Here’s a recent post from our friends over at the China Briefing�Blog�on a new Asian Development Bank study:

China and India, the two economic powerhouses of a fast developing Asia, are lagging in terms of economic well-being and living standards of their population, a new study�undertaken by the Asian Development Bank (ADB) shows.

According to the International Comparison Program (ICP) in Asia and the Pacific: Purchasing Power Parity Preliminary Report, released yesterday, China and India account for 64 percent of the total real gross domestic product of the 23 economies featured in the study.

However, when the size of the economies is adjusted by population, China and India drop to 10th and 18th respectively, out of the 22 economies participating in the full GDP comparison.

China ranks 15th and India 17th when the economies are compared based on “actual final consumption of households” (AFCH), which the ADB says is a better measure of the economic well-being of the population.

According to the ADB, the AFCH is a measure of what households actually consume, comprising of what they purchase and what they are supplied for individual use by the government (principally education and health). The economic well-being of the population is obtained by comparing household consumption expenditure per capita.

The five economies that top the list are Hong Kong,�Taiwan, Singapore, Brunei Darussalam, and Macau. The five economies that are at the bottom of the survey are Nepal, Bangladesh, Laos, Cambodia, and Vietnam. (more…)

A recent post from China Economic Review about India’s largest ever IPO. Enjoy:

India�s largest-ever IPO went to market this week, a US$2.4 billion float by real estate firm DLF.

The company received bids worth three times the total shares available. Later this month, state bank ICICI plans to raise US$5 billion in offerings in India and the US.

Those of us who follow the stock markets in Shanghai and Hong Kong may not be particularly blown away by a subscription that is three times oversubscribed. It�s par for the course when trading in these parts. But inability to be impressed does not take away from the significance of the achievement. (more…)

A recent post from http://www.chinaeconomicreview.com/editors/�with looking at Chinese stock ownership and the volitility of the market.� Read on:

Chinese investors on average hold a stock for just 62 days compared to an Asia ex-Japan figure of 124 days. Remove China from the calculations and the average shoots up to 249 days, although, as the analysts at Citigroup who put together this research point out, length of ownership is falling across the region.

The China figure speaks volumes for the volatility of the market, which, in turn, goes a long way towards explaining the turbulence of the last few days.

By comparison, during the last big Chinese bull market in 1997, the average stock holding period was 56 days. The bull before that � 1994 � saw length of ownership hit 51 days.

Don�t forget the subsequent market slumps and vanishing liquidity, though. In 1995, the investors that hadn�t already cut and run were left holding stocks for an average of 486 days. In 1998, it was 249 days. Then the truly dark times towards the end of 2002 and the beginning of 2003 saw ownership periods in the 488-548 day bracket � people just didn�t want stocks (which, let us not forget, were headed towards an eight-year low).

Obviously it is the brokers who have gained from the shorter ownership periods: the more investors buy and sell, the more money brokers receive in commissions. No wonder the financial results for last year published by China�s brokerages look so rosy when set against the challenges of 2005 (official figures for the sector were never revealed, supposedly because they were so shockingly bad).

Now they just need a way to make money when the market is down and the investors shy away. Bring on financial futures.

Friend of and contributor to 2point6billion, Shantanu Bhagwat of global themes�blog, shares his friend’s article on contentions with the concept and methodology behind Goldman Sachs’ bundling, comparing and projecting futures of the BRIC countries.

An incredibly though-provoking piece here which�deserves our readership and contemplation - take the time to read through this and grateful to�hear your thoughts…

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From Shantanu:

My good friend Tosh (author of �The Rising Elephant�) sent me one of his recent articles last week titled, �Eye On The Tigers� which makes the point that putting the all the BRIC countries in one basket may not only be unwieldy but also confusing and possibly inconsistent.

Excerpts:

The BRICs report published in 2003 by Goldman Sachs � which foresaw the rise of Brazil, Russia, India and China as global economc powerhouses, has acquired the aura of a Delphic Oracle.

Nevertheless, it remains confusing with regard to some key assumptions and conclusions, particularly for policymakers.

The first problem is the heterogeneousness of the BRIC membership. Demographically, Brazil and Russia have a combined population of just 330 million � against 2.4 billion for India and China.

Russia, by many accounts still a nuclear-armed superpower, is essentially an exporter of com m odities to the West and of arms to China and India - which, in some cases, its own armed forces cannot afford.

Russia is also ageing fast: 15 percent of its population is over 65 years old,against a mere 5 percent in India.

For its part, Brazil�s growth is three to four times lower, and its income distribution far more skewered, than India and China.

Indeed, the lack of a meaningful middle class is one reason for Brazil�s stagnation, while its presence in India underpins the surprising spurt in its GDP growth.

More perplexing is Goldman Sachs�s faith in the three-fold gap between Chinese and Indian GDP lasting for the next 25 years.

India has been far more efficient than China in moving up the global value chain.

Its telecoms market is now the w orld�s fastest grow ing.Outbound Indian acquisitions, ahead of China in both quality and scale, are another example.

� All this may be overlooked.

What cannot is the report�s unquestioning faith in the continuity of the current global order.

To show precedents for the BRICs, the Goldm an Sachs team turn to Japan and Germany�s rapid growth after World War II.� Such straight-line insight may well apply to Japan and Germany, or Brazil and Russia�

To imagine this is true for India and China, inhabited by a third of the w orld�s population (and sometime soon, half its workforce), is curious.

�Devoid of the yardstick of the dollar,� things look quite different . Both within the BRICs,and for the world outside.

For in purchasing power terms, China�s econom y is over tw ice the size of India�s,� while India�s is larger than those of Brazil and Russia combined.

More dramatic is the fact that the Indian and Chinese econom ies are together already equivalent to those of the U S or the EU.

A critical yet edgy piece (very comparitive!) on whether China has the umph and brains to out-do India in outsourcing…� Highly doubt it!�

This piece was shared by friends of and contributors to 2point6billion, the China Economic Review Editors.� Thanks guys!

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The global outsourcing story has been a hot topic for years now. India remains its lead actor, with local firms like Infosys and�Wipro hogging the limelight.

An emerging thread, however, has been China�s role in the so-called BPO (business process outsourcing) scene. This is a particularly juicy thread because it connects two of the biggest business stories in recent years, the �India outsourcing� story and the �rising China� story.

The general consensus seems to be that China is becoming an increasingly powerful player in global BPO, as befits its climb up the value chain from cheap manufacturer to sophisticated service provider. An Indian paper, DNA India, has this recent headline: �India being Bangalored by China�. Offshoring Times, a trade publication, has items headlined �Will India�s dominance wane?� and �China an emerging BPO hub.� A quick Google reveals plenty of similar articles.

A new report by Forrester Research seems to buck conventional wisdom. Here�s the summary from the website:

When Forrester first looked at China�s offshore and global delivery model (GDM) role nearly two years ago, the country was widely viewed as the key challenger to India for offshore supremacy. However, our latest research shows that to date the market has not taken off as expected. While there continues to be demand from Japan and multinationals with operations in China, the offshore business from the US and Europe has been slow to materialize. In fact, China�s percentage of GDM resources for the top services firms like Accenture has dropped, while India and the Philippines have seen far greater investment.

The report also sparked an insightful discussion at a Computerworld blog. Some of the reasons cited for China�s poor BPO performance were �high attrition rates, a lack of English-speaking workers, and inadequate intellectual property laws.� Commenter David Scott Lewis, a former analyst and now an executive at a China-based outsourcer, begged to differ: �Hey, analysts are not right about everything. But in both cases, they should stick to topics that they know. China is a topic that they don�t know, don�t understand. Their knowledge is way too superficial, idealistic, biased.� According to Lewis, all the factors Forrester mentioned were not significant.

The outsourcing business is ostensibly based on the bottom-line � how much money can be saved, how much more efficient can a process be � but perception seems to play a much bigger part in decision-making, at least on a global level. China�s ascendancy to the global outsourcing throne will not just be because of the hard data, it will also be because of image-making, hype and perception.

First piece�from our new contributor, Siddharth Soni whose blog ‘drumming’ http://profss.blogspot.com/,�provides some very critical analysis on India’s education imperative.� His contribution is an observation and a selfless recognition of an important step that China has made to prioritize development (and improvement???) in education and the emphasis the government has placed on the need for training and producing more teachers.� A lesson to be learned for India perhaps but would India be willing and able to replicate such a model?

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Part-1

Chinese teachers’ colleges to offer free education soon

Yes, six of the top universities of China plan to waive all the expenses for students enrolled to become teachers and who’ve agreed to serve as teachers for 10 years after graduation. It is no small measure since it involves enrolling 12000 students and taking taking care of expenses to the tune of $5120 per student at least. And if this measure succeeds in the six universities, it would be implemented in other Chinese universities too. This initiative doesn’t just include imparting education to future teachers but it also ensures suitable employment in middle and primary school once students graduate.

Chinese premier, Wen Jiabao, sums it up in these words:

“The measure will demonstrate to the general public the importance of the teaching field, create an atmosphere of respect for teachers and education in society, increase awareness of the value of the educational profession, produce large numbers of outstanding teachers, encourage prominent educators to run schools and spur more outstanding young people to become lifelong educators.”

Another point to note is that most of the students would be from Central and Western China, which are relatively under-developed areas.

Few more lessons for India to learn.

source, People’s Daily article: http://english.people.com.cn/200705/19/eng20070519_376042.html

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and an outlook onto another facet of Chinese influence in the global educational arena…

Part-2

Some time back, in one of his articles ‘Laughing and Crying’,� Thomas L. Friedman narrated his experience at Rensselaer Polytechnic Institute, one of America’s great science and engineering schools. Here’s an important part of the article:

First I had to laugh. Then I had to cry.

I took part in commencement this year at Rensselaer Polytechnic Institute, one of America’s great science and engineering schools, so I had a front-row seat as the first grads to receive their diplomas came on stage, all of them Ph.D. students. One by one the announcer read their names and each was handed their doctorate � in biotechnology, computing, physics and engineering � by the school’s president, Shirley Ann Jackson.

The reason I had to laugh was because it seemed like every one of the newly minted Ph.D.’s at Rensselaer was foreign born. For a moment, as the foreign names kept coming � “Hong Lu, Xu Xie, Tao Yuan, Fu Tang” � I thought that the entire class of doctoral students in physics were going to be Chinese, until “Paul Shane Morrow” saved the day. It was such a caricature of what President Jackson herself calls “the quiet crisis” in high-end science education in this country that you could only laugh.

There you go, the all-conquering swamping Chinese. While the description by Friedman overwhelms the reader and sounds like, “What are these Chinese doing… They are manufacturing PhDs like they manufacture goods”, it’s significant for countries like China and India to get so many countrymen to study and indulge in research at a higher level since that could result in development of indigenous technology and ways and means of doing things. And that to my mind, that would be the real development.

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Thanks for sharing this Sid.� Look forward to the next one!