Chinese economy has entered into a new normal but moderate growth phase in its transformation journey to become a developed economy. The new moderate growth is quite slower than the explosive 10 percent growth it has achieved for nearly thirty years till 2010. Premier Li Keqiang has told the Parliament that for this year, the Chinese government is expecting a growth rate of 7. This is below the Indian growth rate for the year.
Traces of the new and the inevitable moderate growth phase were appearing for the last several quarters. The economy was growing at 7.5% from 2010 onwards. In 2014, the growth rate was lower than the projected growth. Li has described the new moderate growth rate as the one ‘needed’ and ‘possible’.
As China enters into the new normal moderate growth rate phase, many of its peers among the emerging world are dreaming to enter into the high growth phase China has undergone from 1980 to 2010. Among the emerging world, India is the leading contender to undertake the 1980-2010 Chinese growth story.
At the same time, emulating the Chinese story of sustaining double digit growth for a long time will be difficult for India. A strong manufacturing sector and infrastructure base are to be developed to become the next ‘China’. The magnitude of the Chinese achievement is quite visible from the fact that India was bigger than China in terms of GDP upto 1980. Now, Chinese economy is four times bigger than India’s.
But many believe that the Chinese growth rate was unrepeatable and was consistently high for three decades. India can follow China, but the growth rate will be relatively low. With this slow rate, it may take another thirty-thirty five years for India to catch up with China.