Ruchir Sharma On State Of Chinese Economy & Associated Risks For India

Investor and author Ruchir Sharma said while China’s stimulus efforts may help stabilise its economy, it will not be enough to resolve the country’s deepening financial crisis. In an interview with Business Today’s Executive Director Rahul Kanwal, Sharma highlighted that China’s growth is unlikely to exceed 2.5% annually over the next decade. Sharma noted that China is grappling with a multitude of economic challenges, with a full-blown property crisis and a crippling debt burden. “China has a massive debt of about 300% of its GDP, both from the public and private sectors,” he said. He further highlighted that over the next decade, China will lose around 6 to 7 million workers per year due to its ageing population, which will severely hamper its economic growth. “When you have demographics as negative as China’s, it’s very hard for the country to grow in any meaningful way,” Sharma added. Therefore, despite the ongoing economic interventions, Sharma said that China’s challenges will persist, with stabilisation being the only possible outcome in the near term. "The stimulus may stabilise the situation, but there’s no (solution to the) outright financial crisis," he said. In his view, the measures can only manage the existing turmoil without addressing the underlying structural problems, especially in sectors like real estate, which continue to languish. Listen in to know more.