India increased its per capita income/GDP by 4.5 times in the last 35 years (since 1984) In the same period, China increased its PCI/GDP by a remarkable 26 times! 

The reasons are manifold and debatable and include in no particular order

  • Leadership – Practical as opposed to intellectual, religious or ideological leadership
  • Common language. Most Chinese speak Mandarin or a dialect close enough to that. In India, we have over 200 languages. English was the official language that helped Indians internationally but also sub-optimized the productivity of a vast percentage of the population that didn’t speak it.
  • Totalitarian or single-party government versus a democracy led to the inability to create infrastructure for e.g. roads. China was able to formulate and implement a long term vision for the future – one that relied on them being the world’s manufacturing factory. 
  • The caste system – in essence, India willy-nilly left a vast percentage of its population out of the labour force. This is changing for the better now.
  • Demographics were in China’s favour with working-age people being at a high percentage of the country’s overall population. India’s demographics between 2020 and 2027 will be superior
  • Brain drain – Chinese who studied at the world’s best universities were aggressively re-hired back and offered higher salaries to come back and work in China versus what they would earn in the West. This was an example of regional governments and the State using its power for good. The Indian diaspora did not have that positive inducement in the past.

In summary, China had a vision and a steady and stable government to implement the vision.