Commentary: China and India – the region's twin growth engines – are stuttering
Dr Duvvuri Subbarao is a former governor of the Reserve Bank of India.
HYDERABAD: China is no longer the economic spring chicken it once was. When the collapse of Lehman Brothers in September 2008 plunged the global economy into a near death experience, it was the aggressive fiscal stimulus provided by China that prevented the downturn from spiralling into a depression.
This time is different. In the wake of the economic crisis triggered by COVID-19, China is ferociously battling its own growth slump, forget about saving the world.
Its economic output shrank by a whopping 6.8 per cent in the first quarter of this year, its first quarterly contraction since 1992.
For an economy that has been turbo charging at breakneck pace for three decades – the Chinese economy has not contracted on a full year basis since the 1970s - this is a stunning decline.
“The Great Slowdown” of China, which today accounts for nearly one-fifth of global output and more than one-third of global output growth, raises two important questions.
First, will China return to being the global powerhouse it has been or will it acquiesce into a structural slowdown to allow its economy to rebalance growth?
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Second, how will the post-COVID-19 geopolitics impact China’s prospects and what repercussions will this have on the global economy, in general, and Asian economies, in particular?
China was already slowing before COVID-19 hit its Hubei province in early January and then rapidly engulfed the world.
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