Namaste or Nee-Hao

It is popular belief that China is going to be the next economic giant. In fact, the anti-American wishful predict that China will become the new world power and dwarf the hated USA.

Surprisingly (but not too much, knowing how westerners have traditionally been racists against everything Indian), very few people predict India as the next world power. I believe that these predictions are flawed on both political and economic grounds.

Economically, China has a top-down model that has worked amazingly well to transform the country from the starving level where it was left by Mao Tze Tung to the developing level where it is now. But this model has relied mostly on cheap exports to the USA, the good old Far-Eastern model. Worse: it has been largely driven by government rather than by entrepreneurs, which means that China has not raised a generation of entrepreneurs that can take that model and extend it to a domestic market. Exporting to the USA is a relatively easy business model: you simply list all the things that the USA buys, and then make them cheaper. Creating a domestic market is a much more difficult task, because it has to be self-sustaining. Japan went down the same avenue and, despite being a much more advanced capitalist society than China, is still largely dependent on exports to the USA, a fact that causes pneumonia every time the USA economy catches a flue. China, with one billion people and far less powerful companies, is even more vulnerable.
One wonders what happens when the USA will force China to let its currency fluctuate (Chinese goods are so cheap because the currency is kept artificially low, something that benefits inflation in the USA but that won't last forever). One wonders what happens when Chinese companies will have to compete free and fair with American, Japanese and European companies. On the other hand, that is precisely what India has done. Government has merely enabled the transition to capitalism, which the transition has been carried out by thousands of big and small entrepreneurs, who had to develop skills to compete among themselves and with many other "offsourcing" destinations. India is one huge version of the Silicon Valley, with venture capital initially being supplied, directly or indirectly, by the USA but increasingly coming from inside India itself. India has also managed to capture skills in high technology that China can only dream of: by now, India has probably become the second software power in the world after the USA. Long-term, India's economy is better prepared than China's to compete worldwide. Its success depends less and less on cheap labor, more and more on infrastructure, skills and, in general, competitively.
Politically, it should be even more obvious that India has a great long-term advantage: it had 50 years to experiment with democracy, and it is now the largest democracy in the world, the largest of all times. Despite all the trouble with its Muslim minority and eastern separatists, India's democracy has become more and more stable. Legitimate governments and the rule of law have the advantage that people complain about policy, not about the institutions themselves. On the contrary, China is still one of the most brutal totalitarian regimes in the world. Its minorities have been appeased by the sudden economic prosperity, but discontent is rampant both in the countryside and in the cities as poor masses have to sacrifice for the army (that still controls most of the business) and the corrupt elite of capitalists. The likelihood of a Soviet-style collapse is much greater in China than in India. As the capitalist economy creates a middle class (the thing that communists used to despise as bourgeoisie), the middle class demands more power, something that neither the old-fashioned communists nor the new capitalists are contemplating.
Eventually, as Marx taught, this will lead to a class struggle and a revolution. (Right, Mao?) Socially, the wealth gap is much bigger in China (that has already created billionaires, mostly corrupt government officials) than in India. Demographically, India's population is still growing, whereas China is experiencing the biggest slow-down in the entire world: the number of people of working age per every pensioner is projected to fall from 9:1 to 2.6:1 in the next 40 years. Its rapidly ageing population will soon become a major factor. Today, early retirement is a way for China to avoid unemployment. If China is forced to increase retirement age to 65 or even 70, millions of Chinese will be jobless (they already are, but right now they receive a pension, which basically works like an unemployment benefit). Western Europe and Japan have the same problem, but they got the problem after they got wealthy enough to solve the problem (at least for a while), whereas China will probably get the problem while it is still a poor country. China is getting older faster than it is getting richer.
China is expanding its sphere of influence, particularly through acquisition of strategic resources such as oil and raw minerals. But this sounds eerily similar to what Japan did in the 1980s, when it created an inflated demand for real estate and then bought real estate at overpriced values. China's booming economy is creating inflated prices for oil and raw materials, which then China proceeds to purchase at these inflated prices. Japan learned the effect of buying in a bubble: when a slow-down occurs, the bubble bursts, and you are left with a net loss. Last but not least, China's growth relies on a stable Pacific environment and stable routes from the Pacific to its trading partners (Middle East, Africa and Latin America). Ironically, the peace that China needs is guaranteed by the USA, which China itself sees as a long-term competitor for supremacy...

On both economic and political grounds, India might be a safer bet than China.