Why India may be far from replacing China as the global growth engine; gap expected to widen to $17.5 trillion by 2028

[beijingwalker]

Why India may be far from replacing China as the global growth engine; gap expected to widen to $17.5 trillion by 2028​

Bloomberg / Oct 13, 2023, 14:00 IST

HSBC expects the gap between India and China economies to continue to widen in the foreseeable future, expanding to $17.5 trillion by 2028, based on IMF forecasts.

India’s impressive recent economic gains are unlikely to displace China as the world economy’s main growth engine anytime soon, according to HSBC Holdings Plc. “The numbers don’t exactly add up,” economists Frederic Neumann and Justin Feng wrote in a report Friday. India, at the moment, “runs on too few cylinders,” while China is “simply too large to have its importance for the world economy readily eclipsed,” they said.

HSBC expects the gap between the two economies to continue to widen in the foreseeable future, expanding to $17.5 trillion by 2028, based on IMF forecasts. That is equal to the current size of the European Union’s economy. The gap between the two stood at $15 trillion last year.

The bank’s take is in stark contrast to the bullish outlook by others, such as Barclays Plc., that earlier this week said a steady 8% expansion for India will enable it to topple China as a global growth driver in the next five years. The HSBC report also hghlights the difference in consumption and investment trends between the two Asian giants.

Even assuming zero growth in China, and a tripling of investment spending growth in India from its recent average, it would take another 18 years before India’s investment spending catches up to China’s, the economists wrote. Currently, China accounts for around 30% of world investment, while India’s share is less than 5%. Its share in global consumption also stands below 4%, compared to Beijing’s 14%.

Despite this, the economists do expect India will make a hefty contribution to world demand for commodities, consumption and capital goods, making the HSBC economists “bullish on India.”

The South Asian country will likely become a “far bigger player in global trade, possibly attaining a similar, key role in services exports as China occupies in goods supply chains today,” they said.

The International Monetary Fund forecasts India’s economy to grow at 6.3% each in 2023 and 2024, while China’s economy should grow at 5% and 4.2%, in that same period.

Why India may be far from replacing China as the global growth engine; gap expected to widen - Times of India

India Business News: HSBC expects the gap between India and China economies to continue to widen in the foreseeable future, expanding to $17.5 trillion by 2028, based on I

timesofindia.indiatimes.com

 

[kankan326]

Inida's economic growth isn't worth boasting. It is low quality growth and hasn't made any substantial progress.

 

[StraightEdge]

Those figures are pointless, people need to stop using GDP (specially nominal GDP) as some holy metric. It doesn't show much realistic value in terms of quality of life. Factors like GNI, Gross capital formation, employment, real wage growth, current account balance, interest repayment, inflation, healthy life expectancy (not just life expectancy), quality of education, quality of jobs are more important.
eg., China's CPI is almost 0, India's CPI is 5%, there is no point of comparing GDP figures when the inflation is so drastically different. If at all we want to compare, we need to compare inflation-adjusted values.

 

[CallSignMaverick]

Same IMF data actually says otherwise

5.64 times in 2021
3.96 times in 2028

And since HSBC stands for "Hong Kong and Shanghai Bank", not surprised.

 

[Reashot Xigwin]

Same IMF data actually says otherwise

5.64 times in 2021
3.96 times in 2028
View attachment 961166

Also Indian economy are more diverse (healthier?) than China. Chinese economy are too lopsided on manufacturing for export. While Indian economy have agriculture, pharmaceutical, service, tech & others that made up their economy.

China is not the equal to the US. It's the equal to india. & India is catching up fast.

 

[etylo]

Also Indian economy are more diverse (healthier?) than China. Chinese economy are too lopsided on manufacturing for export. While Indian economy have agriculture, pharmaceutical, service, tech & others that made up their economy.

China is not the equal to the US. It's the equal to india. & India is catching up fast.

A real welled green frog's view.

 

[Reashot Xigwin]

A real welled green frog's view.

Said the country that literally closing it self to the world.

 

[etylo]

Said the country that literally closing it self to the world.

I am talking of a person from a well in ghost island. Lol, China is closed to the outside world now ? China is the largest trade partner to more than 150 countries, hundreds of millions of Chinese travel to the outside world each year. This only tells me that you are really a green frog lives in a well.

 

[StraightEdge]

Also Indian economy are more diverse (healthier?) than China. Chinese economy are too lopsided on manufacturing for export. While Indian economy have agriculture, pharmaceutical, service, tech & others that made up their economy.

Not true.

 

[beijingwalker]

Also Indian economy are more diverse (healthier?) than China. Chinese economy are too lopsided on manufacturing for export. While Indian economy have agriculture, pharmaceutical, service, tech & others that made up their economy.

China is not the equal to the US. It's the equal to india. & India is catching up fast.

You will really piss Indians off if you suggest they are now behind China.

 

[hatehs]

Also Indian economy are more diverse (healthier?) than China. Chinese economy are too lopsided on manufacturing for export. While Indian economy have agriculture, pharmaceutical, service, tech & others that made up their economy.

China is not the equal to the US. It's the equal to india. & India is catching up fast.

The majority of India's GDP is service sector, and then everything else follows. Not so diverse as you're trying to paint it.

 

[Reashot Xigwin]

The majority of India's GDP is service sector, and then everything else follows. Not so diverse as you're trying to paint it.

still healthier than china.

 

[DabbuSardar]

still healthier than china.

Manufacturing is a lower rung of development than services, Chinese can be proud of being a great manufacturing nation now, but all that does is serving western consumers with low prices.

It's a win for all, Chinese get jobs and money their consumers get cheaper products.

Everyone of consumers wants a giant factory serving cheaper affordable products.

Blue collar work is a respectable profession.

 

[Reashot Xigwin]

Manufacturing is a lower rung of development than services, Chinese can be proud of being a great manufacturing nation now, but all that does is serving western consumers with low prices.

It's a win for all, Chinese get jobs and money their consumers get cheaper products.

Everyone of consumers wants a giant factory serving cheaper affordable products.

Blue collar work is a respectable profession.

With rising labor cost inside the country & china being china. Companies are running away from china to a third country (vietnam, India & etc.) to set up factory there.

Manufacturing is the one thing that china have. And they are about to lose it.

China's exports and imports drop again in September

China's trade slumped this year amid lackluster global demand for Chinese good and muted domestic demand.

www.cnbc.com

Foreign investment in China falls to lowest level on record

Decoupling and doubts about Beijing's openness spook overseas companies

asia.nikkei.com

Direct investment by foreign companies in China in the second quarter totaled $4.9 billion, an 87% decrease on the year, the largest drop since 1998, when comparable data first became available, according to figures released this month by the State Administration of Foreign Exchange of China.

 

[DabbuSardar]

With rising labor cost inside the country & china being china. Companies are running away from china to a third country (vietnam, India & etc.) to set up factory there.

Manufacturing is the one thing that china have. And they are about to lose it.

China's exports and imports drop again in September

China's trade slumped this year amid lackluster global demand for Chinese good and muted domestic demand.

www.cnbc.com

Foreign investment in China falls to lowest level on record

Decoupling and doubts about Beijing's openness spook overseas companies

asia.nikkei.com

Labor cost was a known issue imo, it's the draconic zero covid policy and wolf warrior embarrassment that made it lose its western clientele, Apple is the canary that others follow, they already have moved out and showed others it can be done.

China will still be a Major manufacturing power near term, that won't last long as Japanese learnt, corporations will find sunnier shores.