China More Competitive in Manufacturing While India More in Services

Abstract

This paper first presents a comparison between China and India with respect to their overall economic and social development conditions and finds that China is currently at a higher development stage than India in terms of key economic indicators or social indicators. This paper also conducts an assessment of the international competitiveness of the Chinese and Indian manufacturing industries and finds that the Chinese manufacturing industry is more competitive than its Indian counterpart globally. This paper then conducts an evaluation of the international competitiveness of the Chinese and Indian service industries and finds that (1) the Indian service industry has remained more globally competitive than its Chinese counterpart in most of the years examined; (2) the Chinese service industry has derived its international competitiveness primarily from its competitive advantages. In spite of its weaker comprehensive competitiveness, the Chinese service industry has consistently secured a stronger competitive edge over its Indian counterpart. Chinese service industry’s comparative competitiveness is weaker than India’s, simply because the Chinese manufacturing industry has grown at a faster pace. Last but not least, this paper conducts an in-depth analysis of the causes of competitive difference between China and India in respect of labor quality, infrastructure, government role, social heterogeneity, religion and culture as well as overseas compatriots.

Keywords: China-India comparison, manufacturing competitiveness, service competitiveness