The New Normal for China and India

MANY people go to Davos simply to meet other people, and heads of state are no exception. All are drawn to the discussions and formal presentations; one of the eagerly awaited presentations was that of the Chinese Premier Li Keqiang. He gave an eloquent presentation, full of hope for the future and stating that China was not going to have a hard landing as its economy slowed - or at least, as its growth rate stabilised at the "new normal" of 7 per cent or perhaps a little more.

As nations become "developed", their growth as indicated by GDP figures year on year falls somewhat, and China is no exception. From 2012 it has alarmed some observers as its growth seems to be faltering, falling from 8 per cent to 7.3 per cent in the last two quarters. Observers seem to forget that China's growth has, over the longer term, varied from 14.2 per cent to 3.8 per cent through 1989 to 2014 - sometimes rising and falling with rapidity. Premier Li sought to calm the markets by his embracing of the "New Normal".

Premier Li's presentation has been widely reported and analysed in detail, but I feel not enough has been presented on the relativities of his views (about China's future) against those presented at the same meeting about India's future. Just ahead of Davos, the International Monetary Fund updated its World Economic Outlook and posted that India's projected growth in 2016 will be about 6.5 per cent, overtaking the 6.3 per cent rate that it had forecast for China.