India can beat Asian peers, even China: Morgan Stanley

Discussion in 'China' started by LETHALFORCE, Jun 6, 2009.

  1. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    India can beat Asian peers, even China: Morgan Stanley - International Business Times

    India can beat Asian peers, even China: Morgan Stanley




    By Staff Reporter
    05 June 2009 @ 09:06 pm ISTNext Market Article
    India can outperform the Asian region by a margin and even leave China behind in its trail, a top official of financial services major Morgan Stanley has predicted.

    According to Morgan Stanley Asia chairman Stephen Roach, "India is a more balanced economy than the rest of export- led Asia" and it "can actually outperform at the margin versus the rest of Asia as it has a more balanced economy."

    "The real surprise in Asia could be India. India could actually outperform the Asia region by a margin," Roach said, addressing the media at the Morgan Stanley 11th India summit.

    Related Story: Morgan Stanley bets big on India's growth story

    Roach said India's economy has shown more resilience in the present crisis than analysts' expectations and he was more upbeat about India's growth than its rival China. "For the first time in a dozen years, I am more optimistic about prospects for India than China," Roach said.

    "China faces major challenges for the first time in 30 years," he said. "It pushed its export-led model too far, leaving it too dependent on the external climate."

    "India has made improvements in the recent years from the standpoint of macro developments, especially higher savings, increased FDI and a modest improvement in the infrastructure share of Indian's GDP," Roach said.

    Besides, "India has got a large collection of world-class companies, extraordinary entrepreneurs, well-developed markets and an educated workforce that will act in its favor," he said.

    According to Roach, the victory of the UPA coalition in the recently concluded elections was a clear mandate that people wanted a stable and progressive government at the Center.

    "The recent election changes the prospects for reforms," Roach said. "What has been missing in this interplay between the micro and the macro has been the political impetus to reforms."

    Though the comprehensive win of the Congress party means that the newly elected government would not be subjected to pressure from its regional allies while making policy decisions, "the government and politicians need to seize the moment," Roach said.

    On the issue of government stake sale in public sector enterprises, Roach said the process would help in bringing down the country's massive fiscal deficit that has widened to 6.2 percent of gross domestic product (GDP) in the last financial year ended March 31, according to a government statement released on May 29, as the government borrowed more to fund fiscal stimulus packages.

    However, "India would continue to be vulnerable to external capital inflows if the new Government is not able to aggressively tackle the problems of these deficits," he warned.

    Roach also said he supported Morgan Stanley's forecast of India's GDP standing between 5.5 percent and 6.5 percent for the next couple of years.

    "This is an encouraging trend when the rest of the world is going through deep recession. Though it might be a little premature to think that India will be able to achieve 8 percent growththat it is not possible for at least another two to three years," he said.

    Roach also warned that the worst of global crisis is not over and the current rally in global markets is not justified.

    "The crisis is not even half over. The latest assessment from IMF suggests that by the time the crisis ends, over $4 trillion worth of toxic assets will be written down by financial institutions, globally. Today, the writeoffs total only $1.7 trillion," Roach said.

    "Secondly, this is an unusually-synchronized recession in the world economy. Normally, in a recession, half of the world economy is contracting and about half of the world is rising. So, when the rate of contraction moderates, the balance swings pretty sharply towards expansion. This time, as of mid-2009, 75 percent of the world economy is contracting. So, the balance between contraction and expansion is skewed towards weakness that will limit the upside of the world economy," he said.

    "Third is the record decline in consumption growth, a dramatic slowdown from the pre-bubble norm of 4 percent," he added.

    Hence, as such Roach feels the current rally cannot really be justified. "The green shoots of recovery will turn brown this summer. Markets are pricing a V-shaped recovery, which is probably not going to happen. Markets will correct sooner rather than later," he said
     
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  3. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    chinese export driven economy may have peeked with dollar strengthening and inflation coming in USA cheap chinese goods will not be able to compete with cheaper goods from other countries, the low chinese labor cost is not as low as it use to be with the economic boom;and goods produced cannot be sold at the same old cheap prices.
     
  4. badguy2000

    badguy2000 Respected Member Senior Member

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    the power of CHinese industry does not lie in its low labour cost, but in the following two superority:

    1. Chinese has good infrastructures, that can match developed countries.
    2. Chinese has full industry chain, that also can match USA and EU.


    in fact, at least 60 developing countries have lower labour cost than China,but no other developing countries can afford to good infrastructure or full industry chain.
     
  5. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    simple question if USA can buy cheaper in vitenam,phillipines or Mexico why will they buy from China? only advantage china had was they were cheaper but that is no longer true.
     
  6. badguy2000

    badguy2000 Respected Member Senior Member

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    simple question . how can vietnam and phillipines can mass-produce cheaper prodcuts,when they have import all component and material and their infrastructure?

    attention: low labour cost is not equal to cheap price


    . the broken industry chain will increase cost much.
    if you set up a textile plant in Chinese pearl delta, you will get the support of chinee full industry chain and can order all your components ,materials in one town, it can save the cost of transportation much.

    if you set up a same plant in Vietnam, you have to import most of components and material from China perhaps. you have to pay high freight for such import.


    the crappy infrastructure also increase the cost much..
     
  7. badguy2000

    badguy2000 Respected Member Senior Member

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    fact is that :

    the country which owns low labour cost, good infrastructure and full industry chain at the same time can be the winner.


    and now, china is the only country that owns the 3 superiorities at the same time.

    that is why chinese manufacturing can sweep the whole world.
     
  8. johnee

    johnee Elite Member Elite Member

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    ^^^
    @Badguy:
    Buddy,
    You have given a good analysis and I agree with your other points. But why cant you resist from flame baiting? I hope that you dont make comments like the following.

    This reduces your credibility and makes you look like a joker. Please desist from it and we can debate properly.

    PS: once again good points. keep it up.
     
  9. JattDaDanda

    JattDaDanda Guest

    ARE u living in a fantasy world because u my friend is starting babling about your so called chinese industry that you haven't known that you chiese economy has lost more than 40% of its companies already. Now about vietnam, the so called infrastructure is not that hard to build up. It takes about 2-3 months in modern age to construct an infrastructure to a modern standard to match, a modern needs. I think you are still living in 1988 ERA.
     
  10. Known_Unknown

    Known_Unknown Devil's Advocate Stars and Ambassadors

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    China has suffered far more during this economic crisis because of its heavy dependence on exports to the US. The most recent growth figures for China are 6.2 pc and for India are 5.8 pc. India was earlier growing at around 8%, while China was growing at 10%. So India's growth declined by 2.2% while China's declined by almost 4%.

    Supports the Morgan Stanley thesis that India suffers less because it is a more balanced economy.
     
  11. badguy2000

    badguy2000 Respected Member Senior Member

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    yes, infrastructure is not very hard to build.

    to build 60000 KMs long expressway,China just took only 20 years and USA just took only 40+ years.

    if india were to start the tide of construction as harsh as Chinese did, then India would have 60000 KM long exressway when you and I retime in 20 years.

    it is indeed not very long....
     
  12. badguy2000

    badguy2000 Respected Member Senior Member

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    well,

    in the 1st quarter, shanghai in coastal china grew only 2% while Jiangxi province in inland china still grew 10%+...

    does it prove that Jiangxi province is a more balance economy than Shanghai?

    BTW, dozes of province in inland China are still growing 10+% now.
     
  13. Known_Unknown

    Known_Unknown Devil's Advocate Stars and Ambassadors

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    I'm talking about overall economic growth of China. Your own government's figures. Even in India, some states grow at 3-4% while some others grow at 10% plus. But we are talking about total average growth here.

    India suffers less because exports account for much less of our economy than they do of yours. Your economy is kinda like Canada's.....extremely dependent on trade with the US.
     
  14. badguy2000

    badguy2000 Respected Member Senior Member

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    the relation between china's economy and trade is not as simle as you think.

    1.the additional value of export is just a small seciton of CHinese GDP ,although the absolue value of export is about 30-40% of China's GDP.
    sir, can you tell the difference of additonal value and absolute value?


    2. the importance of export to CHina lies mainly in employment, instead of economy growth.

    3.chinese government has much more resource than you think ,and chinese government also can mobile much more resource to stimulate the economy than you think...
     
  15. Known_Unknown

    Known_Unknown Devil's Advocate Stars and Ambassadors

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    I don't know what you mean by "additional value" of exports and "absolute value". Exports as a % of GDP are much higher for countries like China, and Canada as compared to India.

    Your second statement is fallacious. Employment rate is directly related to economic growth. If you want to grow your economy, you have to utilise as much cheap labour as you have at your disposal, and at the same time, without economic growth, you will have massive unemployment. China's economy, just like that of the Asian "tiger" economies of the 90's, is export driven.

    So when the US sneezes, India might catch a cold, but China will have to be hospitalized with pneumonia.
     
  16. John

    John Guest

    China is way to over-rated, India will surpass china by 2050 as the world's largest economy. we have a diamond cutting and polishing factory in China and we're moving because the fixed costs are increasing.
     
  17. badguy2000

    badguy2000 Respected Member Senior Member

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    1.additonal value: the new value created by manufacturing;
    absolute value= the cost of purchased material + additional value.

    For example, you purchase 8000 USD material and produce 10000 USD shoes.
    then the absolute value of your products is 10000 USD while the additional value is only 2000 USD.


    2, chinese export is about 1.5trillion usd,about 30%+ of CHinese 4.3 trillion GDP . it is very high.


    3.but the additional value of chinese 1.5 trillion export is not as much as you think,because many material of export are imported .


    4. the ratio of "absolute value/ GDP" is a joke.:2guns:
     
  18. badguy2000

    badguy2000 Respected Member Senior Member

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    hi, guy ,I always think any anticipation of future over 10 years is just nonsense.

    can people in 1890 anticipate the world in 1930?

    can people in 1910 anticipate the world in 1950?

    can people in 1950 antipcate the world in 1990?
     
  19. K Factor

    K Factor A Concerned Indian Senior Member

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    Dont worry dude, John is Nostradamus in disguise. He could see the flaws of the Rafale in his godly visions. :D :blum3:.
     
  20. Known_Unknown

    Known_Unknown Devil's Advocate Stars and Ambassadors

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    Most of the exports of China are low cost goods like shoes, textiles, toys etc. Walmart and $ stores in North America are filled with Chinese goods.

    Now why would you need to import raw materials for such things?

    Secondly, do you have any statistics to support your theory of value addition?

    Thirdly, regardless of whether or not you're adding value to the finished product, you're still exporting it overseas to earn foreign exchange. That is what drives your factories and generates employment to rural and semi-urban Chinese workers on a large scale. If your customers in the west suffer from a recession, the effect is going to be felt on poor Chinese workers-they will lose their jobs or be forced to work for less pay. I don't see how "absolute value of exports" vs "additional value of exports" makes any difference in this case.
     
  21. K Factor

    K Factor A Concerned Indian Senior Member

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    India built the 5986 Km long Golden Quadrilateral of National Highways in 6 years.

    Golden Quadrilateral - Wikipedia, the free encyclopedia
     

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