“When you look at it carefully, China’s growth has been very unbalanced-very much focused on capital accumulation, neglecting consumption. And that is now catching up with China,” he told ET in an interview. “To me, from afar at least, it looks like India is on a more balanced path. I presume you can do a lot more capital investment-both public and private. But the fact that consumption is already a significant share of output, to me, it looks much more balanced,” he added.
However, additional tariffs on Chinese goods, as pledged by US president-elect Donald Trump, may not necessarily divert massive investments by global corporations away from China, he reckoned.
“The competition with China as a place of production is not just on the cost side. It’s also the stability, the policy frameworks, the persistence of that which China used to offer and continues to offer in many ways. That would have to be replicated elsewhere also,” he said.
BCG India chairman Janmejaya Sinha said pain for China doesn’t automatically guarantee commensurate gain for India or others, although a Trump regime may be good for New Delhi in some aspects, given the close bonds shared by the leaders of both the countries.
“The biggest thing is scale. India doesn’t recognise scale like China does. And we need to learn. Even (through) our policies in the past, we have confined the MSME to being MSME. The incentive to go out of that structure has not been great,” Sinha said.Even many of the large Indian players do not have the same kind of vision of scale. “It is starting to get built but not nearly in the same way as China,” he added.Sinha also rooted for five areas for reforms-primary and adult education, water, digital health stack, contract enforcements and digitisation of land records. “The thing is that water, for example, is a binding constraint for agriculture and it is a hard reform… As one German politician said, ‘we know what to do but if we do it we won’t get re-elected’. So it’s not so simple,” he said, arguing, however, that there is no easy way out.
Globalisation in Trump era
Globalisation would very much outlive Trump’s second term as the US president and even world trade volumes could remain resilient as they have, Carlsson-Szlezak said, amid mounting fears that the world’s largest economy would turn more protectionist under Trump. “I don’t think the deglobalisation story has held up very well. There’s plenty of trade, there will be plenty of trade, it will continue. So it’s really the ‘how’ rather than the ‘why’,” he added.
