chindia and inflation.

never before have we witnessed two future super economic powers' development as China and India.

Each country has a unique history, huge populations and common boarders but that's where the similarity ends. Different national temperaments and politics; one run by a power elite forcefully keeping the country together and the other the world's largest democracy.

One economy centralized with planned development and total government control on every aspect of economic activity, the other a free market economy that manages growth despite a strangling bureaucratic jungle.

One has a currency tied to the USD and controls all money supply while India has a currency exposed to the whims of the currency markets.

The interesting point at this stage is how the push for growth is now presenting both countries with a similar problem the dynamics of which the world has never seen....

inflation.

China has now increased interest rates by .5% in two months and looks bent on on reducing food inflation head on. Of course there will be plenty of causalities but the governments respect for the average constituent is well known.

India government faces a similar problem but must use control mechanisms that are more subtle.

The similar outcome produced will be unemployment and with India that would cost the government it's job at the next elections.

With China it could be a regional bloodbath.

The way India handles the problem of inflation will signal a maturity that will give it the ability to control the growth needed to deliver it's population out of generational poverty.

China has ingrain problems that can only hinder economic expansion. It's treatment of inflation will tell us everything about the future for the Chinese people.