MoneyTalk

 

India vs. China

06 July 2011
In this week’s episode:

David Kuo and Fool.com analyst Nick Kapur lock horns over investing in India and China. They compare the merits of India's democratically-elected parliament versus China's central but authoritarian government for investors. They also look at China's command economy vs India's free market system, the likely demographic changes, the education systems and lots more.

 

A transcript of this podcast is also available.

Nick Kapur and David Kuo
Nick Kapur and David Kuo

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Comments

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Teddydeo 07 Jul 2011 , 2:12pm

Good podcast, China is certainly ahead of India at present and should remain so medium term. However in the medium to long term one would expect China to slow or decline and India to pick up the pace / pass China. As an investor I would favour India.

W000000000dy 07 Jul 2011 , 3:49pm

Thangbrand 07 Jul 2011 , 5:29pm

After the fall of communism in the Soviet Union, a Russian official visited London and was impressed by the success of the free market system.

Just one point that he wanted to know , however. "How do you organise the supply of bread for London?"

You can guess which way I voted.

jobrif 07 Jul 2011 , 6:23pm

Very interesting and lively discussion. Thank you.
i found a terrific article on demographics. I copy the site and a key part for you, but there is more in it on India/ China.
I was delighted it made the point about higher dependency ratios not being a threat. Nick Kapur et al please note!

http://tkcollier.wordpress.com/2009/05/09/muslim-birthrates-falling-worldwide/
the total depen¬d¬ency ratios of the 21st century are going to look remarkably similar to those of the 1960s. In the United States, the most onerous year for dependency was 1965, when there were 95 dependents for every 100 adults between the ages of 20 and 64. That occurred be¬cause “dependents” includes people both younger and older than working age. By 2002, there were only 49 dependents for every 100 ¬working-¬age Americans. By 2025 there are projected to be 80, still well below the peak of 1965. The difference is that while most dependents in the 1960s were young, with their working and saving and contributing lives ahead of them, most of the dependents of 2009 are older, with more dependency still to come. But the point is clear: There is nothing outlandish about having almost as many dependents as working ¬adults.

TMFDragon 07 Jul 2011 , 7:05pm

Hi Thangbrand

As an investor, surely the question you need to ask is whether the baker you have invested in knows how to distribute the bread he has made to maximise profits?

You can guess which way I voted.

Best

David

Jimi97 07 Jul 2011 , 8:19pm

From a parochial viewpoint, I am interested in whose success would be best for the UK (and other English-speaking countries). From this perspective, China's success brings all sorts of concerns. In my own field, the Chinese are publishing vast amounts of research; unfortunately, I cannot assess their relevance or quality because the reports are in Chinese. India, on the other hand uses English as the default for business and research. It may be no coincidence that Bangalore has flourished as an IT centre when it is at the point of contact for 6 different Indian languages (none of which is Hindi), so English is the preferred second language.

Slightly more objectively, the fable of the tortoise and the hare comes to mind.

bajuu 07 Jul 2011 , 9:14pm

I am from India myself, and visit the country few times a year. I fear India is continually hyped up by the West because it is dead scared of China. People do get to vote in India but have precious few rights. More children are malnourished in India than in sub-Saharan Africa. An Indian train which trundles at 50mph is called an 'express' whereas China has the fastest train in the world. I feel India should be compared with Tunisia or Vietnam. China is in a different league altogether,

DRS73 07 Jul 2011 , 9:27pm

Shocking News: China's Ghost Cities

These amazing satellite images show sprawling cities built in remote parts of China that have been left completely abandoned, sometimes years after their construction.

Elaborate public buildings and open spaces are completely unused, with the exception of a few government vehicles near communist authority offices.

Some estimates put the number of empty homes at as many as 64 million, with up to 20 new cities being built every year in the country's vast swathes of free land.

The photographs have emerged as a Chinese government think tank warns that the country's real estate bubble is getting worse, with property prices in major cities overvalued by as much as 70 per cent.


Read more: http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html#ixzz1RSALZA5P

TMFDragon 08 Jul 2011 , 8:43am

Hi Jimi97

If memory serves me right, Aesop's hare lost to the tortoise because he went to sleep under a tree. I see no reason why China would go to sleep on the job.

Best

David


TMFDragon 08 Jul 2011 , 8:56am

Hi DRS73

Think back to 1980 and the regeneration of Canary Wharf - empty office blocks, unoccupied residential flats, vacant shops, overpriced properties. Now fast forward to 2011.

Best

David

Pat4Ra 08 Jul 2011 , 8:00pm

Like China India has 5 year plans too. To what degree planning is still relevant I am not sure. Like China businesses Indian businesses do employ innovative accounting methods! China certainly has better infrastructure. India has several IITs and the number is growing. But I am sure Chinese are also taking care of their education sysyem. However, when investing we mat have to drill down to the quality of individual businesses and invest accordingly. Currently China has an edge and its per capita income is signaficantly higher than that of India. Chinese people are living a beter life. Best.

shinygoldcar 10 Jul 2011 , 4:44pm

How do we vote don't know?
Jeff

TMFDragon 20 Jul 2011 , 12:57pm

Hi All

Many thanks to everyone who voted in the India vs. China debate. A big thank you to those contributed with their comments on the podcast, too. They were insightful, intelligent and very informative.

The votes have now been counted and I am pleased to announce that the final tally for India is 609 votes and China received 222 votes. You have therefore voted overwhelmingly for India as a better place to invest than China.

I am also pleased to announce the winners of the podcast competition. Congratulations to sparky147, MoFoPB17, Ravpat, ide01 and reinholdmuller. A member of our Customer Services team will be contacting you about your free subscription to Champion Shares Pro.

We have more competitions in the pipeline, so please stay tuned to win more freebies.

Best regards

David

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MoneyTalk is a podcast from The Motley Fool (UK). Hosted by David Kuo, it’s a lively roundtable discussion where Fool writers and guests from the world of money thrash out the financial issues of the day.

Join us as we take an irreverent look at anything and everything to do with shares – from how to pick your first share to how to manage your own pension to what mini skirts have to do with Britain's economy (quite a lot, according to David).

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About the presenter

David Kuo is The Motley Fool’s media personality. He can be heard on BBC London’s (94.9FM) Breakfast Show where he arouses listeners every weekday morning with his unique brand of financial news. He is also a regular commentator on national news programmes including CNBC, BBC News, and Sky News.

David stumbled into the world of broadcasting at the turn of the Millennium when he was invited to comment on the stock market crash. He says, “I think I stunned Londoners speechless when I said the good thing about the crash is that shares are now more affordable for people who want to invest in the stock market!”

His attitude to investing has never wavered, as he always sees downturns in the market as a buying opportunity for long-term investors.