to its own social and economic problems.

The effects of a younger population may already be being felt. India is predicted to exceed 7% growth this year, while China’s official growth target is 6.5%. However, this alone shouldn’t be cause for concern in Beijing: the Chinese economy is five times larger than the Indian economy meaning that – despite the differential in growth rates – the gap between the two is actually increasing rather than shrinking.

Part of the reason India lags behind China is that the latter country has many valuable things in place that the former country doesn’t. China has better infrastructure – roads, railways, and basic sanitation – and it has better education. In China, 5% of the population is illiterate. In India, that figure is 30%.

Despite the gulf between the two nations, underlying signs suggest that India is on the rise – or, as many Indians claim, the last 30 years were Chinese; the next 30 will be Indian. Whatever the timeline, and the specific size of economies, populations, and militaries, one thing is quite clear: there will come a time when these are the world’s two superpowers.

Disclosure

The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.


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