Where the recent global economic melt down has made many developed countries shudder, it has also brought forth new contenders in the economic arena, namely China and India. Change is inevitable. The 17th century was marked by the rise of Europe; the 19th and 20th Centuries were marked by the rise of the US; and now, its time for the Asian players to come to the fore. The competition is between the developed nations of the G7 and the emerging economies of the BRICs, namely Brazil, Russia, India and China. In Asia, India and China have steadily emerged as major economic powers.    Hence, with the economic rise of the developing countries, a global shift in balance of power is just round the corner.
Both the emerging Chinese and Indian economies bear the testimony that slow and steady wins the race. Until the early 1990s, the G7 rate of growth dominated the world economy, but from the early 1990s onwards, the effect that China and the other developing economies of Asia were having on the global rate of growth started getting visible.

Opening their door to the world in shape of dramatic increases in trade have been factors leading to the success of the Chinese and Indian economy. Having a huge population is a definite advantage to both china and India. They have human capital that doesn’t get devalued or depreciated. China has a huge light industry and is into manufacturing everything under the sun, from toys to microwaves and copiers. China has utilized elements like export-orientation, controlled monetary value, unfair market practices, cheaper products, low interest rates, and cheap labor force to its advantage. In 2007, China contributed majorly to the growth of the global economy than any other country. Meanwhile, India has made a name for itself into the outsourcing business, by providing tech support and back office support to call centers, software, and IT firms in America. It has a growing auto and heavy shipping industry, as well as huge steel, Thorium, coal and mineral reserves.

India currently has the most billionaire tycoons: Birla, Tata, Mittal, and Ambani. Hence, it was no surprise that the Forbes list of the world’s top billionaires in 2008 had four Indian out of the total of eight, while no Chinese billionaires featured in the list. Indian billionaires are richer than their Chinese counterparts. For instance, the net worth of 100 rich Indians is $276 billion, as compared to the net worth of $170 billion of their Chinese counterparts. A Merrill Lynch/Cap Gemini report reiterates that the rate of growth of Indian millionaires was more than twice the growth of millionaires in the U.S in the year 2007. In India, the private sector companies are strong and thrive through the efficient use of capital. In contrast, Chinese companies are partially state-owned and funded.

There have been undermining factors and challenges too faced by these two economic players. China has ignored the demand and supply rule and has over produced. Also, its attempt to move from light to heavy industry hasn’t fared that well, as its automobile industry hasn’t been able to have a breakthrough neither regionally nor globally. This is something that happened to Japan as well when it tried to move from low productivity industries to cutting-edge technologies, the growth and productivity rates plunged. Furthermore, many of China’s toxic products such as diet supplements, jewelry, toys, etc., have lead to massive recalls, and a great uproar and concern globally. At the social level too, there are challenges that both these economies face. There is widespread corruption too plaguing both the countries. India is yet to deal with its rural poverty, inflation, and illiteracy problems, which points to the great divide between the affluent middle class and the struggling poor. Similarly, in China, politicians, bureaucrats and businessmen are enjoying the growth, whereas the labor and rural class is struggling. India also has to eventually compete in a labor intensive market and thinner profit margins in the future. Moreover, the examples of the ‘sudden stop’ experienced by Thailand, Taiwan, Korea, and Indonesia in the early 1990s should also be kept in mind by the economic policymakers of these two countries.

But is the shift in trend in emerging economies indicative of the rise of East and the fall of West? One doubts. The analyses indicate that interdependence has been a key factor in the rise of both these economies; among developing nations and between the developed world and the developing world. As developing countries, bilateral relations between China and India are based on the efforts of the governments of the two countries to recognize common trade interests. The anticipated figure of bilateral trade between the countries is 30 billion US dollars for 2010. Thus, both the countries are acting as complementarities rather than competitors, encouraging intra-Asian trade and regional and global economic integration. India has been dependent on the American frontend businesses and has felt the brunt of the Global recession during the last quarter of 2008, as the US holds the largest, almost 50%, of the Indian software and outsourcing market. However, it regained its ground after a while. China has been dependent on the purchasing power of the developed world’s consumers. In return, Chinese products have enabled the US manufacturers and consumers to save billions. According to a Morgan Stanley Report, the American consumers have been able to save more than $600 billion in the past decade through using the Chinese imports. After the global recession, the growth in China and other developing countries has kept the economy going, through the buying up of U.S. Treasury bills and keeping the economy rolling through allowing borrowing and spending. The global economy thus rests on the notion of inclusion and not division or seclusion.