We all know that China matters a great deal more to the world than all of Europe put together. But we forget that India matters too.
Numbers tell the story I want to tell. India's GDP is almost $650 billion and growing at a possible 8% this year. China's is $1.5 trillion and growing slightly faster.
China's economic output is ahead of France and England and slightly behind Germany at $1.9 trillion. Europe is not growing. When Europe grows it grows at a rate of a few percentage points.
A simple bankers rule of thumb is that a 7% compound rate of growth doubles the original money in ten years. Variations on this mean that a10% rate doubles the money in seven years. 3.5% doubles in twenty years.
The dollar measure of GDP has some error in it because the Euro is overweighted right now and so is the Chinese Reminbi.
At current economic growth rates, population giant, India will pass most of the European nations in total economic output in less than fifteen years. That is soon on an historic scale.
India won't catch up with China's economic output at current rates but will be close behind. Both countries have similar population sizes, with India on the way to pass China's population of over a billion people.
"At current rates" is the issue I want to address. Which country, China or India, has a better economic engine of growth?
An anecdote will help. I taught a business class to former Indian military officers in Lucknow. The core mission, the school instructed me, was to teach the students that improvement was possible and desireable.
The basic premise of Indian culture is that the world proceeds in cycles always returning, wonderfully, to the point of origin before beginning the cycle over.
That is clearly not what industrial societies believe.
The god of improvement in India is a god that was re-introduced by the British over one hundred thirty years ago: Ganesh, the human-elephant god.
What I saw in India were two societies. The Indians who worshipped Ganesh, including a large group of ethnic Gujuratis, and all the rest. The Ganeshians were about 150 million people; middleclass. They hide their wealth from everyone else; a wise and practical policy.
The big advantage that China has over India is the vast overseas Chinese network that provides massive amounts of capital to China. The advantage India has over China is her deeply democratic background. Commerce thrives on the open, decentralized values of democracy.
Both countries have a similar problems. Industrial commerce requires meritocracy and trust. Both countries accept meritocracy based on mandarin test scores. Unfortunately that is not how commerce works. Dumb, mean and rude people can have greater merit in the world of commerce. Meritocracy will be difficult in both countries. China rewards family lineages and tongs over merit. India rewards cousins and caste over merit.
How either society will deal with the merit problem is not clear to me. Neither has an apparent advantage.
Both countries have the same problem of trust. Ask a question that requires a direct and honest answer. "Does this video system work on the American TV standards?" Most Indians will give you any answer that will create the least dissonance, unless you are a member of their family. Most Chinese will give you the answer that will sell the product, unless you are a member of their family. Neither system works well with industrial commerce.
So my answer to the question of which society will do better comes down to the extent to which either society can solve the problems of merit and trust. I would guess it will be done by incorporating top managers from outside and slowly learning over many decades. The Indians seem to do well incorporating Americans and Israelis into their industry. The Chinese seem to do well working with Japanese.
My wildest guess would be that India will have a slight advantage over the next thirty years. Look out for India.