India has the potential for “explosive economic growth” and could develop into a “China 2.0” with its big market, low labour costs and large population, a Chinese think tank has said, cautioning Beijing to ignore competition from the neighbouring country at its own economic peril.
India’s GDP might be much lower at present but it is at an economic stage that China was a few years ago, Anbound Consultancy, a Beijing-based think tank on Chinese public policy, said.
“Just as what happened with China in the past, the changes that are taking place in India may also point to great potential for development. With a large population of young people, which is not only the labour force but also a potential consumer group, India has the possibility of seeing explosive economic growth in the future,” Anbound Consultancy said in an article published in the nationalistic Global Times tabloid.
The think tank said that China hasn’t closely studied its “unfamiliar neighbour” and needs to track its economic development.
“It should be pointed out that China has not conducted enough studies on India. From the perspective of think tanks, China cannot wait until India grows into an apparently promising competitor before discussing how to deal with the situation,” it said. “As such, China should develop a more effective growth strategy for the new era or it may become an unfortunate bystander watching India’s success. “Therefore, we must pay close attention to the development of this unfamiliar neighbour,” scholars from the think tank said.
It added that some Chinese companies are doing well by investing in India.
“An increasing number of Chinese companies have invested in India in recent years, covering such sectors as hardware, software and marketing. Smartphone manufacturers like Vivo, OPPO and Lenovo have already entered the Indian market; while mobile tools like SHAREit, UC Browser, Cheetah Mobile and APUS have also been downloaded by vast amounts of users,” the think tank said.
It noted a change in the attitude of Chinese investors in India from marketing to research.
“It is noteworthy that Chinese companies’ investment in India has shifted from simply marketing to research and development (R&D). For instance, Chinese telecom company Huawei Technologies Co invested $170 million to open an R&D facility in Bengaluru, and announced its plan to join Prime Minister Narendra Modi’s Make in India campaign.”
The Indian economy could also do well by copying the Chinese model, the think tank said.
“If India decided to copy China, what impact would it have and what should China do? By copying China, India may also develop an Internet economy and boost its infrastructure construction, along with investment-driven growth. In other words, India may turn itself into China 2.0, and let global investors decide whether to invest in China or India,” the article predicted.