Rain or shine, India's China problem is a perennial challenge. As China sank into its economic and geopolitical morass in recent years, India emerged as an alternative for global companies under the China Plus One trend. At the same time, Chinese overcapacity became a challenge for the world as well as India. India's border situation with China post Galwan clashes has fluctuated, never seeming to find a resolution despite long negotiations between the two countries. Now, China's hard stimulus is likely to pull foreign money from India which is threatening India's bull market. A large neighbour with an outsized influence on the global economy remains a thorn in India's side. Below are some of the major challenges India faces from China:
Why China's stimulus could be a worry for India
China’s policymakers recently introduced stimulus measures aimed at bolstering demand as keeping the world’s second-largest economy grapples with a prolonged property sector debt crisis, continued deflationary pressure and high youth unemployment.
The People’s Bank of China slashed interest rates on one-year loans and eased rules on purchases of second homes. The government also issued cash handouts and floated new subsidies for some jobless graduates, while the Politburo vowed to boost fiscal spending to arrest a decline in property prices. The move will inject around a trillion yuan ($141.7 billion) in long-term liquidity into the financial market, as per central bank chief Pan Gongsheng.
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