Chindia: The Place to Be for Growth in the Future

recessionWhile GDP growth in the U.S. is estimated to run at around 2.97% in 2012, the number is well below the world average of around 4.49%, but on par with the G7 average GDP growth of 2.45%, according to Economy Watch. China, which is showing some stalling, is still expected to expand its economy by up to nine percent depending on who you listen to, but could be as low as 7.5% should the eurozone plummet into another recession.

The GDP growth in China is impressive and the country is trying hard to make sure the growth holds up and the economy avoids a hard landing.

China’s GDP growth expanded at an average of 9.30% annually from 1989 to 2010.

I like the GDP growth in the Asia-Pacific region, which is promising, including seven percent in the developing Asian economies and stellar 7.82% GDP growth in China’s neighbor, India.


I firmly continue to believe China will continue to be the one of the major top growth regions in Asia, better than Japan, which has been mired in a two decade economic slump that the country cannot seem to shake off, as I recently discussed in China & India vs. Japan: The Best Place to Put Your Capital. Japan’s GDP growth is estimated at 2.07% this year, but I doubt this estimation.

The developing Asian countries, including Indonesia, Malaysia, Philippines, Thailand and Vietnam, are expected to grow at 8.36% this year.

But the country that I believe has immense long-term growth potential is India, with its population of over 1.18 billion people, which is estimated to surpass China by 2025 and hit a staggering 1.6 billion by 2050, according to the BBC. What makes India attractive are its democratic government, young and educated workforce, and high literacy rate at 71.7% for those seven years and older, according to the country’s Ministry of Statistics and Programme Implementation.

I get excited when I think about the combined markets of “Chindia” (China and India), with over one third of the world’s population and where the disposable incomes in both countries are on the rise. India’s GDP per capita was US$3,703 in 2011 and ranked 127th in the world, according to the International Monetary Fund, but this was up from 142nd in 2009.Chinawas ranked 90th with a GDP per capita of $8,394 in 2011, a steady jump from $3,735 in 2009. By the way, the U.S. GDP per capita is seventh in the world at $48,147, while oil-rich OPEC member Qatar is first at $102,891.

It will take some time, but as income levels rise, I expect to see a corresponding rise in spending and GDP growth.

With higher incomes will come more spending.

Consider this: at the present time, only a small fraction of both China and India’s GDP numbers are driven by consumer spending, compared to about 70% in the U.S. Both countries want to drive consumer spending long-term and this will drive organic GDP growth in both countries…and you know this will drive stocks in these countries, too.