Why in News?
Recently China’s annual Central Economic Work Conference (CEWC) was held on December 11 and 12.
What are observations made by China’s central economic work conference observed?
- CWEC – It is an annual meeting held in China which sets the national agenda for the economy of China and its financial and banking sectors.
- Convenors - It is convened jointly by the Central Committee of the Chinese Communist Party and the State Council of the People's Republic of China.
- Attendees - It is attended by all the members of Politburo , China’s prime decision-making body headed by President Xi Jinping , ministers, provincial leaders and executives of state-owned financial and industrial giants.
- Observations
- Recognised the seriousness of the persistent slowdown of the Chinese economy.
- Noted the stagnant domestic demand and worsening external economic headwinds.
- Reaffirmation of technology-driven “high-quality” growth model.
- New directions
- A more expansive economic stimulus.
- Changed to moderately loose monetary policy from prudent monetary policy
- Reducing interest and mortgage rates
- Lowering bank repo rates
- Larger issue of long-term treasury bonds
- Rise in fiscal deficit is being embraced
China has been very conservative in its fiscal policy, and has strictly followed an informal limit of 3 per cent of gross domestic product (GDP) on fiscal deficits.
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- New type of industrialisation, focusing on the digital economy and artificial intelligence-led growth.
- Ensure balance between the pace and quality of development.
- Growth target of 5 per cent and continue to contribute 30% of global GDP growth, as in the past several years.
What was China’s aspiration towards Global South?
- BRI - Belt and Road Initiative BRI is a major contribution by China to the development of the Global South and sought the partnership of international economic organisations in taking it forward.
- Prefered economic partner - The Global South is coming into prominence as a preferred economic and commercial partner.
- Trade and investment - China is not only looking at the Global South as geopolitical ballast but also increasingly as a trade and investment partner.
- Technology Transfer - Open Science International Cooperation Initiative will promote technological advancements that benefit less developed nations.
- Financial Assistance: China committed to utilizing $20 billion in development funds to support projects in developing countries, reinforcing its financial backing for economic growth.
How will it affect India’s interest?
- Increased Competition for Leadership - China's initiatives to strengthen ties with the Global South present a direct challenge to India's ambitions in the region.
- Economic Implications - India's ability to compete economically is hampered by China's financial might such as BRI.
- Strategic threat - China's growing presence in the region can be seen as a strategic threat, especially in areas like the Indian Ocean Region, where China's navy has been increasingly active.
- Security interest - China’s presence in global south can potentially undermine India's influence and security interests in the region.
- Resource Access - China's investments in resource-rich countries in the Global South can limit India's access to essential resources such as minerals, energy, and agricultural products.
- Regional instability - China's involvement in regional conflicts and political dynamics in the Global South can affect regional stability.
What can India do?
- Strengthening India’s own partnerships and leveraging its historical ties with these nations.
- Advocating for equitable representation in global governance and pushing for south-south cooperation at international forums like the G20.
Reference
Business Standard | China turns to Global South
