The term "Chindia", a combination of China and India, is being used by some economists as they gauge the economic performance of the two Asian juggernauts.
The rise of China and India will change the world economy and generate investment opportunities in the consumer, agricultural, industrial, banking and logistics sectors, the China Securities Journal quoted Jing Ulrich, managing director and head of markets in China with JP Morgan Chase & Co, as saying.
Her remarks were echoed by Timothy J Bond, analyst with Merrill Lynch & Co., who pointed out in a report that the Indian stock market had grown much faster than the Chinese market in recent years but the latter had enormous potential.
Jing Ulrich said overseas fund managers were looking at the two countries as key investment destinations following Chinese President Hu Jintao's state visit to India which ended Nov. 23.
Ashburton, an asset management company based in Jersey, the United Kingdom, launched in November a Chindia Equity Fund that invests in Chinese and Indian companies, according to the newspaper.
The company decided to launch the fund as China is expected to grow at a rate of eight percent to 10 percent per year for a long period, while a growth rate of eight percent is projected for India, said fund manager Jonathan Schiessel.
He said consumer demand would grow exponentially in both countries, driven by an expanding generation with higher aspirations, offering investors tremendous opportunities.
China's economic growth mainly relied on investments and exports, while consumption provided great impetus to India's economy, said Jing Ulrich.
Investment and consumption contributed 43 percent and 40 percent of China's gross domestic product (GDP) in 2006, compared with 27 percent and 60 percent of India's GDP, according to her latest report.
The high savings rate of 45 percent in China led to a fast increase in investment and a decline in investment returns, while the opposite case in India made the country more favorable for overseas investors.
India needs better infrastructure, more investment and greater openness to foreign trade and investment, said Timothy J Bond, adding that China should encourage consumer spending and boost the service sector.
Jing Ulrich said the younger generation in China is eager to buy luxury goods and tends to consume on credit, which gives banks an opportunity to develop consumer credit services.
The country's expanding senior population are potential customers for service companies, travel agencies, hotel chains and insurance companies.
In India, where families will mainly spend on food, education and housing with their limited disposable incomes, she predicted business opportunities for department stores and supermarkets.
Consumer credit is still underdeveloped in China and India where banks prefer to loan money to companies rather than individual clients. But the situation will change as consumers in both countries gradually change their traditional attitudes towards debt, she said.
Mortgage loans will become popular in both countries due to booming real estate markets.
Bullish commodity markets are expected in both countries as a result of the continuous growth in demand for farm products and industrial raw materials.
However, arable land is shrinking at an appalling pace in China, while India's supply of water resources is restricted, she said.
China has been the biggest recipient of foreign direct investment among developing nations for 15 straight years.
Over the next five years, the country will give priority to the quality rather than quantity of foreign investment, according to its 11th five-year plan (2006-2010).
Foreign investors are encouraged to pour funds into modern agriculture, the service industry, high-tech and advanced manufacturing, and help upgrade the country's traditional industries.
The plan emphasizes environmental protection and the efficient use of natural resources, welcoming foreign investments in the control of water and air pollution and recycling.
The plan criticizes local governments that blindly seek foreign investment without relating it to a strategy.
It also notes that emerging foreign-owned monopolies in certain industries pose a potential threat to China's economic security.
Foreign businesses that abuse intellectual property right protection laws have adversely affected Chinese firms' capacity for independent innovation, it says.