China and India and the Global Political Economy

A lot of comparisons have been made between the rapid economic growth in China and India. However, significant differences in the nature of the growth in these two giants are worth noting. China's growth is far more balanced than that in India, covering the broad range of industry and services, export and domestic oriented, while India's growth has been more service and export oriented. The potential for China to sustain rapid growth through its domestic economy, even if there is a slowdown in exports, is greater than the similar potential in India. Nevertheless, the fact that China is growing in excess of 10% per annum (latest numbers were in excess of 11%) and India at about 8% means that the global political economy is undergoing a major alteration in structure, with natural resource demands in these two giants growing faster than the global economy is likely to be able to keep up, meaning that there are inflationary pressures that must impact life in the United States and other high income economies. To the extent central banks attempt to moderate inflation, they may be fighting a battle that will become increasingly difficult to win, at least without triggering a global economic downturn with unanticipated consequences. IMHO.