China is Looking to Invest in India’s Infrastructure: That’s the Best Idea I’ve Heard in a Long Time

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By Harry Dent, Economy & Markets Daily:

China has overinvested — like 12 to 15 years of future urban migration out — with 27% of home vacancies in cities. India has underinvested in everything. The roads are terrible, electricity is nearly non-existent in rural areas and it’s shoddy at best in urban sectors. Water and sewer services are not up to snuff and there are slums everywhere.

This means the Indian population on the whole has to work much harder than emerging world competitors like China or Malaysia. I’ve always said that if the Indian government just made much larger investments in infrastructure… it would attract strong foreign investment and its development would accelerate at a faster pace just like China did.

India Becomes A Major Player

India looks like the next big thing to me and will likely be the first foreign country we advise to invest in after the next crash ahead, likely by late 2016 to early 2017. Much of the rest of the emerging world is too linked to commodity exports and won’t see a sustainable turnaround until that 30-year commodity cycle bottoms between 2020 and 2023.

India has a population of 1.271 billion, close to China’s at 1.395 billion. That’s 17.4% of the world’s population, but it’s growing at a much faster pace than China…

By 2050, India will be larger than China in population and China is already on the road to a shrinking workforce followed soon by declining population.

The biggest driving factor in emerging countries is the rate and slope of urbanization vs. GDP per capita. India has a slope nearly as high as China and Malaysia, the two strongest in the emerging world.

India is only 33% urban and will not mature to 80% for at least another 50 years. China is at 56% and will likely slow dramatically over the next decade after so much overbuilding and the highest rate of urban migration in history in the past 15 years. The following chart summarizes the urbanization trends and projections for three major emerging countries at different stages.

Image For China and India Changing the Global Marketplace

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India’s workforce growth, the key demographic indicator for emerging countries, will grow rapidly into 2050 followed by a plateau moving into 2060 and then it’ll only slowly decline. Urbanization will continue to grow until at least 2070. Combining urbanization and demographic trends, I see India continuing to grow into the mid- to late 2060s before it slows down.

China’s workforce growth already peaked back in 2012. Malaysia will peak around 2040 demographically with their urbanization peaking well before that.

Image For China and India Changing the Global Marketplace

Interactive Map

Bank by BRICS

But here’s perhaps the most interesting trend. The major BRICS (Brazil, Russia, India, China and South Africa) are talking about an international bank to help finance their growth and political issues like the IMF for the world. China is talking about investing in India. Why not Southeast Asia that has much potential for urbanization and modernization as well?

Combine China, India and Southeast Asia and it’s close to 50% of the world’s population in one giant and connected emerging region… That is formidable.

The Asian Union (AU) is likely the next big thing as well, but India more so, especially now that it has the first progressive and capitalistic leader in its history with newly elected Narendra Modi… and he’s already meeting with the U.S. and China.

While the European Union faces more pressure, demographic slowing, high debt, banking and trade imbalances; I could see an AU emerging increasingly over the coming years. And it just makes sense for China to invest in India and Southeast Asia, now that it has overinvested in its own country.

It makes sense for the wealthiest western nations to invest in Asian emerging countries that are experiencing the highest growth. Japan and the East Asian “tigers” should do so as well seeing as they’re faced with stagnating growth and deteriorating infrastructures and yet… they have much higher wealth to invest.

I’ve stressed for many years that investors from developed countries will get higher returns by investing in the emerging world after this winter season and great reset.

We’ll keep monitoring India as the first emerging country and we’ll likely recommend it for longer term investments after the next big crash well before the winter season finally ends between 2020 and 2022. I cover this topic in more depth in this November’s issue of Boom & Bust. By Harry Dent, Economy & Markets Daily

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  6 comments for “China is Looking to Invest in India’s Infrastructure: That’s the Best Idea I’ve Heard in a Long Time

  1. Ray
    Oct 30, 2014 at 6:11 pm

    Over investment = malinvestment. So the reasoning is after successfully destroying capital in your own country you should expand that destruction of your capital to another country’s shores?

  2. NotSoSure
    Oct 30, 2014 at 9:15 pm

    The same arguments have been put forward again and again. If those weren’t true then, why would they work now? There’s fundamental difference between Chinese and Indians i.e. the average Chinese is more productive and ambitious. It may sound racist or even close to stereotyping but unfortunately it’s true. Indians rely too much on other people i.e. the government to do things for them, not to mention the “you first” attitude.

    Indians are supposedly tech savvy, but just look at the proliferation of successful Internet companies in China as compared to India. Heck, the dream of the best Indian tech talents is to get to America. If those people have given up, why should foreigners who know less step in?

  3. Roddy6667
    Oct 31, 2014 at 2:03 am

    China is not really overbuilt in housing. The 27% vacancy rate is only in some cities. A lot of vacant units are intentionally vacant. Homes are purchased for a long term investment as an alternative to bank CD’s. They are left unfinished and vacant. Therre is no property tax, so holding costs are nil. Also, it is gereral practice for parents to purchase a home for their son when he gets married. This is often done decades in advance. A vacant new home in China is not the same thing as a vacant new home in America. In China, most of them are paid for in cash before they are built.

  4. jim wilson
    Oct 31, 2014 at 3:49 am

    Pretty overly simplistic.

    India is many nations (and faiths) in one. China is one nation with a common “we are Chinese first” attitude. Homogeneity helps in early stage development (shared purpose and sacrifice).

    India is overpopulated … case closed. It is just waiting to blow up. China’s growth is to a good measure due to the one child policy which focused education and investment on fewer people. India will be a demographic mess for years.

    Another word – caste. Incredibly destructive to growth and advancement.

    Don’t see the optimism for India. They can probably squeeze a bit more out of it (financial engineering, pent up opportunities) but the entrenched roadblocks will soon stop advancement in its tracks.

    • NotSoSure
      Oct 31, 2014 at 8:51 am

      Yep forgot about the whole caste system. No one in this world has a greater contempt towards Indians then ….. Indians.

  5. Vespa P200E
    Oct 31, 2014 at 9:25 am

    I used to go to China often on business from ’97 to ’08 and been to India once on business 14 years ago. India by far was the most challenging place to visit with very poor infrastructure as there was only 1 express way in India from Pune to Mumbai. Most of the 2 lane roads are shared by cars, motorcycles, tut-tuts, slow overladen trucks and lest we forget sacred cows.

    India is also well known for corruption (like China) and bloated bureaucracy where it takes years to get permits approved. Local farmers also can be vigilantes. Good luck to dumb Chinese money as I sense it will end badly…

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