Indian economy poses major challenges: Chinese think tank

Beijing: India`s competitive economy may pose a challenge to China which may become an "unfortunate bystander" watching India succeed if it didn`t develop a more effective growth strategy, a Chinese think-tank has warned.

The Beijing-based think tank Anbound also said that India could well become the next China because of low labour cost, young population and other factors.

It pointed out that not enough studies were conducted on India and Beijing "cannot wait until India grows into an apparently promising competitor before discussing how to deal with the situation.

"While Indian GDP may lag far behind (than that of China), the country remains a potential emerging market that has high attractiveness for global capital," said the report, carried by the state-run Global Times on Thursday.

"Just as what happened with China in the past, the changes taking place in India may also point to a great potential for development.

"In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China.

"Moreover, there are growing signs that India is succeeding in attracting more and more investment, which China should take (note of) seriously.

"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.

"The country`s vast domestic market, low labour costs and skilled labour market are its most attractive features. As China`s demographic dividend diminishes, India, with half of its population below the age of 25, is poised to take advantage."

An increasing number of Chinese companies had invested in India in recent years, covering such sectors as hardware, software and marketing.

"It is noteworthy that Chinese companies` investment in India has shifted from simply marketing to research and development (R&D)," it said.

It cited the case of Chinese telecom company Huawei Technologies, which invested $170 million to open an R&D facility in Bengaluru, and has announced plans to join Prime Minister Narendra Modi`s "Make in India" campaign.

"In other words, India may turn itself into China 2.0, and let global investors decide whether to invest in China or India.

"In our opinion, if India intentionally creates a competitive situation in front of global investors, it will pose a challenge for China.

"China needs to ponder and study the rise of the Indian economy carefully.

"With a young population, it is entirely possible for the emerging market economy to become China 2.0 to gain the attention of world capital."