Watch China and India!

3042 views



There are two countries that will have a great impact on the future of economics and political mobility and I do not mean the United States and Russia, but rather China and India.

China is an important, effective and influential economic weight at the global level. Its every movement has profound repercussions on the international level, but China today has a clear concern and fear. It has achieved a low growth rate, the first in its 30-year history, and it is no longer growing as it was before. It is a country where the average income is growing, but which cannot maintain a double-digit growth rate.

China has a long history of large companies in the public sector and in diverse fields, such as electricity, iron and steel and telecommunications, and now 34 percent of those companies are losing revenue. Since the sharp structural reforms in its economy, China has built a successful private sector and sustained profitability. This sector was solely responsible for achieving economic growth, creating new and innovative jobs and giving China an advantage from which it is reaping benefits today.

However, under President Xi, China has turned its back on the private sector, focusing on support and attention to government institutions and the public sector. In 2016, the ratio of new loans to the private sector was 11 percent compared to 83 percent for public sector companies. This is a huge change compared to the previous six years when the private sector received 36 percent of new loans as compared to 48 percent for the public sector.

China used to pump large amounts of money into its economy with every sign of a crisis on the horizon, and in many cases the state itself was the lender and the borrower. After the financial crisis in 2008, the Chinese government provided financial support to the economy to “keep” growth rates equivalent to 12 percent of GDP. This subsidy kept the growth rate high, but the cost of doing so was high, as well. The ratio of public debt to GDP reached 253 percent, an alarming rate that will inevitably slow down long-term growth.

Most of this debt involves both private and public sector companies. If China loses its investment in Venezuela amid the political turmoil in that country, the Chinese debt crisis may be similar to a time bomb.

India, the greatest democracy in the world will soon hold parliamentary elections that will be watched by the world as global democracies are threatened by populist and far-right movements. The Indian ruling party has now adopted a more hardline position, resulting in an increase in hate speech full of racism and exclusion. But because India is a vibrant society, the ruling party has recently lost in three major states.

The Indian elections will be watched by a world seeking reassurance as democratic machinery has been hijacked in some parts of the world that have become a focus for tyranny. Many models of democracy are democratic in name only.

China and India are the two global powers with the greatest impact on the future. It is now the Asian era.


3042 views