10 February, 2006

more on india vs china

Via Far Outliers, Fareed Zakaria hosts a discussion between two economists on the different paths China and India have taken in growing their economies. There’s not much new analysis in this for people who follow such things, but the ideas are presented clearly and are a good starting point.

Yasheng Huang: Yeah; essentially the Chinese economic miracle is a result of Chinese labor being cheap and very productive rather than the result of the capital accumulated by the Chinese capitalists and–and this is one of the principal reasons why even with eight or nine percentage growth rate every year we do not see the emergence of the world-class Chinese companies coming out of that economy.

Fareed Zakaria: Now what–why is that–because most people would say if you go to China you certainly see this. There’s a very strong entrepreneurial spirit in China, that certainly–

Yasheng Huang: That’s right; yeah.

Fareed Zakaria: You know to the extent that genetics or culture matter, they seem to be fine. I mean you look at Southeast Asia it’s all Chinese entrepreneurs.

Yasheng Huang: Yeah, absolutely; the Chinese entrepreneurs do very well outside of China. China–Chinese have this animal spirit, the business acumen capabilities and let me add a substantial engineering and scientific capability. The main issue is not a lack of these capabilities or entrepreneurial drives; the main reason is the lack of a financial system supportive of these entrepreneurial initiatives and growth. So you can get Chinese company up and running to a certain level; after that they stop growing because you need outside financing; you need outside capital; they can’t get bank loans; they can’t get listed on the Shanghai Stock Exchange or Shin Jin Stock Exchange and from that perspective Indian firms have done much better because they have access to financing; they have access to legal protection in a way that the Chinese entrepreneurs so far have lacked.

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by @ 8:21 pm. Filed under China, India, Asia, East Asia, Economy, Northeast Asia, South Asia

3 Responses to “more on india vs china”

  1. Jatin Says:

    A lose chinese financial systems helps give the Indians an edge

  2. T Yang Says:

    Yasheng huang who is a india hero knows nothing about china.

  3. Y steve Says:

    China’s really edge over india is it’s finacial system, China would bave been nothing if chinese
    financial systems were inidan’s like, however, very few people in western countries knows this,
    95% of them have made wrong prognostication on china’s economy simply becase they have wrong
    ideal about the chines bank.

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