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Economic reforms were initiated earlier in China, with India following more than a decade later. China has been following a bottom-up approach, moving forward from sectoral reform, which has stimulated macroeconomic reforms; India has taken a broader approach to macroeconomic reform, fine-tuning sectoral reform later. In both countries, reforms have led to rapid economic growth, expanded international trade, and a large reduction in rural poverty.

The Chinese economy activity, driven by manufacturing, has led to a substantial service sector and a corresponding increase in new jobs, travel and tourism. China had the advantage of having started economic reforms much earlier, i.e., in 1979 as compared to India, and this can be judged by looking at the economic progress of China during the last two decades and the reasons as to why it continues to be the largest destination of FDI outside the U.S., Europe and Japan.

Although India has emerged within the last decade as one of the leaders in the IT world, the effects of computerization in eradicating poverty and raising the standard of living in typical Indian villages is yet to be seen, however, since it has a very large population and a consequent business sector, which is still in need of modernization, the potential for further development at an accelerated pace in this sector is quite promising. Indian competitiveness and success has been possible due to the process of globalization with both mobility of capital and labour illustrating the benefit of forward and backward linkages in various areas of the economy not limited to India only. In contrast to China, which has followed a conventional path in transiting from an agricultural economy to a robust industrial economy, India is attempting to leapfrog from a predominantly agricultural economy to a knowledge-based service economy.

The effect of China pricing on the industries is analyzed sector-wise.

1. Steel Sector

The state of China's steel industry
In 2002, China's fixed assets investment in steel industry stood at 70.4 billion Yuan, surging 45.9 percent over the previous year. In 2003, the figure rose to 133.2 billion Yuan, up 89.2 percent from 2002.

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* Contributed by -
Syam Krishna V. K. ,
B.Tech. (Prod. Engg.), Kerala University,
MBA 2007, DOMS, IIT Madras.