The Future Of India’s Economic Growth:How China’s Economy And Its Relation With U.S Can Benefit India
July 21, 2021
Covid-19 has shaken the entire globe, and India is no exception. With our lives shifting to the new normal and the health catastrophe we are experiencing, the country is also dealing with a significant economic crisisdue to the pandemic. And in order to overcome this, we’ll need to not only improve our current institutions, but also seek for new possibilities so that the economy can rebound like never before.The relationship between the United States and China, as well as the Chinese economy, have a significant influence on India, and these are the conditions we should take advantage of, economically.
When it comes to India’s economic development, the current slowdown is not just due to the pandemic and the lockdowns, but also to the fact that the economy has been sluggish since 2017. The pandemic and the lockdowns however did wreaked havoc on the economy, altering supply and demand, generating unemployment and lowering salaries. India recorded its worst growth since 1996 with GDP contracting by 23.9% in Q1 of the 2020-21 FY.China’s economy, on the other hand, had an initial downturn as a result of Covid, but it has since made a remarkable return by being the first to reopen its economy and accelerate its growth.It has made creative policy moves in recent years that have benefited and will benefit them significantly, and which India should learn from. The Regional Comprehensive Economic Partnership (RCEP), the Made in China Initiative, and the Belt and Road Initiative are just a few of them. India was in discussions to join the RCEP at one point, but eventually withdrew.
Despite this, China continues to face a serious problem: a large number of multinational corporations (MNCs) have opted to shift their manufacturing out of the country, with a few even moving to India. This is mostly due to the trade war between the United States and China, as well as China’s human rights issues and a production slump due to a lack of labour and Covid-19. Since both sides entered the trade war and imposed tariffs on each other’s exports, relations between the US and China have deteriorated.
The most important move India needs to make now in order to benefit economically and enhance trade and growth is to consider joining back the Regional Comprehensive Economic Partnership (RCEP), since the benefits we might have gotten from it are enormous. Furthermore, India must take advantage of the US-China relationship by manufacturing and exporting the items on which the US has put tariffs on Chinese imports. While India has been able to lure some MNCs away from China, it still lags far behind Vietnam, Taiwan, and Thailand. Along with the Production-Linked Incentives (PLI), India needs to establish other programmes such as increasing the infrastructure and making the administrative processes easier. However, it is also important to remember India’s Neighbourhood First Policy and the importance of maintaining good relations with China.
Thus, if properly utilised, China’s economy and U.S.-China ties may be extremely beneficial to India, helping in not just reviving the economy but also achieving new heights and progress.
