Projected Economic Growth in the People’s Republic of China and India: The Role of Demographic Change

Abstract

As the third decade of economic reforms in the People’s Republic of China (PRC) draws to an end, its remarkable growth performance appears almost unstoppable. Between 1995 and 2005, gross domestic product (GDP) and per capita GDP grew at average annual rates of 8.8% and 8.0%, respectively. The central Government’s ambition to raise the level of GDP in 2020 to four times the level in 2000, which requires an annual growth rate of 7.2%, seems well within reach. India’s economic reforms began in earnest in the early 1990s and, like the PRC’s, signal a systemic shift toward an increasingly market-driven economy. Despite the fact that India’s average annual GDP growth performance of 6% in the last decade is enviable by virtually any standards Indian authorities have increased their growth target to 8%, indicating some degree of disappointment with the growth rates achieved in the first decade of reforms (Ahluwalia, 2002). In both countries, there is no question that achieving high and sustainable rates of GDP growth is a major policy objective.