The World Population Review estimates that 2022 saw the population of India surpass that of China, with India being home to 1.417bn people, while China is estimated to have 1.412bn people. The crossover was expected to happen in 2023, but the Chinese population unexpectedly shrunk in 2022. What makes this even more interesting is that more than half of the Indian population is under the age of 30, while in China under 30s account for around 34% of the population. As a side note, it is also worth mentioning that these two nations alone account for 35% of the world’s population!
Published online at OurWorldInData.org. Retrieved from: 'https://ourworldindata.org/future-population-growth'
Over the last 10 years, we have seen Chinese GDP growth on a consistent downward trend, while the Indian GDP growth has been a little more volatile but trending sideways. Over this period the Chinese GDP growth has been about 1.5% above that of India, but the trend (and demographics) would suggest that the next 10 years will look quite different. India should handsomely outperform Chinese GDP growth.
Given what we have noted, it would be easy to assume that the Chinese market has outperformed the Indian market over the last 10 or 20 years and the tables are about to turn. What we have seen however is that the MSCI India index has outperformed MSCI China by 10.2% per annum over the last 10 years. This was in part due to the different timing of peak Covid in the two countries. If we look at the 10 years to the end of 2019 (pre-Covid), the Indian market still outperformed the Chinese market by 3.9% per annum. A big part of this outperformance could be the result of more market friendly (or capitalist) policies in India vs China. We should also consider that the rating of these markets differs by a big margin, with the Chinese market on a 12x PE and the Indian market on a 25x PE at the time of writing.
It will be interesting to see how these two populations shape the world over the next decades. We have already seen them both buying discounted oil from Russia (against the wishes of the West) as well as looking to diversify trade away from the Dollar. They are both still emerging markets with GDP per capita well below developed markets, but the impact of their populations (and increasingly India) on the global market should not be underestimated.