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What China owes India: A whopping $180 billion and counting. India must send the bill

With its mishandling of the virus, complicity of the WHO and a full-blown pandemic, China owes India more than $180 billion in damages caused to the Indian economy.

Amit Agrahari by Amit Agrahari
26 May 2020
in Opinions
Xi Jinping, China, WHO, Coronavirus,
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It has been almost three months since economic activity came to a screeching halt due to the Coronavirus pandemic. So far, more than 55 lakh have been infected by the virus and over 3.5 lakh have died untimely deaths primarily due to China’s authoritarian regime which held back information about the nature of the virus, and used censorship to prevent the truth from reaching the global audience. In the last three months, more than half of humanity is living in some kind of lockdown, thanks to the Communist government of China.

The global lending organization, International Monetary Fund, has estimated that the global economy would shrink by 3 percent or $2.6 trillion in the calendar year 2020 in an economic carnage triggered by the Coronavirus pandemic. Earlier, the global economy stood at $87 trillion in 2019 and was expected to grow by around 3 percent, but thanks to the Chinese government, it is now estimated to shrink by the same figure.

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Therefore, the total amount China owes to the world is $5.2 trillion, by initial conservative estimates. This is 40 percent of China’s GDP in 2019.

And what does the Communist nation owe India? So far, India has registered 1.5 lakh cases and more than 4,000 deaths. The recovery rate in India is very high and the mortality rate extremely low, but we paid for a suppressed outbreak with a harsh two and a half months long lockdown.

The Indian economy was expected to grow by 6 percent in the calendar year 2020 on a base of around $3 trillion in 2019, as per IMF estimates. But in April’s World Economic Outlook, the organization reduced the growth figure to 1.8 percent, and given the fact that the lockdown has been extended and cases are growing, the actual growth is expected to be near zero or negative, as argued by RBI.

If we consider that the Indian economy will not shrink but won’t grow either, that means a loss of 6 percent of base GDP in 2019 or $180 billion. So, China owes us $180 billion or an equivalent of West Bengal’s GDP in 2019.

India’s manufacturing activity registered a record decline to 27.4 percent in April from 51.8 percent in March (figure above 50 means expansion and below it means contraction), as per Nikkei Manufacturing Purchasing Manager Index. “After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April,” Eliot Kerr, an economist at IHS Markit, said. This is the lowest ever since the monthly survey began in March 2005.

The service sector, which contributes 55 percent to India’s GDP, also registered a record decline in April. Service sector PMI dropped to from 49.3 in March to a mere 5.4 in April. “The extreme slide in the headline index, which fell by over 40 points, shows us that the strict lockdown measures have led to the sector essentially grinding to a complete standstill. Historical comparisons with GDP data suggest that India’s economy contracted at an annual rate of 15% in April,” said Joe Hayes, an economist at IHS Markit.

The only sector in which activity did not halt is agriculture, and the country registered one of the highest ever grain produce. But given the decline in demand due to halt in industrial and service sector activities, demand is subdued; leading to low prices for produce. And therefore, the farmers would not benefit much from this record-high produce.

The Coronavirus induced lockdown has completely ravaged the Indian economy as well as the global economy. The clampdown on the free flow of information in China by the Communist government is the reason behind the global misery, hunger, job loss, record contraction in the economy, and death of more than 3 lakh people.

For many countries in Europe like the United Kingdom, Italy, Spain, and France, it would take 3-4 years to return to pre-COVID-19 era economically. China has done irreversible damage to these countries and pushed the world back by three to four years, and these countries must demand compensation from China. The Modi government should also send a detailed bill of $180 billion to the Communist government of China.

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