Although India Is on Track to Becoming the Fastest Growing Economy, It Might Need Another 78 Years to Surpass China

New Visit Begins $22bn New Economic Era

First Published Date: May 21, 2015

China and India may have non-agreed issues from decades of mistrust, but economic cooperation is something these two Asian giants can agree upon. India’s PM Narendra Modi’s recent visit opened up a new economic bridge paved by $22bn to begin a new era of cooperation.

As China’s economic growth starts to slow down, India is expected to overtake China with its growth rate of more than 8 percent to become the world’s fastest growing economy. And China takes notes by not missing to become a partner of the growth opportunity in India.

China has expressed interest in investing in India’s $2tn before, but the progress has been slow due to various political issues on the Indian side. However, at the end of Mr. Modi’s visit to China, both countries signed $22bn deals to boost economic ties, starting with areas such as renewable energy, ports, financing and industrial parks, and so on.

Although India is on track to becoming the fastest growing economy, it has a long way to go to become the next China. China’s GDP is about five times that of India. As a recent Wall Street Journal post points out, India would require 78 years to surpass China at its current economic rate.

Although the new India-China economic cooperation begins a new era, their non-economic rivalries remain strong with no ending in sight. Decades-long border disputes and vying for regional influence to become the regional big brother are here to stay and have no indication of resolving anytime soon.

China’s Yuan Keeps Rising

China’s Economy Improves

Published Date : September 6, 2014

China’s Yuan is on a roll. For the third straight month, it rallied against the U.S. dollar. Last year, the picture was different as the yuan tanked. As China’s economy continues to improve, the yuan has further room to climb up.

Although the yuan has gained 1.5 percent since last year’s low, the yuan is still down 1.9 percent for 2014. As recent economic data shows better growth, especially in manufacturing and real estate, the Chinese government may be lenient and let the yuan go even further.

Chinese stock markets seem to be doing just as well. The Shanghai Composite Index reached its highest level in seven months, making investors grab more blue chip stocks recently. Also, in the offshore currency market, global investors – especially hedge funds – are betting on more positive currency runs.

China, the world’s second largest economy, averaged 10 percent growth yearly for 30 years in the past. However, recently China is struggling to achieve its target of 7.4 percent growth per year. The IMF recently predicted that China’s economic growth will be 7.1 percent in 2015 and will slow down further in the future.

In the past, especially in early 2014, there were many reports and predictions pointing out the collapse of the Chinese economy. None of them proved to be correct, however, as several recent economic data show that the Chinese economy is not going downhill, but rather climbing upward.

China Eases One Child Policy

China Relaxes One Child Policy

First Published Date: November 27, 2013 ADawnJournal.com

In the past, I wrote about how the Chinese economy got its boost from its one-child policy: China’s One Child Policy. In a recent announcement, after months of speculation China announced that it is relaxing its unpopular and decades-old one-child policy.

The new policy change will apply to those families where one parent is an only child. In some places, especially in the countryside, families can have a second child if the first child is a girl. It is estimated that some 20 million parents will be affected and can have a second child.

There are possibly 2 reasons behind this policy shift by the Chinese government. China will face enormous labour shortages in the future due to its heavy concentration of aging population. Over 25 percent of its population is expected to be over 65 by 2050.

And then there is another problem of gender imbalance. Unless changes are made rapidly, in the near future Chinese males will be unable to find a female partner to get married, and this could mean nearly 24 million men will be unable to find wives by the end of the decade.

Despite the easing the one-child policy, the policymakers are not expecting a dramatic growth of newborn babies creating a Chinese baby boom. New generation Chinese families are opting for smaller families and the fertility rate is already on the decline.

As time goes by, if no significant or unexpected population influx arises it is possible that the Chinese authorities will abolish the remaining family planning restrictions altogether.

The Standard of Living in China

China’s Standard of Living

First Published Date: April 1, 2013 ADawnJournal.com

China, one of the most fascinating countries on Earth, has existed for more than 5000 years and is currently the second largest economy on the planet. This country is going through a remarkable and rapid change with widespread economic reforms. Before 1949 China was characterized by extreme poverty, income inequalities, and insecurity. By 1987, the average national life expectancy has more than doubled with increased living standards.

Starting in 1980, due to economic reforms, the standard of living started to climb beyond the basic level. The general population had adequate food, clothing, and housing, and ordinary families could eat a variety of foods, wear stylish clothing, and indulge in luxury items such as electronic appliances, furniture, and shiny personal vehicles.

The level of poverty fell from 84 percent to 16 percent from 1981 to 2005. The infant mortality rate and maternal mortality rates have fallen 39 and 41 percent from 1990 to 2005. The access to telephones increased 94-fold to 57.1 percent of the population having telephones.

China may be a huge economy, but its per capita income is only $5,400, which puts it 90th in the world. Also, China has the second largest number of poor people in the world, only after India, with more than 170 million people living below $1.25 a day international poverty line. Ten percent of Chinese population still live in extreme poverty.

Although the living standard in China is rising in general, the differences between rural areas and big cities, and the eastern seaboard and deep inland remain strikingly high. The World Bank once said that China is one of the most unequal countries in Asia. Although the majority of Chinese feel that they have a higher standard of living than their parents, there are rising concerns over inequality, corruption, and consumer protection.

Even with these problems, China is relentlessly working hard to fix them and reduce the gap between the rich and the poor. The former president of China, Hu Jintao, predicted in his speech that China is aiming to double its 2010 GDP and per capita Income by 2020 for both rural and urban residents. As the years go by, things are looking brighter for this amazing country.

China Currency Gets More Freedom start

China Doubles Currency Trading Band

First Published Date: April 19, 2012 ADawnJournal.com

China took another step towards the future to make its currency globally compatible on Saturday, April 14, 2012. The Chinese government announced that it will increase the trading band or range in which the renminbi (or the yuan) can trade against the dollar from 0.5 percent to 1 percent.

The fluctuation will still be done against a fixed benchmark, and this benchmark is set by the central bank. However, allowing it to fluctuate from 0.5 percent to 1 percent will increase China’s currency role in the global financial markets.

Although the U.S. has been demanding more currency freedom from China to ease its unfair advantage to exporters in China, this doubling the size of the renminbi’s trading band against the dollar may not work the same way as the U. S. is expecting.

The yuan increased about 4 percent in 2010 and about 5 percent in 2011. Many Chinese leaders believe that the yuan is close to an equilibrium. The yuan’s outlook among investors in the offshore non-deliverable forward market is not rosy and it is believed that there is room for the currency to depreciate. Also, as China is going through the slowest economy in a decade, Beijing is willing to concentrate more on its domestic economic growth than foreign export. A more flexible currency may give Chinese exporters more room to maneuver, making the currency lower than going higher.

As China wants to see the yuan as a global reserve currency and Shanghai as global financial and banking centre, the Chinese government is gradually allowing its currency to trade more freely and expect more moves from the Chinese government to achieve its dreams.