TMS Ep499: Chinese economy, policy making rejig, markets, protectionism

A host of news emerging from China in the last few days has set the alarm bells ringing around the world. It is being heard in India too. China’s economy has slipped into deflation. Its exports have fallen by over 14% in dollar terms, and imports by 12%. Add to it the ballooning local government debt and the housing market slump, it’s a crisis in making. At least on the face of it. In our first segment, Abhijeet Kumar speaks to experts to find out how serious this crisis is. And what does it mean for India and the world? 

India, meanwhile, is trying hard to emerge as an alternative to China. And its attempts are meeting with some success too. The country is set to cross 1.2 trillion rupees in mobile phone exports in the current fiscal year, thanks to its PLI scheme. But in some areas, its policymakers are still testing the waters. Recent move to include international credit card spends outside India under the Liberalised Remittance Scheme and its withdrawal surprised many. So did the immediate import curbs on laptops and its subsequent extension. So does India’s policy making need a rejig? 

Most government policies have a bearing on financial markets too. The reaction at times is quick, like what we saw in the case of laptop import curbs when related domestic stocks soared on the bourses. Moving on, Q1FY24 results season is drawing to a close with many new-age companies showing first signs of profitability during this quarter. At the bourses, shares of related companies have surged up to 62% thus far in 2023, outperforming the benchmark indices by a wide margin. Given the sharp run up, should investors book profit in these counters? Or do the financial results put them on a growth runway? 

Strong performance by new-age companies is indeed a good sign. Not just for the markets, but also for the country’s economy which is being called a bright spot. But, the central government believes, India Inc still needs some insulation from global competition. It recently announced a plan to impose curbs on the import of laptops and personal computers. And as the move was being hailed or criticised by experts, it has been reported that the cameras and printers may also join the list of items facing import curbs. Some industry experts have claimed that these steps are leading towards the old era of “protectionism”. But what is protectionism? Listen to this episode of the podcast to know more.