India will soon surpass China as the most populous country in the world: In fact, it will do so by the summer of this year. When that happens, it will be the first time in centuries that China does not have the world’s largest population. This milestone will focus everyone’s attention on India’s potential to become a global power, and on the significant challenges it will have to face moving forward.
China’s economic and geopolitical rise over the past few decades has changed the world. If India can use its size to catch up, the world would change again.
China, today, is vastly richer than India, but that’s a relatively recent phenomenon. In the late 1970s, India was more affluent (based on economic output per person). Since then, the two countries have followed very different paths.
In the late 1970s, under Deng Xiaoping, China began to open its economy to market forces and foreign investment. It moved away from the inefficiencies of state-run communism. However, it did so in a measured way, rather than fully embracing laissez-faire capitalism. China maintained trade protections that helped its companies grow. In exchange for allowing foreign companies to build factories, China restricted those companies’ ability to sell goods in China and required them to share technology with local companies. This mix of market capitalism and government regulation was the same one that other countries have used to industrialize, including the United States long ago.
The strategy worked phenomenally well. Hundreds of millions of Chinese citizens moved from poor, rural areas to take up factory jobs in cities. The resulting decline in the country’s poverty rate may be the largest in human history.
India was never a communist country, but it did have a weak socialist-style economy in the 1970s. However, India was slower to modernize than China. Mujib and Alex write that, “India started opening its quasi-socialist economy nearly a decade later than China. Its approach remained piecemeal, constrained by tricky coalition politics, and the competing interests of industrialists, unions, farmers and factions across its social spectrum.”
India’s lag allowed China to grab a “first-mover” advantage. By the 1990s, China’s manufacturing sector was developed enough to be much more efficient than India’s. Even though wages were somewhat lower in India, many foreign companies chose to locate in China.
An additional factor was the Chinese government’s aggressive investments in roads, airports, rail networks and other infrastructure. Transportation in India tends to be far less efficient.
India’s more recent leaders have absorbed this lesson, and tried to catch up, spending large sums on infrastructure. They have made significant progress, even though China remains far ahead.
Another factor is education. China’s population has long been more educated than India’s, with higher literacy rates, and larger numbers of people completing grade school, high school and college. Research has confirmed the obvious, educated people make for more productive workers in both white-collar and blue-collar jobs. Importantly, the Communist Party’s focus on learning included both girls and boys.
India, by contrast, has large gender gaps in literacy and educational attainment. This contributes to employment gaps between men and women. Only about one-fifth of Indian women work in a formal job.
According to Poonam Muttreja, the executive director of the Population Foundation of India, a research group, “In terms of education, employment, digital access and various other parameters, girls and women do not have equal access to life-empowering tools and means as the boys and men have. This needs to change for India to truly reap the demographic dividend of a large population.”
There is also another major demographic divide between India and China, and this works in India’s favour: India has a far younger population; 42% are under 25 years old. China’s population is aging rapidly, and declined last year for the first time since the 1960s. The World Bank projects that China’s working-age population will fall to 600 million by 2050, and India’s to rise to 800 million. The demographic dividend gives India a chance to expand both its economy and its global influence. The big question is whether it can do so.
Indian leaders are proud of their country’s status as the world’s largest democracy, and India’s relations with the United States are better than with China. In the continuing global competition between democracies and autocracies, India could be a key player. However, current Prime Minister Modi’s continuing crackdown on dissent and his embrace of strongman tactics may indicate that he thinks China’s autocratic model would be better for India than the U.S. democratic model: his leanings that way could just reflect his personal autocratic power ambitions. However, in either case, the potential loss of India’s democracy would be a serious blow to world democratic systems and a serious advantage to the world’s autocracies. A sobering thought for the West.