Dinesh Kamath's Editorial 'China is struggling to maintain its economic status' that was published in Newsband

China is struggling to maintain its economic status

China is the world’s second-largest economy. This reflects the government’s continued pump priming by way of increased spending, and a robust property market. Chinese government began a ‘rebalancing’ of the economy by shifting the focus away from a production and export-led model to an increasingly domestic consumption and services reliant one. But China increasingly risks facing slower growth or a “disruptive adjustment” unless it acts quickly.

Japan’s economic doldrums since its ‘lost decade’ at the end of the last century is a primer of what could ensue from such an economic slowing. Risks for China appear high but manageable if the problem is addressed promptly. Their prescription includes the political will to identify companies in financial distress

Let's hope the mildly positive news from China steers our politicians away from patting ourselves on the back and instead looking into our glaring faults such as: Fall in Gross Capital Formation, Continuous fall in exports, Sluggish public and private investment, Atrocious state of infrastructure and cleanliness in urban areas except Delhi and Falling demand from rural markets.

Remember one thing. When China's debt bubble bursts, it will no longer be a preferred investment destination. Its economy has been growing at a scorching pace by massive investments in infrastructure and capacity expansion. That burst will make India as the best investment destination. But India has to remain alert. It should not become a dumping ground for Chinese products.

Authoritarian leadership of China can implement whatever they want which is not possible in India with opposition parties like Congress coming in the way for any strategic reforms. NDA should be given credit for doing better in this environment.

India should avoid Chinese products and buy ‘Made in India’ products and provide employment opportunities to youth in India. India should not buy Chinese products and empower them economically. They work against our country's interests. Indians should firmly resolve to buy ‘Made in India’ products. Think before you buy.

China has been developing economically as well as militarily. Its internal planning has been commendable. It is tightening its loan portfolio and trying to utilise IMG assistance. That is why US is very intent on stopping China from expansion and so it is trying to curb in all ways possible by monitoring its moves.

China’s recent concern on her home investment is due to new competitor India. Due to Make in India campaign, the investors are inclined towards India due to cheap Labour and new ease of doing business policy which the NDA government initiated. China whose economy is stable but due to large investment of money by government in every sector, the external debt and recovery with sluggish and struggling firm is difficult. China's transition from export led economy to consumption and service based economy indeed brings structural changes and China wants to slow down the process of exhausting its resources on exports. China's spending pattern increased and it wants to switch over from blue collar jobs to white collar jobs. Hence the slowdown created debt burdened balance sheets of the Corporates. China's slowdown certainly will have global impact since it has relation with major economies either through exports or with investments. Hence China in the rebalancing process plays low cards and sustains fumbling capital market. But China may bounce back with vigour since it has strong infra with both men and material power and with a committed polity.