Made in China 2025 – Thinking about China in India

The Coronavirus Epidemic: Some Economic Considerations for India

There are several ways in which the coronavirus outbreak in China has consequences for the Indian economy, directly and indirectly.

One, the lockdowns in Chinese cities – many of which are economic hubs with populations and GDPs equivalent to small countries – affects production and supply worldwide given how integrated China is into the global economy. India is likely to suffer, too – more than half of India’s imports in 19 categories come from China according to a State Bank of India report[1] and 14% of its overall imports.[2] One of India’s top export sectors, pharmaceuticals, for example, depends heavily for key starting material, intermediates and active pharma ingredients from China.[3]

Both the pharma sector and the Indian economy in general have faced a tough year and were only just beginning to show signs of recovery which are now likely to be delayed due to the outbreak in China.[4] The spread of the coronavirus is pushing the world economy toward its worst performance since the 2008 financial crisis. And while the Indian government has declared itself ready with steps to ameliorate the effects on domestic industry,[5] its record so far is not encouraging.

China’s 19th CPC Congress: Redefining Economic Growth

There are several aspects of the recently concluded 19^th Congress of the Communist Party of China (CPC) that are noteworthy for India.

First, CPC General Secretary Xi Jinping has attempted to redefine what acceptable economic growth is in China. The expression ‘contradiction’ is an important one in the Chinese communist lexicon and until the 19^th Party Congress, the ‘principal contradiction’ was the one between ‘the ever-growing material and cultural needs of the people and backward social production’ or, in other words, China’s inability to provide for the basic material needs of its people. Following nearly 40 years of economic reforms, this challenge has now been met with China eradicating poverty at the most massive scale and at the quickest pace in human history.

This process has, however, also resulted in rising income inequalities between individuals and between regions in China, and massive environmental damage and health crises across the country.