We might say that we don’t need China but is that really possible in today’s interlinked world?
China’s third-quarter GDP growth slowed to 4.9%, much lower than the estimated 5.2%. And this was due to the tepid 3.1% growth in industrial production, much below the expectation of 4 to 45.%. The numbers also showed that businesses were less keen to invest in new projects. Factory output in Sept was the weakest since 2020. The power shortage crisis and the trouble on the realty sector impacted the growth too.
To say that we won’t be impacted is being truly foolish. Despite all the animosity and blocking of apps on social media, the fact remains that China was India’s top trading partner in the April-July period. India’s imports from China rose to $68.5 billion in the first nine month of 2021, up 52% (YoY). India’s total trade with China touched $90.38 billion during the January-September period, and is likely to cross $100 billion by the end of the year.
What does this mean? Is China slowing down or more importantly, can the world afford to have a slowing Chinese economy when the rest of the world is on the verge of recovery? Despite its incursive policies with its neighbours and violation of various Human Rights, China continues to draw one and all like a magnet. Everyone worth their name in salt has set up shop in China or has outsourced manufacturing to China. Every single piece of data which comes out is dissected and debated and usually, makes it to the front page of every business newspaper around the world.
Thus if we look at this logically, we cannot ignore China as it looms large over the globe today simply because it so humungous; towering like the Mt. Everest. Like mountaineers vying to climb the Everest, with unpredictability threatening at every step despite years of experience, China too is an enigma. No one, not even the best brains at Goldman or Moody’s or GE or Apple, are able to lay a finger on the exact working of its development model. Forming alliances with some of the most dangerous and authoritarian countries in the world, while signing the dotted lines with developed countries, one cannot really fathom what really lies beneath.
Coming to the basic question – can the world today cope with a slowdown in China? Well, it will hurt; there is no beating around the bush there. If the fastest growing economy slows down, which are like wheels of an automobile, naturally, if one or two wheels develop a puncture, slowdown is certain. A few years ago, one could have never ever imagined China becoming what it is today. But that is how the changed equation of the global economies stands today.
But let’s look at it logically. India too is pushing ahead with its ‘Make in India’ concept and all the reforms are expected to start bearing fruit from H2FY22. Maybe that’s the time when the world will bounce back too. So, to a large extent, our domestic push will be enough to push our growth but not enough to hit the target of becoming a $5 trillion economy.