Economics

Introduction
Political Economy is a branch of political science carried out by the governments in dealing with relationships between individuals and the state. It explores the relationship between politics and economics and how they influence the economy of a country. It analyses how the legislation and government policies affect the economic stability of a country.

Chinas political economy has been growing from communism to capitalism. She has grown to become the worlds fourth largest economy, with its net surpassing that of France and the U.K.
             
Indias political Economy has risen over the years. Its growth was held hostage by the socially based democratic policies that advocated for corruption, protectionism and Government ownership. She underwent substantial economic growth through foreign relations and international markets and fully utilizing her adverse resources.

Size Population
Chinas population is estimated to 1.33697 billion, which is the largest in the world, thus government has come up with policies to control birth rates. Her infrastructure, mortgage, energy and agricultural sector have been stressed (Dougan, 2002)

India is the second largest with 1.179618 billion people. This has affected the health sector equaling the birth and death rates. The government experiences challenges in housing, infrastructure and education sector (Keseelman, et al 2009).

Structure
India is agriculture oriented with government improving its irrigation to support farming. Though Government has a bigger influence in the economic activities of India, the private sector has been given freedom to buy shares in the public sector to ensure quality and expansion of investments. Foreigners have also been allowed to increase their stakes in investing in the country though restricted in certain areas. They have strong controls of the Export Processing zones and phmaceutical industries with expansion in herbal products which has increased their market in African countries. Chinas economic structure is market oriented, with main emphasis in agriculture. The CCP dominates the government of China in all areas, thus it explains the popular communism in the country. Recently, the country is adapting to capitalism.

Also, agriculture is the main economic activity in India with about 52 of the employers followed by the service and industrial sectors. She practices animal and crop farming, and provides transport and telecommunication services. She produces food, cement, mines, oil and machines. China has manufacturing, cotton, pharmaceutical and mining industries and owns the chemical and automobile industries (Zhong, 2003).

Foreign Investment
Both India and China are good foreign investment regions as they are the fastest growing economies. China uses foreign investment to improve its management, competitive ability and productivity. It is also used to cab shortages in their domestic funds and improve their links in world economy. They have various foreign investments among them

Equitable joint ventures where china and other foreign countries pool funds together on agreed upon amounts. They invest in a certain project then share profits and losses in accordance to the ratios contributed. It is the most common in china. The second is investments fully owned by foreigners and operate in china. The foreigner runs the venture catering for the capital, input, and marketing and management costs. China taxes them and they are allowed to take profits to their country.Contractial investment operated jointly is another form of investment where china gives land, employees and building facility and the foreign country provides capital, technology and required equipments. The foreigners only operate for a shorter period of about 5-7n years and its flexibility makes it more attractive to the foreigners. Joint oil exploration is also common in china. China partners with another country to share the different levels of risk like the financial and production risks. China is also popular with the compensation trade venture where the foreign country is either paid in form of goods produced or even other goods to avoid too much dealing with foreign exchange. Others include leasing and intermediate processing where china is supplied with raw materials to produce finished goods. Major foreign investors include Japan, Hong Kong, World Bank, France, USA, Britain, Germany, Italy, Sweden, and Singapore. (Zhong,2003)

On the other hand India is increasing its foreign direct investment. It is permitted in financial collaboration, joint ventures, technology, capital markets in euro and private and preferential placements. According to the foreign policies of India foreign investment in ammunitionarms, atomic energy railway transport and mineral oils can not be owned by foreigners. India can exploit their diverse market of many languages, religion and ethnicity to attract more foreign investment especially in Europe. They can achieve this by developing a wide understanding about India through research firms in other countries. (Keseelman, et al 2009).

Exports
India mainly exports Textiles, plastics, crafts, jewellary, leather and agricultural products like wheat and rice. China exports cotton, food products and advanced technology in many countries (Imbach, 2009).

Role of the state
Both in China and India, the state plays the same role of coming up with economic and foreign policies that encourage growth of their economies. Chinas economic policies include the foreign currency transactions where those dealing with exports are allowed to trade in US dollars or Chinese Yuan, so any other foreign currency has to be changed to CNY before any transaction takes place. Policies on high salaries for employees have been set. Also china has increased its protection for foreign currency by reducing taxes on exports to encourage trade. Some of the foreign policies include the strong controls along the boarder, strong army to fight against enemies and severe punishment to foreigners involved in criminal activities such as drug dealing.

Indias foreign policies a include the strong advocacy against racism and terrorism, equality of all states, good relations with other countries, peaceful conflict resolution means, good bilateral relations, and commitment to the general cause of the United nations she being the founder. Some of their economic policies is the barring of foreign investment in ammunition, fire arms and their railway system. They have also allowed privatization of public firms to boost investments and quality of production in the public sector. (Imbach, 2009).

Conclusion
Based on the above factors, China is in a better position to expand long term as a result of better technology, more efficient manpower, better policies to curb population increase and a large net worth as compared to India.