How India surpassing China as most populous country changes the economic balance of power

Sometime around the end of April, give or take a few weeks—not to mention a few million people—India surpassed China to become the world’s largest country by population, a numerical feat that generated headlines around the world. As population horse races goes, they don’t get bigger than this. By year’s end, the United Nations estimates India’s population will reach 1.429 billion, edging out China by roughly one Toronto’s worth of people.

Bragging rights aside, India’s population growth has garnered so much attention for what it means to the balance of economic power in the world. China’s spectacular growth, particularly from the 1970s through to the early 2000s, was supercharged by a working-age population that doubled in size. As investment flowed in, drawn by low wages and massive government spending on infrastructure, a thriving middle class evolved, and GDP per capita—a measure of prosperity per person—grew five-fold since the late 1990s. However, China’s working-age population is now shrinking, creating demographic headwinds India does not face.

The numbers tell the tale: The median age in India, at 28, is more than 10 years lower than China’s, a gap that will only widen in the coming years. This chart divides the populations of both countries into three categories—young, prime working age and older—and shows the demographic advantage that awaits India. It already has hundreds of millions more young and prime working age people than China. China, on the other hand, has an excess of grey.

Companies like Apple are already being drawn away from China to India’s more youthful workforce as that country seeks to become the world’s new factory floor and as geopolitical tensions make China less appealing.

Still, whether India can match China’s economic performance depends on what it does with its natural advantage. Literacy and education levels remain poor by comparison. That said, India is undergoing an infrastructure revolution, its populace is massively plugged into the internet, and digitization initiatives are bringing business and government services to even its poorest citizens.

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