Steve Zavestoski (the curious stall) and I traded emails about the recent argument that China’s labor pool was drying up and India’s youthful population was therefore poised to take over the lion’s share of work.

Here is my position on this topic.

China has currently the largest population in the world followed by India, but the Indian population grows at a faster pace, since China has enforced for years the one-child policy. However, the effects of this policy will start to be seen more than 40 years from now, and has therefore no short-term impact on the relative workforces.

It is also important to note that China’s current labor force in services (not only IT but all services in general) is twice as big as India’s. According to the CIA world fact book, the labor force in services was of 230 millions in China for 114 millions in India.

In addition, today, China is the largest producer of engineering graduates in the world, with some 600,000 coming out of its colleges and universities in 2005. India follows with over 450,000 engineering graduates in 2005, of which almost 30 per cent were computer engineers. Both India and China have over 2,000 colleges and Universities.

Compared to India and China, the United States produces only 70,000 engineering graduates every year. All of Western Europe produces just over 100,000.

Duke University in the USA recently released a report that looked specifically at all computer science and information technology degrees from four-year schools, Duke’s initial study came up with 137,437 engineering graduates for the U.S., 112,000 for India and 351,537 for China.

China is therefore the country that produces today the highest number of IT engineers, by far, more than India and the USA together!

While China produces the highest number of graduate students every year, there are also a fast growing number of Chinese students graduating from foreign universities.

The Open-Door-policy in China had as one of its effects that hundreds of thousands of young Chinese got the opportunity to study abroad, mainly at American universities. For instance the fall 2003 class at Yale alone had 297 Chinese students. Moreover, Chinese Americans represent a significant percentage of undergraduate and graduate students in the USA.

The last element to consider is the Diaspora, i.e. the people living abroad, and their influence on their country of origin.

According to statistics provided by the Overseas Chinese Affairs Commission of Taiwan, the Chinese Diaspora (Chinese people leaving outside Mainland China and Taiwan) represents today 35 million of individuals – the largest in the world.

The Russian Diaspora is probably the second largest one: about 20 million Russian people live in the CIS-countries (the former republics of the USSR), including 8 million in Ukraine, and another 10 million living in foreign countries.

India has the third largest Diaspora with a little over 20 million individuals living abroad, according to the Indian Ministry of External Affairs.

As a conclusion, I would say that whatever the angle taken for comparing the 2 economies, China is likely to benefit from the comparison.

In the next 10 – 15 years, China is likely to become the world leading economy, and we better get accustomed to this idea. In fact, the real question is not whether India can effectively challenge China, it is how much the two countries are willing to cooperate together, to create the highest level of stability and harmony in the region.

Posted by Remi on Thursday, May 24th, 2007 at 3:43 PM.