India vs. China

Two countries with billion-plus populations. Two countries that, centuries ago, had by far the world's largest economies — and two countries that, for varying reasons, fell into a long economic slumber. So we wonder: A few decades into the process of economic reform, how does China's current standard of living, as measured by per capita income levels, compare to India's?

A. Same as India's
B. Double India's
C. Four times India's
D. About half the size

A. Same as India's is not correct.

Back in 1990, China and India had the same per capita income level of around $350, according to IMF data.

China embarked on its reform process in 1978, when Deng Xiaoping and a group of pragmatists undertook a series of economic liberalization efforts and strengthened China's cultural and economic ties to the West.

In contrast, India got a later start. There, economic reforms began in the mid-1980s. They accelerated in the early 1990s under Manmohan Singh — the current prime minister and then the country's finance minister. He is widely credited with laying the foundations that allowed the country to overcome its "Indian-socialist rate of growth" — a term coined by a prominent Indian economist to describe the lackluster 1.3% per capita income growth India experienced from 1951 until 1980.

B. Double India's is not correct.

By 2000, China's determined embrace of economic reform yielded impressive results in comparison to India's performance. China's per capita income that year reached $950 — slightly more than double India's $450.

The key reason for that significant difference was that China's economy grew by an average of 10.5% a year from 1991 to 2000, nearly double India's GDP growth, which averaged just 5.6%.

C. Four times India's is correct.

In 2011, China reached a per capita income of $4,800, nearly four times higher than India's $1,380 (as measured in current U.S. dollars).

In the coming decades, China's and India's responses to their divergent population trends will have a significant impact on their economic growth. India is still growing rapidly, with its population projected to expand from 1.2 billion today to 1.7 billion by 2050.

However, China's population will peak at around 1.4 billion before it begins to decline in the late 2020s. To ensure future economic growth, China will need to successfully cope with an aging and stagnating population, whereas India will need to take advantage of the "demographic dividend" provided by its young, rapidly growing populace.

D. About half the size is not correct.

Back in 1950, the Arab region's population, at about 76 million, was comparatively small, about half the size of the U.S. population at the time. Back then, Europe's population — at 547 million — was seven times as large as the Arab region's.

However, since then the populations of Arab countries have been growing 50% faster than the U.S. population — and more than twice as fast as the population of Europe.

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