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October, 2015

  • china-one-child Two weeks before China celebrates her singles day on 11/11, Beijing announced that she was going to abolish the one child policy altogether. Enforced in 1979 to curb China’s growing population and ensure a good standard of living for a nation aspiring to excel, the one child policy brought in sweeping changes for Beijing.

    However 68 years later, having reduced China’s population by almost 400 million child births (the estimated prevented births if the policy wasn’t in place), President Xi Jinping and his team decided to abolish the rule in order to boost the working age population for the next generation. The fear that China would get old before she gets rich held true and Beijing was finding it hard to pay retirement bills with a falling number of workers.

    The country’s working age population fell 3.71 million in 2014. The United Nations projects that China will lose 67 million workers from 2010 to 2030. At the same time, China’s elderly population is expected to soar from 110 million in 2010 to 210 million in 2030, and by 2050 will account for a quarter of the population, according to the U.N. China’s population, the world’s largest, rose to 1.34 billion in 2010, according to census data.

    Additionally, social unrest was growing with a large number of unmarried men and women who had to work doubly hard to support extended families admist growing consumption levels.

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  • links-with-africaIn a bid to catch up with China in Africa, India is hosting the third India-Africa Trade summit in New Delhi between 26 – 29th October. The trade summit will seek to increase Indian investments into Africa, a feat China has been pursuing since the early 2000’s. New Delhi however woke up to the continent only after the 2008 financial crisis when she realigned strategies to diversify trade beyond the US and Europe. Since then, two-way annual trade has more than doubled to US$72 billion

    Meanwhile, China has become by far Africa’s biggest trading partner, exchanging about US$184 billion-worth of goods a year, a growth of nearly 20 times trade since 2000 and almost three times the value of India’s trade in the region.

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  • brahmaputraChina today operationalized and put into commercial run the US$1.52 billion (9.6 billion yuan) Zam Hydropower Station, the largest in Tibet. Built on the upper reaches of the 2,900-km Brahmaputra river also known as the Yarlung Zangbo River, which flows through Tibet into India and later into Bangladesh is a major source of livelihood for Indians and Bangladeshis.

    The damming of the river, has been a major bone of contention between India and China for a few years now. While the river originates in Tibet, and Beijing has assured India it will not dam the waters but build the dams to generate electricity, New Delhi has been weary the sweet and sour neighbour might usurp power to flood or create a drought situation in North Eastern India during times of unease. As a result, Indian officials monitor and measure the flow of water into India from China to ensure the country is ready for any eventuality, such as the possible holding back and sudden release of water by China.

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  • stalled-investmentsIts time New Delhi pulled a Beijing – a massive capital infusion to kick start the Indian economy and get India rolling. Indian Private investments and capital expenditures have dropped significantly due to a slowing global economy and gradually waning economic enthusiasm. So much so that 2015 is recorded as the first year since 2006, that Indian public sector capital expenditure has overtaken the private sector, according to Standard Chartered.

    New Delhi needs to invest in her economy to get her engines chugging. Take for example Beijing’s infusion earlier this year which kept the Chinese economy in momentum. The Chinese central government announced both the allocation of 1.13 trillion yuan (US$185.8 billion) for upgrading internet infrastructure and the creation of a 124.3 billion yuan fund for affordable housing. These expenditures followed authorization of six new rail lines costing 250 billion yuan. Compare this with Indian Prime Minister Modi’s request to the US to digitize India earlier this month and with China to build roads and railways.

    Albeit the Indian economy is growing at 7 percent and is one of the stalwart BRICS economies, she is shaking at her knees, wobbly and uncertain of her next few steps, waiting and watching for the game to change – hopefully improve. Her steel sector is low, Private power producers are in the doldrums, dragged down by problems at state-owned electricity boards. The property market is also struggling, while slowing global growth has begun to hit exporters. The Rs. 700 billion (US$11 billion) which Mr. Modi kept aside for infrastructure projects earlier this year has but created a small filip for overall investments.

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