At the heart of China’s economic conundrum lies a series of structural issues. The country’s labour market has been grappling with unemployment, posing significant challenges for its workforce and economy at large. Additionally, the bursting of the real estate bubble has further exacerbated the economic turmoil, leading to concerns about the stability of China’s financial systems and the potential ripple effects on global markets.
In an interview with CNBC-TV18, Arvind Sanger, Managing Partner at Geosphere Capital Management said that India sees a silver lining in China’s economic slowdown. He also spoke about intricated dynamics of emerging markets, emphasising that these markets are not at the mercy of China’s unique problems.
He said, “I do not think India or emerging markets get hurt because China has its own unique problems and people are looking for other emerging markets which will have growth and other markets. It does not matter whether emerging or developed.”
Speaking about India, Sanger acknowledged the production-linked incentive (PLI) scheme as a favourable initiative, he does express a degree of concern regarding the potential transformation of the PLI scheme into a protectionist license raj by India. He also criticized the sudden prohibition of personal computer imports, deeming it a counterproductive strategy compared to the more constructive approach of establishing a conducive framework for companies to invest in India due to the market’s potential. Consequently, Sanger underscores the importance of India’s vigilance in avoiding such actions.
Furthermore, he pointed out that both global and domestic investors perceive these actions not as indicators of strength, but rather as signs of regressive economic measures. Despite the potential of the PLI scheme, India should exercise caution and avoid pursuing short-term gains that could result in adverse long-term structural implications, Sanger added.
Sanger’s astute observations dismiss the notion that emerging markets are closely linked to China’s economic woes. He firmly believes that the vulnerabilities and obstacles faced by the Chinese economy do not automatically translate into setbacks for other emerging economies.
While talking further about India, he said that China’s loss of momentum could translate into a golden opportunity for India. Sanger stated that India stands poised to harness this moment of transition in China and position itself as an attractive alternative for investors and businesses seeking growth and stability.
“China’s loss is India’s opportunity. India is one of the ones that is not as much impacted by China. India has its own short-term challenges, but the structural problems are unique to China,” added Sanger.
The optimism expressed by Sanger extends to India’s domestic capital expenditure (capex) cycle. Despite global economic fluctuations, he remains bullish on India’s potential to capitalise on its domestic capex cycle. This confidence is rooted in India’s burgeoning infrastructure development, technological advancements, and growing consumer base. Sanger’s perspective underscores the belief that India’s internal economic dynamics can serve as a strong counterbalance to external uncertainties.
