10% over the last five years.

5 – 6% this year.

8 – 9% over the last five years.

7 – 8% this year.

A young population. 300 million people joining the workforce over the next 20 years so vital they can educate and up-skill the population.

Population peaking and an ageing population bringing potential problems in the future.
 

Cost of labour “flat on its face” in India signifying a cost advantage for India.

Income per capita $1,500.

Wages sharply increasing in China – Xiangdong has a minimum wage increased of 13% until 2015. This will drive up costs particularly for Chinese manufacturers.

Income per capita $5,500.

Very fragmented democracy rather than a strong one party – biggest party only has 38% share. India is a political patchwork quilt.

All states are very different regarding political persuasion and economic outlook – Gujarat is the model state.

The new leadership has signified new era in Chinese politics – the members of the Politburo are much younger, many educated in the West and all want reform.

They are much less corruption-tolerant. Impetus for change for the better.

Reform Agenda – this has opened up competition in retail, travel and will boost infrastructure.

One child policy will change to two-child policy to offset ageing workforce issues.

* Consumption based economy – 60% of growth is coming from that.

* Poor infrastructure inhibiting growth.

* Flawed democratic system also inhibitor to growth.

* Consumption based economy through urbanisation.

* Manufacturing hub of the world – climbing up the value chain.

* Natural resources, gas in particular.

Economic growth will come through increased consumption through urbanisation.

Slower growth replacing boom and bust trajectory.

Desire to keep inflation to a minimum.

Holding India back – 350 million still without electricity. Over the last five years $480 billion spent on infrastructure but $1 trillion planned in next five years, mainly through domestic funding.

Massive investment in Chinese infrastructure projects.

Pollution – pupils stopped from going to school because too dangerous to go out.

Trying to use more gas and improving water and sewage.

Currency is the biggest concern. There is an account deficit of almost 5% because 45% of Indian imports are oil and gold – no domestic solution to this. India is subject to foreign capital flows which is why such a high volatility in currency.

Indian stock markets dominated by foreign investment – very little domestic retail investment. Indian consumer is wedded to bonds and gold. Foreign institutional investors have been keen on India for the last ten years.

China needs to improve its image and open up its markets in order to improve investment sentiment. China is currently s semi locked market, which is a big disincentive to investors.

Gradual appreciation of the renminbi against the US dollar – they don’t want to damage their competitive position.

QFII (Qualified Foreign Institutional Investor) controls foreign investment – Chinese authorities tend to treat foreign investment with a “tap-like” approach, turning it on when they need it.

The domestic Chinese investor tends to go with the flow and has little knowledge of how the markets work.