China: Biggest Loser In India's 'Modislide' Election

[W.G.Ewald]

Gandhi is not the biggest loser overall, however. That honor belongs to Beijing, because it's certain that in the coming years direct foreign investment will head to India instead of China. For a Chinese economy needing outside cash, the redirection will not come at a worse time.

In India, times could not be better for the BJP. Its win was the most decisive since 1984, when Congress's Rajiv Gandhi won after the assassination of Prime Minister Indira Gandhi, his mother and Rahul's grandmother.

As a result of the landslide, the BJP's charismatic Narendra Modi formally takes over Wednesday as India's 14th prime minister.

China: Biggest Loser In India's 'Modislide' Election - Forbes

 

[no smoking]

China: Biggest Loser In India's 'Modislide' Election - Forbes

Well done, Mr Chang!
Chinese people will remeber your effort forever!
Keep it on!

 

[Ray]

Gandhi is not the biggest loser overall, however. That honor belongs to Beijing, because it's certain that in the coming years direct foreign investment will head to India instead of China. For a Chinese economy needing outside cash, the redirection will not come at a worse time.

This century is already supposed to belong to China, but that pronouncement is not heard as often now. China's economy, the motor of its rise, is sputtering and on the edge of an historic failure. At the same time, Beijing is intensifying its discriminatory investigations of multinationals.

In a deteriorating economy, Beijing's blame-the-outlanders policy may be good politics, but it is very bad economics, especially in the long run. China, unfortunately, is unlearning the wisdom of the Chinese leader who launched reforms at the end of the 1970s, Deng Xiaoping.

At a moment when the Chinese economy is teetering, he is indirectly giving it a shove in the wrong direction. The "giant sucking sound" you will soon hear is money, once headed for China's shores, on its way to India's instead.

These are truism that cannot be ignored and should be watched.

 

[Ray]

Why India Will Soon Outpace China

Dig a little deeper though and the picture doesn't appear as favourable for China's economic prospects vis-a-vis India's. First, it's highly probable that China's GDP growth rate is slowing much more than the fraudulent figures put out by the government (I'm not picking on China here as many governments are guilty of this). Second, credit tightening in China will almost certainly take years rather than months given the boom which preceded it. Third, Chinese economic reform will be a drag on growth in the near-term, as can already be evidenced by the crackdown on corruption and its impact on retail consumption.

On the flip side, there are many signs that India's economy may have bottomed. The current account deficit has significantly eased, the currency has stabilised, inflation has substantially pulled back and corporate earnings are improving. With inflation down, interest rates will soon be cut, which may prove the catalyst for the next investment cycle. The election of a new, economically-friendly government should ensure an acceleration in investment and improved productivity.

There are other positive developments which augur well for India too. For instance, there's an ongoing boom in the agricultural sector with rising investment and wages. This has resulted in India becoming a net food exporter – an important development given the country's dependence on agriculture.

Modi: friend or foe?

The big question is whether the almost-certain-to-be new leader, Narendra Modi, can deliver on the inflated expectations of him. India's stock market is certainly answering in the affirmative as it hits new highs (though it's noteworthy that small caps have significantly lagged).

Modi's economic track record is undoubtedly impressive. He's been chief minister of Gujarat, a state with 60 million people, for 12 years. During that time, he's cut red tape, built substantial infrastructure and contained corruption. Business and investment have thrived. Gujarat GDP has grown 3x under Modi's leadership. The state now produces 25% of Indian exports yet accounts for just 5% of the nation's population. Most social indicators in the state have also improved under his watch.

As leader, Modi has promised to replicate his Gujarat policies of improving infrastructure, reducing regulatory hurdles for businesses and ultimately achieve higher growth rates. Granted, he's been vague on how he's going to finance some of his promises. Given the fiscal situation, there's not much room for a substantial boost in spending

What matters most though is the opinion of the Indian voter. There's a chance that Modi could win an outright majority of votes in the general election, which would allow him to rule without coalition partners. The most probable outcome is that he'll win a near-majority and will be able to build a coalition with a small number of partners.

By voting for Modi, Indians will be clearly saying that they're tired of the Congress Party's policies of protectionism, the bribes disguised as subsidies and corruption which goes along with these. They're demanding policies to promote economic growth, development and jobs. And they want decisive leadership rather than bumbling and infighting.

It may be a stretch to suggest that voters favour market-driven solutions over government-driven ones. But the tide has certainly swing in that direction.

Ultimately, Modi is expected to be given a strong mandate for change and his business-friendly credentials bode well for the country's economic prospects.

Despite slowing, China's economy is still growing at a much faster clip than India's.

- But that may be about to change with signs that India's economy has bottomed while China faces serious downside risks.

- With inflation falling in India, interest rates there are set to drop and this, combined with a new, business-friendly government, should provide the impetus for the next business investment cycle.

- For a long time, India's decentralised economic model has been viewed as inferior to China's authoritarian, top-down model. A reappraisal of that view may soon be in order.

Why India Will Soon Outpace China - Forbes

 

[Singh]

India will outpace China because Chinese economy is now 4-5x bigger than India's.

Impossibru for them to keep such high growth

A 10% growth for China is the same as about 45% growth for India.
A 10% growth for India is about 2% growth for China.

Sent from my iPhone using Tapatalk

 

[jon88]

These are truism that cannot be ignored and should be watched.

Except for one thing.......Gordon Chang has been wrong for one and a half decade about China. I don't think you can even consider this guy as an authoritative figure on China matters.

 

[Ray]

Except for one thing.......Gordon Chang has been wrong for one and a half decade about China. I don't think you can even consider this guy as an authoritative figure on China matters.

Well, maybe so.

But he is not 100% wrong.

Even Mao, who was 100% right while he lived, suddenly became 70% right and 30% wrong after his death!!!!!!

Perceptions!

And Forbes?

Western propaganda, right?

Or maybe 30% wrong and 70% right.

Who knows.

Terima kasih. or for you, 谢谢

adakah anda cina

 

[jon88]

Well, maybe so.

But he is not 100% wrong.

Even Mao, who was 100% right while he lived, suddenly became 70% right and 30% wrong after his death!!!!!!

Perceptions!

And Forbes?

Western propaganda, right?

Or maybe 30% wrong and 70% right.

Who knows.

Terima kasih. or for you, 谢谢

adakah anda cina

bukan cina...

 

[jon88]

Well, maybe so.

But he is not 100% wrong.

Even Mao, who was 100% right while he lived, suddenly became 70% right and 30% wrong after his death!!!!!!

Perceptions!

And Forbes?

Western propaganda, right?

Or maybe 30% wrong and 70% right.

Who knows.

Terima kasih. or for you, 谢谢

adakah anda cina

He has been writing for Forbes for a long time and his China articles are almost always 100% China negative. I subscribe to Forbes. I just think that you might want to quote someone else who are much more credible. He has been wrong a lot of times, especially on China and has been criticized even by his own magazine colleagues.

Yes, China might be the biggest loser with Modi wining the election, but using Gordon Chang's article do not carry much weight. Infact, it might propel it the opposite way since he(Gordon) has been proven wrong many times.

He predicted China will collapse in 2001. In 2006, he says he was off but the collapse is imminent, it will be 2011. In 2011, he says China will collapse in 2012, saying he was only off by one year. The China collapse never came. Yes, China will collapse one day, just like any country in the world, and just like everyone will die eventually. Say, if China do collapses 50 years from now, Gordon Chang will tell you "I told you so". You call this guy a China expert?

I am not saying your argument is wrong, bud. I am saying you choose the wrong guy to backup your argument.

 

[badguy2000]

it is quite brave to buy Mr. Gordon Chang' words.

 

[Ray]

I am aware that Chang is not always right.

But he is not always wrong either.

Just like Mao.

NO article on Economics can ever be totally right.

There are too many variables and too many models.

Forecast on China can never be accurate since all the variables cannot be ascertained first hand and much of the indices on which to base assertions are on figures that are again questionable.

From WSJ

It's typically advisable not to accept Chinese economic data at face value –as even the country's own premier will tell you. Figures on everything from inflation and industrial output to energy consumption and international trade often don't seem to gel with observation and sometimes struggle to stack up when compared with other indicators.

How the figures are massaged and by whom is as much a secret as the real data itself. But in an unusual move, the National Bureau of Statistics – clearly frustrated with the lies, damn lies – has recently outed a local government it says was involved in a particularly egregious case of number fudging, providing rare insight into just how we're being deceived.

According to a statement on the statistics bureau's website dated June 14 (in Chinese), the economic development and technology information bureau of Henglan, a town in southern China's Guangdong province, massively overstated the gross industrial output of large firms in the area.

An investigation by the state statistician into a sample of 73 out of a total 249 firms counted in the data found that 38 were too small to be counted as large firms and so shouldn't have been included, and a further 19 had either stopped production, moved out of the town or otherwise ceased to exit.

The statement said that 71 companies surveyed by the statistics bureau had industrial output of 2.22 billion yuan ($362 million) in 2012 in total, but that the local government recorded it as being 8.51 billion, almost four times as much as the actual figure.

The data was supposed to be contributed by the firms themselves using an online platform. Instead, employees of the Henglan economic development bureau entered the figures themselves from their office, the statement said. It also said that by May or June last year the relevant government leaders in Henglan knew about the distortions but chose not to do anything about it.

Calls to the Henglan economic development bureau Wednesday went unanswered.

The statistics bureau doesn't say why Henglan inflated its industrial output numbers. But indications that a local economy is sagging could reflect poorly on the prospects for promotion of local officials, and China's southern provinces have been particularly hard hit by the global slowdown in demand for the country's exports. Factories have closed, moving inland and overseas in search of cheaper labor, denting local government revenues.

"When governments are looking to burnish their track record, that can put the local statistics departments in a very awkward situation," said a commentary piece that ran Tuesday in the Economic Daily (in Chinese), a newspaper under the control of the State Council, China's cabinet. The article said that one of the biggest obstacles to ensuring accurate data is that the agencies responsible for crunching the numbers aren't independent from local authorities. Moreover, it argues that penalties for producing fake data were too mild to act as a deterrent.

The National Bureau of Statistics said that it pursued the Henglan case on a tip from a whistleblower. How widespread the problem is elsewhere in the country is anyone's guess. And sure, this may have been going on for years with little real impact on economic decision making. But with China's growth slowing for first time since becoming a major player in the global economy, artificially inflated figures threaten to further complicate efforts by companies and governments everywhere to gauge what that slowdown means for them.

http://blogs.wsj.com/chinarealtime/2013/06/19/a-rare-look-into-how-china-fudges-its-numbers/

From South China Morning Post on 2014/05/17

Exports a handy fudge when playing the Hong Kong GDP numbers game

They had to let a lot of numbers go this time at Census and Statistic in order to find something upbeat for the press release on the latest gross domestic product figures....

Read more at

http://news100hk.com/news/exports-a-handy-fudge-when-playing-the-hong-kong-gdp-numbers-game-43881

 

[amoy]

Gordon Chang certainly appeals to his target audience. Otherwise his books wouldn't have sold, or the funding for his "research" may have stopped.

Often enough one is prone to info that only reinforces his own preconception while screening out info that doesn't.

 

[Ray]

I am aware that Chang is quite a few time off his top.

But I would still read him since it is, what it is, just another view.

I rarely take the economists at their face value since each thinks he is cats whiskers, only till proved wrong.

The same case as the 'battle' between Bhagwati and the Nobel Laureate Amartya Sen. They are both right and also horribly wrong too because each is batting their favourite line of economics.

 

[pmaitra]

Well done, Mr Chang!
Chinese people will remeber your effort forever!
Keep it on!

Mr. Chang is like Fareed Zakaria.

They spout the script given to them by the USG.

It is safer to assume the opposite of what is being stated in articles authored by such people.

 

[ninja85]

China: Biggest Loser In India's 'Modislide' Election - Forbes

in 1984 corrupt congress got majority vote after assassination of Prime Minister Indira Gandhi, his mother and Rahul's grandmother
thats correct but that votes was just votes of sympathy and nothing else.