China and India have been slated as the two next economies to watch for. Both have massive populations of over 1 billion and China has posted 9% GDP growth rate in the last decade, while India has averaged 7%.A report by Rand National defence Research Institute, looks at the diverging demographic trends emerging from the two nations and its potential impact on both economies.
For now China’s population is prime for economic growth, in the future however, India could take its place if it improved education and healthcare. Here are they key takeaways:
- India’s population is growing at annual rate of 1.55%, compared with China’s 0.66%. In 2025, India’s population is expected to equal China’s 1.4 billion and then outpace China’s. That’s because fertility rates in India are estimated at 2.65 children per woman, against 1.54 in China largely because of China’s one-child policy.
- China’s population is also older than India’s and is ageing fast. “China’s largest age cohorts consisted of people aged 20–24, 35–39, and 40–44. By contrast, India’s age structure more closely resembles the classic “pyramid” shape, in which the youngest cohort is the largest and each succeeding age cohort is slightly smaller than the next younger one. By 2035, China’s population will skew heavily toward older age groups, whereas India’s population will have its largest cohorts in the age groups below 50.”
- China’s ageing population is expected to hurt economic growth as a larger part of its savings gets used by by retirees cutting the flow of private capital into investments. Simultaneously, the government will divert more of the budget from public investment to pensions.
- Of course other factors affect how demographics impact growth. For instance the Chinese population has higher average levels of literacy than India’s and is likely to be more productive.
- China also has more women in its workforce than India. 67% of women in China over the age of 15 work, compared with 33% in India. But that also means India is more likely to have this segment of its population available to contribute to its workforce in the future, if its situation changes.
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