[Post-China India] ① World’s Most Populous Country, Surpassing Jung

India is surpassing China this year to become the 'world's most populous country,' eyeing China's position. While China experienced a population decline for the first time in history last year, India’s population continues to grow, and its working-age population is expected to catch up with China by 2030. Especially amid escalating US-China tensions, the United States is engaging in comprehensive cooperation with India to counter China, propelling India?with its demographic advantage?to rapidly emerge as the 'post-China.'

According to the United Nations (UN) population projections on the 13th, India’s mid-year population is expected to reach 1.4286 billion, surpassing China’s 1.4257 billion, intensifying the rivalry between India and China for the title of the world’s most populous country. Although India’s growth momentum is not yet comparable to China’s, it is rapidly closing the gap using its population as a weapon, emerging as a potential competitor to China. Amid US-China conflicts, India, boasting a massive population and growth potential, is highlighted as another market that could replace China, leading to strong interest from major countries seeking to secure a foothold in the Indian market.

Kim Jeong-gon, head of the India-South Asia team at the Korea Institute for International Economic Policy (KIEP), said, "India was the country with the largest population in the world during the Mughal Empire in the 1700s, and regaining that position is a major event in world demographic history," adding, "India’s 1.4 billion population now signifies the creation of a consumer market comparable to China’s."

India’s 1.4 Billion Population... Creating a Consumer Market Comparable to China

One demographic factor that differentiates India from China is its younger population. India’s average age is 28.4 years, possessing the youngest workforce among Asian countries. This is about 10 years younger than China’s average age of 38.4 years. This means that the growth of India’s consumer base until 2030 will be driven primarily by young people. According to KIEP, the proportion of India’s working-age population (ages 15?64) has steadily increased. The share of this age group, which accounted for 60.91% of India’s total population in 2000, rose to 67.45% in 2021.

As India’s population income structure changes, its consumer market is also rapidly expanding. The proportion of the population consuming less than $3.65 per day decreased from 77% in 2004 to 61% in 2015 and 45% in 2019, reflecting a steady decline in India’s poverty rate. Park Dong-hoon, head of the Asia-Pacific Economic Team at the Bank of Korea’s Research Department, analyzed, "India’s working-age population ratio will continue to rise until 2032, strengthening the demographic dividend effect," adding, "The expansion of population size acts as a factor improving employment, expanding the middle class, and strengthening the domestic demand base, thereby enhancing growth potential."

India’s 6?8% High Growth... GDP to Rank 3rd Globally by 2027

India’s high growth rate also enhances its appeal as the 'post-China.' Except for the COVID-19 period, India has maintained high growth rates of 6?8%, and this year, India’s economy is expected to show a favorable trend centered on domestic demand. The International Monetary Fund (IMF) forecasts that India’s gross domestic product (GDP) will catch up with Germany and Japan by 2027, ranking third in the world. The Bank of Korea evaluated, "Since economic reforms in 1991, India has continued to grow, emerging as the world’s sixth-largest economy, and is expected to benefit as a production base replacing China." Since taking office in 2014, Prime Minister Modi has been promoting manufacturing growth policies such as 'Make in India' and 'Self-reliant India.' Although the initial growth momentum was high, it did not sustain, but subsequent active fiscal policies have yielded relatively favorable results.

Compared to major countries, exchange rates and inflation have also remained relatively stable. According to the Bank of Korea, India’s inflation rate is expected to fall to the 5% range this year, which will positively affect domestic consumption and investment. Considering demographic changes and the expanding role as a global production base, India’s economy is expected to maintain high growth in the medium to long term.

Especially amid escalating US-China tensions, India is emerging as one of the biggest beneficiaries. India, with its abundant labor force and massive consumer market, is gaining a windfall from the intensifying US-China conflict. Recent possibilities of changes in global supply chains present an opportunity for India’s manufacturing-centered growth strategy to succeed. In the medium to long term, as manufacturing competitiveness improves and the strength of the huge consumer market is highlighted, cooperation with the United States is expected to strengthen, further expanding India’s role as an alternative production base.

Since the military standoff and border clashes with China in 2017 and 2020, India has been strengthening military and security cooperation with the United States. Kim Kyung-hoon, associate researcher of the India-South Asia team at KIEP, explained, "The United States has a strategic perspective to firmly bring India into its camp in terms of military diplomacy and economic security in the Indo-Pacific region," adding, "India’s status as the world’s largest democracy is one of the key reasons why the US highly values India as a counterbalance to China." The Bank of Korea analyzed, "In the US-China competitive landscape, India is strengthening defense and security cooperation with the US while actively participating in China-led multilateral organizations economically and maintaining friendly relations with its traditional ally Russia, engaging in selective cooperation based on issues," and added, "India is enhancing its position by actively participating in various issues to raise its status in the international community."