The reference news network reported on September 11 that British media said that as China's economic growth slows, market turmoil, and decision-making ability are questioned, India seems ready to surpass China to become the world's fastest growing large economy.
The British "Financial Times" website reported on September 9 that the Indian Minister of State for Finance, Jayant Sinha, made a tough stance on "Beyond China." He said that India is ready to "take over the baton of global growth" from China.
According to the report, on the surface, India seems to have room for optimism. As China seeks to get rid of excessive dependence on investment, China's economic growth is bound to decline. At the same time, India's economic growth is expected to reach 7.7%.
Unlike many other emerging economies, including Brazil, Russia and South Africa, which are members of the BRICS, India does not rely on exporting high-priced commodities. This means that India will not be dragged down by the collapse in commodity prices caused by weak demand in China. Not only that, as the world's third-largest oil importer, India has also benefited a lot from the plunge in oil prices. The plunge in oil prices has not only improved India's current account balance, but also eased inflationary pressures. At the same time, India is not a major exporter of manufactured products. Even with weak global demand, the Indian economy has been hit harder, with household consumption accounting for 57% of India's gross domestic product (GDP).
According to the report, the view that India will become a major force in the global economy is at least flawed. If this view makes India complacent, the result will be dangerous. It is unrealistic to hope that India will replace China as a global growth engine. From nominal GDP (the most appropriate measure of the international influence of an economy), India's economic output is one-fifth that of China. In addition, India's share of global GDP is only 2.5%, while China's share is as high as 13.5%. If China's economy grows at an average annual rate of 5%, then in less than four years, China's economic output will increase by the size of India's economy. To say that India can stand shoulder to shoulder with China is like saying that a mouse can pull a tractor.
In general, people have over-interpreted the turmoil in the Chinese market. For China, the era of relatively easy catching up with the world powers is over. But the exclusion of China is seriously misleading. Behind China is the momentum of rapid growth in 30 years.
According to the report, the view that India will easily surpass China's economic growth level reflects the incompetent complacency. People have forgotten that India revised its GDP calculation method in February and increased the nominal GDP growth rate by more than 2 percentage points. According to previous calculations, India’s economic growth rate remains at 5%.
The exaggerated growth rate gave birth to a false sense of security. This may help explain why the reforms that Modi’s government has vigorously promoted have been slow. During this session of the Indian Parliament, almost no reforms were carried out. Modi failed to push for a reform of the goods and services tax, and economists agree that this reform will improve the business environment in many states.
According to the report, although India is relatively separated from the world economy, this is partly because India has not produced products that other countries consider worthy of purchase. As a country that wants to replace China as the world's manufacturing hub, this seems to be a weakness rather than an advantage. These problems will not disappear because there are questionable data showing that India's economic growth has exceeded China's. Indian officials should stop complacent and embark on some meaningful reforms. (Compile / Liu Baiyun)
The Indian government's chief economic adviser, Alvind Subramani, said on September 1 that China's slowdown is a historical opportunity for India.