For the first time since 1998, Chinese leaders have failed to meet their growth targets. While statements by Chinese spokesmen seem to undermine this fact, it looks like China’s economy is slacking and entering a period of uncertainty.
During the last quarter of 2014, the International Monetary Fund ranked China as the largest economy in the world in terms of GDP based on purchasing power parity. The IMF’s measurement suggested that China had surpassed the U.S.’s percentage of the world’s purchasing-power-adjusted GDP by around 0.2%.
Nevertheless, the chief of China’s National Bureau of Statistics, Ma Jiantang, just confirmed that official numbers may have underestimated price levels and overestimated GDP. This information suggests that, in order to meet their high growth targets, Chinese leaders have just been counting inflation, and that the actual fall in growth experienced by China during the last years is actually more significant than the world was made believe.
While China deals with this slowdown, which might or might not be temporary, India’s economy continues to grow steadily and appears to have better prospects for the future. Its popular democratic government is successfully building infrastructure and dissipating the effects of isolation, illiteracy and absence of technology that held back the country until recent years. Today, all of these factors have led India’s economy to be placed among the top ten largest economies in the world.
Even though both of these countries are bound to suffer the “catch-up” effect, current conditions in India have led experts to predict that it will be growing at a faster rate than China by 2017. This makes sense considering that the efficiency of China’s authoritarian capitalism is still in question, its population is shrinking and its economy has notoriously slacked. It wouldn’t be surprising to see the Indian economy surpassing the Chinese one in the close future, taking for granted that its democratic government keeps efficiently promoting growth as it has during the last decades.
Sources
http://rt.com/business/194264-china-surpass-us-gdp/
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“Authoritarian capitalism” is a nice-sounding though vague label, as the terms are often held to be mutually exclusive. But the economy “slacked”? – for the US 7% growth would be miraculous, even for a single quarter.
Are economies however in competition? That’s implicit in the “falling behind” label, but why should we care whether China is growing faster than India? It’s interesting at an intellectual level if it helps shed light on what undergirds growth, but otherwise is irrelevant, is it not? [Note: that’s my claim. Am I just being a devil’s advocate? Try to think about when cross-national comparisons might be useful, and not just (literally!) academic.]