The biggest risk facing investors in China and India

Financial commentators often ask which economy holds the best long-term prospects for investors - China or India? But it's not that simple, says Morgan Stanley's Stephen Roach. China wants to strengthen its services sector, while India believes a stronger manufacturing sector is the solution to rural poverty. But what will be left for the developed world if the Asian powerhouses succeed?

The China-India comparison is central to the Asia debate. It is also of great importance to the rest of the world. In the end, it may not be either / or.

While China has outperformed India by a wide margin over the past 15 years, there are no guarantees that past performance is indicative of what lies ahead. Each of these dynamic economies is now at a critical juncture in its development challenge - facing the choice of whether to stay the course or alter the strategy. The outcome of these choices has profound implications - not just for the 40% of the world's population residing in China and India, but also for future of Asia and the broader global economy.

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Contributor

Stephen Samuel Roach is an American economist. He serves as a senior fellow at Yale University’s Jackson Institute for Global Affairs and a senior lecturer at the Yale School of Management. He was formerly chairman of Morgan Stanley Asia, and chief economist at Morgan Stanley, the New York City-based investment bank. He is the author of several books including Accidental Conflict: America, China, and the Clash of False Narratives and Unbalanced: The Codependency of America and China.