China May Have Technological, Economic Edge Over India in 2025, but Also Demographic Disadvantage

FOR RELEASE

Monday
August 22, 2011

As India and China continue to grow in prominence, each nation has certain advantages, but neither one is primed to have clear across-the-board competitive advantages over the other, according to a new analysis by RAND Corporation researchers.

While India's prime working-age population will overtake that of China in 2028, China has advantages in science and technology, as well as in developing its national defense capabilities, according to the report.

But India's more open and flexible political structure may allow it to move nimbly in making adjustments to its policies and thereby improve its relative performance, perhaps providing it with an advantage over China.

"Because of their population size and tremendous growth, India and China are both nations to watch," said Charles Wolf Jr., lead author of the study and a senior principal researcher with RAND, a nonprofit research organization. "What happens in these two countries as they continue to grow will have major repercussions in the rest of the world."

The RAND study assesses the relative attainment and prospects of China and India through 2025 in four areas: demography, macroeconomics, science and technology, and defense spending and procurement. Researchers say understanding the nations' relative standing on these issues will have an effect on potential cooperation and competition between the two countries, and may assist policymakers in other countries in developing policies toward the two nations.

China and India have the world's largest populations, with India's rate of population growth about twice that of China's. India's total population will equal China's in 2025—each will have an estimated 1.4 billion people—and is expected to exceed China's population thereafter. In addition, India's prime working-age population will overtake China's in 2028.

While the Chinese public is aging faster than in India, China's population is healthier, has access to a better-developed health care system, and has higher levels of literacy and education, according to the study. Both countries have gender imbalances caused by historical preferences for males, which could generate social pressures resulting from having populations with significantly more men than women in certain parts of the two countries.

The growth rate of the gross domestic product in each of the nations from 2020 to 2025 is expected to be about the same—5.7 percent in China and 5.6 percent in India. China's current overall GDP is about three times larger than India's, and by 2025 the difference between their two GDPs is estimated to be $4.4 trillion annually.

China comes out ahead in the science and technology field, with more full-time science and engineering researchers, more people with science and engineering doctorates, and more patents and academic journal publications. However, the quality (measured as employability) of graduate engineers from China is 60 percent lower than those from India, according to a survey of multinational businesses.

Estimating defense spending by each of the two nations is difficult, given gaps in information about the two countries. However, methods used by Wolf and his colleagues to make such estimates suggest that China's spending on defense was three to six times larger than as India's.

Researchers conclude that prospects for India to enhance its competitive position with China are better than China's chances to do the same, because India's political-economic system allows a greater degree of economic freedom and provides an environment more conducive to entrepreneurial, innovative and inventive activity. That flexibility may favor India's position in the long-term competition between the two countries.

The study, "China and India, 2025: A Comparative Assessment," can be found at www.rand.org. Other authors of the study are Siddhartha Dalal, Julie DaVanzo, Eric V. Larson and Harun Dogo, all of RAND; Alisher R. Akhmedjonov, assistant professor in the economics department of Zirve University in Turkey; and Sylvia Montoya and Meilinda Huang, formerly of RAND.

Research for the study was sponsored by the director of net assessment in the Office of the Secretary of Defense and conducted within the International Security and Defense Policy Center of the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies and the defense Intelligence community.

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