China: Alpha and Omega

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China: Alpha and Omega

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• China versus India: The Indian economy had shown GDP growth rates higher than China's, from 2014 onwards, till 2017. Everyone expected nothing to change till 2020 at least. But change happened, as India started slowing, and China pulled ahead. Year 2020 turned it upside down, as India shrank and China grew positively.
• Decadal growth rate: From 2010-20, China's economy grew by 146%, and India's by 52%. (after adjusting for rupee's and yuan's dollar values). But India actually did better than all the 13 other trillion-dollar economies (except China). Seven shrank, and US's 39% growth was the best in the lot. India's decade overall was decent, despite slowdown and recession. Smaller ones like Vietnam and Bangladesh did pretty well too.
• The future beckons: Karl Marx said that capitalistic economies see growth and periodic crises, regularly. But today, worldwide, there are slowly growing problems that need resolution lest they should blow up into explosive forces.

1. Social inequality was highlighted in the "We are the 99%" movement of 2010 that was "Occupy Wall Street". But inequalities are growing daily!
2. Marx also spoke of "a crisis of under-consumption", which is now coming true. The top 1% are growing richer, while lesser people have work, with lesser salaries, and more uncertainties.
3. To imagine that democracy will resolve these problems is to be optimistic, as the Donald Trump phenomenon showed.

• Climate change phenomenon: Till date, economic growth hasn't been hit by climate change in a big way, but the road ahead looks dicey. For President Biden, climate change and inequality are core agenda. India needs to catch up too.
• Nature's capital: In accounting, maybe it's time to start including "nature's capital" into depreciation calculations, to put the right pressure on mining activities and paddy-growing (in north Indian farms). 
• Fiscal trap: As inequalities rise and rise, government may one day, for welfarism, announce a minimum income guarantee that may then be a fiscal trap that is inescapable. The two issue above mean macro-economic policy needs re-assessment. But indeed, without growth as traditionally understood, other goals are tough to achieve.
• China versus India: Today, China's economy is 5.7 times bigger than India's. It was just 3.5 times bigger in 2010. In a decade, China may be bigger than the USA, and with its constantly rising R&D spends, is outpacing India by a huge margin. India spends far less, both as a % of GDP, and in absolute monetary terms. The world is already witnessing how China is moving ahead in latest technologies.
• Military angle: The manner in which China is modernising and expanding, its growing presence in the Indian Ocean region is a certainty. By 2030, either there will be a large military conflict, or many small ones, or Finlandisation of Asia. Not possible to see exactly what. [Finlandisation - the process where a powerful country makes a smaller neighboring country abide by the former's foreign policy rules, while allowing it to keep its nominal independence]

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