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News– How we can leverage the advantages that are generating due to Strict COVID policy of China and other restrictions going parallel to it.
Where we stand vis-a-vis China?
China’s economy is over five times of India’s. it has a $14-trillion economy, to India’s $2.7-trillion economy. We are too dependent on China for everything from active pharmaceutical ingredients to smartphones. And China’s total R&D spending is 20 times that of India’s.
How the current situation offers a chance to India of catching up?
1) Even though China has fully vaccinated over 90 per cent of its total population (we are at 50 per cent of our adult population), it continues to follow a zero-covid policy. This self-isolation is having an impact on China’s economy — domestic travel is well below even last year’s level, domestic consumption is depressed, and increasingly draconian zero-Covid practices are having an impact.
2)Further, new controls on China’s tech giants and increasingly anti-business rhetoric from top leaders of the country has generated concerns regarding ease of doing business in China. As a result, private equity investors from across the globe are all expressing concern about an excessive reliance on China. There is a widespread undercurrent of wanting to diversify away.
3)China has an extractive institution model in political sphere (due to its authoritarian regime) and inclusive economic institutions but as the book why Nations fail argue ,this is not sustainable in the long run, and inclusive economic institutions can only survive if they are supported by inclusive political institutions and this may create some opportunities for India.
Conclusion-As China struggles, a window of opportunity for India to catch up has opened. We must take full advantage, but that means being clear of what makes us unique as a country, where our strengths really lie, and how we can play to them.
Source– This post is based on the article “A window of opportunity” published in Business standard on 8th Dec 2021.
