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Source- The post is based on the article “A resilient India, but growth pangs for China” published in “The Hindu” on 14th March 2023.
Syllabus: GS3- Economic Growth and development
Relevance– Issues related to big data
News– The Chinese government has projected a growth target of around 5% in 2023. It is lower than that of last year and even lower than the expected GDP growth for India in 2023.
What are the reasons for low growth in China?
The Chinese economy is in a process of structural deceleration.
The consumption expenditure is recovering, external demand remains weak. The scenario of future private investment is weak. There are doubts about the role of the private sector in the Chinese economy and sentiment among foreign investors is weak.
The real estate sector is still dragging down growth. Beyond 2023, the government’s push for astructural shift of the Chinese economy is still on the way.
Over the last few years, tighter regulatory measures have been introduced to containfinancial risks and achieve more social objectives such as a green economy, food security.
How is the Chinese economy undergoing transformations?
The Chinese government has recognised that too high a growth is no longer possible nor desirable. It only aggravates financial imbalances. Sustainable growth has become a key concept in China’s new economic narrative.
Job security is one of the most important objectives of the sustainable growth narrative. It is evident from higher target for new jobs, compared to last past years
The need for jobs explains China’s recent charm offensive to retain foreign direct investment in China as it is an important source of job creation.
Comparison between the Indian and Chinese economy?
While India and China may not be too different in size and population, growth prospects differ substantially.
China has lowered its GDP target further. In contrast, India remains resilient. An acceleration of this pattern is to be expected in the next few years. It will depend on whether reshuffling of the value chain continues, pushed by geopolitics and high costs in China.
