China Dragon Flu and Indian Elephant Flew?

http://imgarcade.com/1/sick-dragon

With our big neighbour's economic flu worsening by the day, India's political and economic think tank is surely worried. A small economy like that of Greece shook the world, China's woes could be catastrophic, right? The US seems to disagree. But then, for most of the nations that classify themselves as part of the developed world (the USA included), China is still an emerging market. Never mind that it is the second largest economy in the world today, and will continue to be one for quite some time; even if it treads at an annual economic growth rate of about 2% per annum (the present average of the developed world).  The US feels that China can look after itself and it is Europe that needs its tender loving care. the Chinese government has decided to stop interfering in the market and currency dynamics, at least officially. Don't know if that stand will send any form of positive signals to the rest of the world.

Thankfully for a fuel import economy like India, the global price and demand for all manufacturing related commodities have gone down as has global consumption. If it looks at it more from an opportunistic point of view, the Prime Minister's "Make in India" dream can actually come true. The PM must have extracted investments commitments of over US$ 200 billion from the several nations he has visited in the last 12 months. US$ 75 billion from UAE alone just a few days back. It was very heartening to see the welcome accorded to the Indian PM by the UAE Royalty, and citing the importance of strong ties between the two nations based on economic, political, and security synergies. The Middle East as a region has to follow the example of UAE recognizing that deploying petro-dollars in the developed world has lived its times and the region's future lies aligned with the emerging world.

elephant dragon

allsortsemporium.net

One may question if the commitments made will hold good, specially from China  given the current context. The commitment in actuality holds more relevance now than ever. One look at India's massive infrastructure growth plan of about US$ 1 trillion is enough for any nation to align with it as an economic ally, China will behave no differently. There is already word on the streets of China of  Chinese companies migrating to India. Politically, the elephant and dragon may still glare at each other, but economically, it may be the age of "Hindi-Chini Bhai Bhai" (Indian - Chinese are brothers). While some pundits predict the end of the Asian super cycle, I personally feel they have blind sighted India.

There is no gain without pain, and India will certainly contract some of the flu from its big brother. India having gone through many more economic shocks is hopefully more prepared to firewall itself thanks to the prudent measures of checks and balances in the form of an independently governed Central Bank and regulatory bodies that monitor the markets. The Indian Rupee has behaved itself well so far and has slid enough to maintain the Nation's competitiveness. Yes, it will slip more and make imports dearer. Maybe that's just what the doctor ordered to change the Nation's mindset from a CBU/CKD culture to build truly "Made in India" products. I have already started chalking out places to visit in India and sourcing local produce for cooking up food from around the world.

Finally, an old Chinese proverb (or at least will sound like one) - "An elephant growing wings does not become a dragon". As much as we may dream of surpassing China economically, that country is way too ahead of us. It will take some 21 years to catch up even if India were to progress to a 10% growth rate year on year. Too many moving parts need to come in place for that to happen. Not impossible, but honestly quite improbable. But then, we never saw unicorns in India before - now we do. 

Ha! and you think by growing wings you will fly?
Never underestimate the might of a common elephant.
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                               The Chinese Economic melt has cost investors around the world some US Dollar 10 TRILLION in lisses. That is more than the entire GDP of China of US             $9.7  trillion. The flaming of DOW index should wake up the US for sure. The economic epidemic is real.