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Asian Perspectives Global Issues
WORKING PAPER
FGI-2012-2
Economic Growth Patterns and Strategies in China and India: Past and Future
Louis Kuijs
September 2012
Fung Global Institute Cyberport 1, Level 12 100 Cyberport Road Hong Kong Tel: (852) 2300 2728 Fax: (852) 2300 2729 www.fungglobalinstitute.org
The Fung Global Institute Working Paper Series presents the findings of original and professional research-in-progress on questions and topics that are relevant to the Institute’s research themes. Written by FGI researchers and, sometimes, researchers from other institutions, the papers aim to get the findings out for critical review and feedback. The views expressed in the papers are those of the authors and do not necessarily reflect those of the Institute, its Board of Directors and/or its Academic Board. They carry the names of the authors and should be cited accordingly.
ABSTRACT
This paper, written as part of the Fung Global Institute’s research project on the Evolving Growth Models in China and India, is a first step in exploring part of the project’s research scope. It tentatively characterises the existing economic growth patterns and problems in China and India; summarises how governments want to adjust their growth strategies; introduces some key features of the policymaking process and some of the institutional and political economy problems; and sketches some tentative economic scenarios. China’s investment and industry-heavy growth has allowed for steady growth but has also led to imbalances. India’s growth has trended up, but governance issues are constraining further progress. Meanwhile, expectations and demand have run ahead of supply in recent years, leading to macroeconomic tension. Both countries want to adjust their growth patterns, as reflected in their 12th five-year plans (5YPs). China wants to re-balance growth towards consumption and services. It also wants to upgrade its industrial structure. This calls for an extensive
WORKING PAPER
FGI-2012-2
Economic Growth Patterns and Strategies in China and India: Past and Future
Louis Kuijs
September 2012
Fung Global Institute Cyberport 1, Level 12 100 Cyberport Road Hong Kong Tel: (852) 2300 2728 Fax: (852) 2300 2729 www.fungglobalinstitute.org
The Fung Global Institute Working Paper Series presents the findings of original and professional research-in-progress on questions and topics that are relevant to the Institute’s research themes. Written by FGI researchers and, sometimes, researchers from other institutions, the papers aim to get the findings out for critical review and feedback. The views expressed in the papers are those of the authors and do not necessarily reflect those of the Institute, its Board of Directors and/or its Academic Board. They carry the names of the authors and should be cited accordingly.
ABSTRACT
This paper, written as part of the Fung Global Institute’s research project on the Evolving Growth Models in China and India, is a first step in exploring part of the project’s research scope. It tentatively characterises the existing economic growth patterns and problems in China and India; summarises how governments want to adjust their growth strategies; introduces some key features of the policymaking process and some of the institutional and political economy problems; and sketches some tentative economic scenarios. China’s investment and industry-heavy growth has allowed for steady growth but has also led to imbalances. India’s growth has trended up, but governance issues are constraining further progress. Meanwhile, expectations and demand have run ahead of supply in recent years, leading to macroeconomic tension. Both countries want to adjust their growth patterns, as reflected in their 12th five-year plans (5YPs). China wants to re-balance growth towards consumption and services. It also wants to upgrade its industrial structure. This calls for an extensive
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