As the two most populous countries in the world, China and India offer an intriguing comparison. According to a 2024 report by the National Bureau of Statistics of China, the country’s population currently stands at 1.409 billion. In contrast, United Nations data shows that India's population reached 1.426 billion in 2023, surpassing China's. Futhermore, China is gradually experiencing an aging population, while India is expected to benefit from a demographic dividend for the next 50 years, with its labor force projected to exceed China’s by 2030. These divergent scenarios are playing out in China and India, and their recent economic performances have shown significant differences. To gain a deeper understanding of the situation, this article will provide an overview of these two major Asia-Pacific countries: China and India.
Comparing Economic Structures: China vs. India
Using GDP, the most common economic indicator, to observe economic composition, we can see the biggest difference between the two countries lies in the proportion of consumption and investment.
China’s past policies have continuously relied on debt financing for capital investment, resulting in a GDP structure dominated by capital formation, while private consumption remains relatively low. This weak consumption power has led to an inability to absorb domestic production capacity, causing overcapacity. Over the past few years, China has aimed to “reduce overcapacity, lower inventory, and boost domestic demand,” but the results have been limited so far.
In contrast, following the economic liberalization, the proportion of capital formation in India’s GDP has gradually increased in recent years. However, driven by
