The document discusses the impact of China's economic slowdown on India and the global economy. It notes that China's average growth rate over the last 3 decades was 10% but indications now point to a slowdown, with factors like declining trade volume, bank lending, and manufacturing sector. A slowdown in the world's second largest economy could increase risks to global growth by lowering commodity prices and triggering financial instability. Countries that depend heavily on Chinese demand, like those exporting raw materials, face challenges. For India, opportunities may arise in manufacturing and FDI, but exports to China and a weaker rupee also pose threats. The document examines reasons for China's slowdown like debt issues, economic restructuring, and demographic changes.

1. IMPACT OF
CHINESE SLOWDOWN
ON INDIA
AND THE WORLD
Macroeconomics

2. Second Largest Economy
The law of large
numbers:
Bigger an economy
gets, the harder it is
to keep growing at a
fast clip.
Average growth rate for last 3
decades: 10%

3. Indications of slowdown:
• swelling of trade volume by 7%,
• slowing down in bank lending,
• shrinking manufacturing sector
• depleting foreign exchanges.
Global Growth
Rate: 2%
Middle income trap:
China is also restructuring its economy for domestic
consumption. Hence, the overall slowdown might be slightly
fuelled by this and should not be a cause for concern.
Xi Jinping, said it is the
“new normal”:
• less emphasis on growth
• faster structural reform.
Slowdown Factors:
• Stock Market
• Debt Crisis
• Shift in the Economy
• Demographics
• Impact (India and Global)

4. • Country's progress often depends on it's
partner nations or some dominant economies.
Reasons for Slowdown of an Economy
• China being a manufacturing nation
largely depends on it's customer nations
• Clampdown on government corruption such as
gift giving played a significant role in slowing
economic growth because of impaired investor
confidence

5. • Bribery probe for infant formula companies
equally aggravated China economic downshift.
• Disposable income of urban households has
dropped to 8.9% and retail sales value growth
decelerating to 11.7% from 12.1%
• Structural development has slowed down
• Government is not willing to inject more
money into the economy.

6. Total debt has climbed to about 250% of GDP, up 100 percentage points since
2008.
This debt allowed China to power its economy through the global financial crisis
but also saddled it with a heavy repayment burden.
Much of the credit flowed to property developers. China’s inventory of unsold
homes sits at a record high.
Chinese officials attempted to inflate the real estate market but that did not work.
They then nurtured the equity markets to drive consumer demand. This worked for
some time but then became unmanageable.
Steel Crisis
SHIFT OF ECONOMY AND DEBT CRISIS

7. Falls of up to 8% a day and lost trillions of pounds worth of value.
Various bans on share sales were put in place
The People's Bank of China cut both reserve requirements and interest rates, and
pumped extra cash into the markets and that overinflated bubble busted again.
REASON: Information indicating that the Chinese manufacturing sector has fallen
for a 10th consecutive month and as the Chinese Government to devalue the
currency, indicating weakness in the Chinese economy triggered fear among investors
and prompted sell-offs.
STOCK MARKET CRASH

8. China is now such a big force in the global economy that it would inevitably affect the
rest of the world. It is the second largest economy and the second largest importer
of both goods and commercial services.
Commodity prices
Increase in risks to overall global growth:
• China would not confront its slowdown with
growth-supporting policies;
• commodity prices would slide further;
• the US dollar would continue to rise;
• companies would suffer from higher debts.
SLOWDOWN: IMPACT

9. Slowdown one of the big drivers of massive fall in oil
prices
THE SUFFERERS
Ways in which a China slowdown will substantially
impact regional economic growth:
A fading export market
A pullback in foreign direct investment
A trigger of financial-market instability
• Shipping companies
• global technology
• heavy manufacturing
• automotive sectors

10. The biggest concerns are for Asian economies, as well as Australia, Brazil,
Canada, Chile and Peru which depend on demand from China for vital
commodities for industry.
In manufacturing, Hong Kong, Korea, Malaysia, Singapore and Taiwan are
among those most exposed.

11. India’s Opportunities and Threats:
• Demographics
• Manufacturing
• FDI
• Exports to China
• Global Growth
• Weaker Rupee

12. THANK YOU!!
Cherry Malhotra
Ankita Sharma
Arshpreet Kaur
Baljender Singh
Priyanka Banerjee
Anjali Mehta