CHINA’S citizens may have celebrated “APEC blue” skies at the recent Beijing summit. But amid the nation’s recent diplomatic triumphs, analysts suggest China could still be eclipsed by India as Beijing confronts growing environmental and structural challenges.
Speaking at Brisbane’s recent Group of 20 Leaders’ Summit, China’s Finance Minister Zhu Guangyao said the world’s second-biggest economy was undergoing “a period of pain” as it tackled structural problems threatening its growth targets.
“We do have problems that have been accumulated over time. The first is the overcapacity of our economy, second is the problem of shadow banking, and the third main problem is debt accumulated over time by local Chinese governments,” he said.
Zhu said the world economy “faces greater downward risks,” with the Chinese economy also adjusting to a “new normal” of slower growth.
“Right now the Chinese economy is in a period when we are changing gear. Our economic structure is undergoing a period of pain and we are also in a period when we are absorbing large-scale stimulus packages we rolled out earlier,” he said.
He added, “Now is a ‘new normal’ for China’s economy [which]means the Chinese economy will be running at a relatively high speed instead of a super-high speed. In the normal economic functions we must also take into consideration factors such as the environment and energy.”
Zhu quoted the Chinese president in suggesting that Beijing’s emissions deal with the United States reflected a new focus on putting the environment ahead of unsustainable economic growth.
India to outpace rivals
Japan’s economic woes since the 1990s in attempting to change its previous growth model might indicate the challenge Beijing faces. But according to a recent report by the University of Oxford’s Oxford Martin School and Citi Research, India’s superior demographics have it well placed to expand at a faster pace than its communist rival.
Based on projections by the Organization for Economic Cooperation and Development (OECD), the report predicts India outpacing rivals by growing at an average annual rate of 6.8 percent from 2018 to 2030 and 4.3 percent from 2031 to 2060, ahead of China’s 5.4 percent and 2.1 percent, respectively.
“The demographics of India are more favorable than those of China as China’s labor force has already peaked. Conversely, India still has a young population and will grow at least through 2045 when the country is projected to be home to just under 1 billion workers. India will have 25 percent more workers than China by 2060 while China has 24 percent more today,” the report said.
The report suggests the “demographic window” that has helped power economic development will close in China by 2020, remaining open in Indonesia until 2035, Malaysia until 2040 and not shutting in India until 2045.