Economic Slowdown in China: Lessons for India’s Foreign Economic Policy

Abstract

Economic data from China over the past years indicates the slumping GDP growth rate, elevated unemployment, rising deflation, and the sustained pace of trade surplus. It shows that all is not well with the world’s second-largest economy. The present study will examine the performance of the Chinese economy with India’s economy on indicators of GDP growth rate, unemployment rate, inflation rate, and balance of trade to do the evidence-based examination. The study uses empirical, analytical, and descriptive frameworks to examine the nature, causes, and consequences of the economic slowdown in China. The study finds that the relative performance of the Chinese economy is not so bad as to predict that China's growth is now gripped by a severe structural downward spiral that will persist for several years. It offers useful lessons to India’s foreign economic policy to reduce the trade deficit by importing critical raw materials from China for its import-competitive industries as the latter passes through a deflationary phase.