Note4Students
From UPSC perspective, the following things are important :
Prelims level: Atmanirbhar Bharat Rozgar Yojana
Mains level: Not Much
Central Idea
- The Aatmanirbhar Bharat Rozgar Yojana (ABRY) by the Central Government has outperformed its initial employment targets, proving its effectiveness in fostering job creation during the COVID-19 crisis.
About Aatmanirbhar Bharat Rozgar Yojana (ABRY)
| Launch |
Introduced in November 2020 |
| Purpose |
As part of Atmanirbhar Bharat Package 3.0 to boost post-Covid-19 employment |
| Government’s Contribution |
Subsidy for provident fund contributions in EPFO-registered organizations |
| Coverage |
Up to 1000 employees: Both employee (12%) and employer (12%) contributions for two years
Over 1000 employees: Employee (12%) contribution for two years |
| Subsidy Disbursement |
Subsidy credited upfront to Aadhaar-linked EPFO accounts (UAN) of new employees |
| Eligibility Criteria |
Establishments adding new employees compared to September 2020 reference base |
| Target Beneficiaries |
Employees with monthly wages under Rs. 15,000 joining EPFO-registered establishments
Individuals reemployed on or after October 1, 2020, who left jobs between March 1 and September 30, 2020 |
Achievements and Numbers
- The scheme, open for registrations until March 31, 2022, targeted around 7.18 million employees across India.
- By July 31, 2023, ABRY had already exceeded its target, enrolling over 7.58 million new employees.
- Benefiting 1,52,380 establishments with 60,44,155 new employees, the scheme disbursed benefits totaling Rs. 9,669.87 Crore.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Disksha 2.0
Mains level: Not Much
Central Idea
- The National eGovernance Division (NeGD) plans to incorporate Personalised Adaptive Learning (PAL) into its existing Digital Infrastructure for Knowledge Sharing (DIKSHA) platform.
- PAL offers individualized learning experiences based on students’ unique needs and abilities.
DIKSHA 2.0 Portal
- Diksha Portal was launched in 2017 to provide a digital platform to teachers giving them an opportunity to learn and train themselves and connect with the teacher community.
- It serves as the National Digital Infrastructure for Teachers.
- It aids teachers to learn and train themselves for which assessment resources will be available.
- It houses digitized National Council of Educational Research and Training (NCERT) textbooks, teaching videos, and practice questions.
- It also has assistive technologies for learners with disabilities, but it’s a static content repository.
Integration of PAL
- NCERT seeks MeitY’s expertise in implementing PAL within DIKSHA.
- PAL provides customized learning paths for each student based on their learning progress.
- PAL can loop back students to basic concepts if they make mistakes, enhancing learning efficiency.
Challenges and Implementations in States
- PAL development involves categorizing and tagging content, potentially creating new material.
- Chemistry, Mathematics, and Physics for Classes 9 to 12 are prioritized for PAL development.
- Several states like Andhra Pradesh, Assam, and Haryana experimented with PAL, facing budget constraints.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Stem Cells, Autism
Mains level: Not Much
Central Idea
- The Delhi High Court granted permission for two children with autism spectrum disorder (ASD) to undergo Stem Cell Therapy for their condition.
- The court’s decision followed a challenge against the Ethics and Medical Registration Board’s (EMRB) recommendation against stem cell treatment for ASD.
Understanding Stem Cells
- Stem cells are the foundational cells that can differentiate into specialized cells with distinct functions.
- Two main categories: pluripotent stem cells (can differentiate into various adult cells) and adult stem cells (tissue/organ-specific).
- Pluripotent stem cells are found in embryos; reprogramming of adult cells leads to induced pluripotent stem cells.
Stem Cells in Medicine
- Stem cells’ regenerative properties make them valuable in regenerative medicine.
- Hematopoietic stem cell transplantation treats conditions like leukaemia.
- Challenges: Limited adult stem cells post-removal, focus on making them pluripotent.
What is Autism Spectrum Disorder (ASD)?
- ASD is a neurological and developmental disorder affecting communication, behaviour, and interactions.
- Conventional therapies focus on symptom management, social skills training, behaviour analysis, and speech and occupational therapy.
Potential of Stem Cell Therapy for ASD
- Some experts suggest stem cells could enhance immune system regulation and neural connectivity in the brain.
- Current clinical trials show mixed results; treatment is experimental, lacks sufficient data.
- EMRB recommendations against stem cell therapy due to limited evidence, risks, side effects, and absence of established protocol.
EMRB’s Concerns
- EMRB’s recommendation stemmed from “predatory marketing” of stem cell therapy, giving false hope to parents about “curing” ASD.
- The Delhi HC ruling doesn’t assess the general validity of stem cell therapy but permits ongoing treatment for specific cases.
Conclusion
- The court’s verdict allows continued stem cell therapy for ASD, acknowledging the ongoing uncertainty and potential of the treatment.
- The decision underlines the need for further research and data to establish stem cell therapy’s efficacy and safety for treating autism.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Pulikkali Celebrations, Onam
Mains level: Not Much
Central Idea
- The culmination of Onam festivities witnessed the Pulikkali celebration, a traditional folk art form from Kerala, where humans dressed as tigers and leopards paraded through the streets.
About Pulikkali
- Pulikkali, also known as Tiger Dance, is a unique folk art of Kerala.
- Celebrated on the fourth day of Onam, artists adorn themselves as tigers with distinctive yellow, red, and black stripes, accompanied by the rhythmic beats of traditional percussion instruments like thakil, udukku, and chenda.
- The central theme revolves around tiger hunting, with individuals playing the roles of both the tiger and the hunter.
- It was introduced by Maharaja Rama Varma Sakthan Thampuran, the former ruler of Cochin, Pulikkali reflects a rich cultural heritage.
Onam Festival: Key Highlights
- Onam, the most significant celebration in Kerala, holds great cultural importance.
- Occurring at the onset of Chingam, the first month of the Malayalam Calendar, it’s a harvest festival celebrating prosperity.
- The Onam Carnival extends for four to ten days, with Atham (first day) and Thiruonam (tenth day) as the most pivotal.
- A popular belief holds that Onam welcomes King Mahabali’s spirit, who is believed to visit Kerala during this period.
- The festival includes Vallamkali, a thrilling snake boat race ‘Vallamkali’ conducted on the Pampa River.
- Onam showcases Kaikotti kali and Thumbi Thullal, graceful dances performed by women, adding elegance to the celebrations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Chandrayan-3
Mains level: Not Much
Central Idea
- Chandrayaan-3 accomplished India’s historic achievement of soft landing on the Lunar South Pole.
- Its mission success marked by several noteworthy observations since touchdown on August 23.
Chandrayaan-3’s: Key Achievements
- Pragyan rover’s Laser-Induced Breakdown Spectroscopy (LIBS) instrument identified elements like aluminium, sulphur, calcium, iron, and more.
- Vikram lander recorded a ‘moonquake’ and detected an ultra-thin layer of plasma in the lunar atmosphere.
- These findings hint at distinct characteristics of the moon’s atmosphere compared to Earth.
Significance of Observations
- Sulphur discovery carries paramount importance in comprehending the moon’s origin and past surface (explosiveness) conditions.
- The presence of significant sulphur amounts can provide insights into lunar volcanic activity, potentially indicating the presence of subterranean water.
- Sulphur’s presence could offer clues about past lunar life support and constructing structures for human habitation.
Exploring Lunar Water
- Chandrayaan-3’s findings, particularly sulphur and oxygen on the moon’s surface, play a crucial role in narrowing down possible water sources.
- The presence of sulphur and oxygen enhances the prospects of water detection.
- ISRO was actively pursuing information about lunar hydrogen, another potential indicator of water.
Other mission Lunar Discoveries
- China’s Chang’e 5 mission unveiled a new lunar mineral, Changesite-(Y), and identified water in glass beads.
- Chandrayaan-3’s sulphur detection aligns with the quest for similar glass beads.
- NASA previously confirmed lunar water presence in shadowed craters and sunlit regions.
Present status of Ch-3 Mission
- Chandrayaan-3’s core objectives attained; Pragyan rover placed in ‘sleep’ mode.
- The rover’s solar panels will recharge during the next lunar sunrise.
- Plans to reactivate the rover for further observations remain underway.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RTI
Mains level: Excusions to RTI queries and issues
Central Idea
- Activists worry about the diminishing effectiveness Right to Information Act, 2005 in holding officials accountable.
- The Act has exemptions for political parties, the judiciary, and intelligence agencies.
- Recent amendments have sparked concerns, such as personal data protection provisions.
The DPDP Act and RTI
- The Digital Personal Data Protection Act, of 2023 prohibits personal data disclosure, even for social audits, reducing transparency.
- Critics fear this blanket ban may hinder accountability and transparency efforts.
About the Right to Information (RTI)
| Enactment |
June 15, 2005 |
| Objective |
Promote transparency and accountability |
| Applicability |
All public authorities at central, state, local levels |
| Scope |
Access to information on matters of public interest, government policies, budgets, etc. |
| RTI Application |
Filed in writing with the concerned public authority |
| Response Time |
Within 30 days (48 hours for life or liberty issues) |
| Exemptions |
Some information exempted to protect national security, privacy, etc.
Judiciary |
| Fees |
Nominal fee varies based on state and information requested |
| First Appellate Authority |
Filed if dissatisfied with the response |
| Second Appeal |
Filed with the relevant Information Commission |
| Whistleblower Protection |
Safeguards against victimization for exposing corruption |
| Impact |
Promotes transparency, accountability, and good governance |
Challenges in Implementation
- Implementation issues undermine the transparency that the Act aims to achieve.
- The Act’s effectiveness depends on subordinate rules set by the Union and State Governments.
- Slow appointments to information commissions delay appeals and erode trust in the system.
Barriers and Online Solutions
- Payment methods for RTI applications vary among States, causing complications.
- Online RTI portals remove barriers but are not widespread, hindering access.
- The Union Government’s RTI portal has usability issues, impacting data retrieval.
Growing Dissatisfaction
- Rising first appeals indicate growing dissatisfaction with the information provided.
- Structural problems in institutions and websites hinder RTI effectiveness.
- Activists emphasize the importance of addressing broader institutional issues.
Conclusion
- The RTI Act’s efficacy is hampered by implementation challenges, amendments, and online barriers.
- A holistic approach is needed to restore and enhance the Act’s effectiveness.
- Addressing these issues will strengthen transparency, accountability, and citizens’ access to information.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Adiitya L1 Mission
Mains level: Not Much
Central Idea
- India’s maiden solar observatory mission, Aditya-L1, was successfully launched by ISRO on September 2.
- Carried by the PSLV in its 59th flight, the spacecraft’s mission aims to study the sun’s behaviour and phenomena.
- Aditya-L1 will spend 16 days orbiting Earth, undergoing five manoeuvres for required velocity.
- Subsequent Trans-Lagrangian insertion will begin a 110-day journey towards L1 Lagrange point.
- Aditya-L1 will orbit around L1, a balanced position between Earth and the sun, 1.5 million km away from Earth.
Aditya-L1 Mission
- ISRO introduces the Aditya-L1 mission, a novel space-based observatory designated for studying the Sun.
- The spacecraft will be positioned in a halo orbit around the Lagrange point 1 (L1) in the Sun-Earth system, approximately 1.5 million km from Earth.
- The L1 point’s strategic location enables continuous solar observation devoid of eclipses, furnishing invaluable insights into solar activities and their real-time effects on space weather.
- Once Aditya exits Earth’s sphere of influence, it will head towards the Lagrange point L1, a distance of 1.5 million km.
Significance of Lagrange Point 1
- Lagrange points are equilibrium positions where gravitational forces counteract centripetal forces, offering a stable environment for satellites.
- The spacecraft will be positioned around L1, affording an unobstructed view of the Sun for unhindered observation.
- Different Lagrange points offer unique advantages, such as L1’s consistent view of the Sun, as demonstrated by the Solar and Heliospheric Observatory Satellite (SOHO).
Aditya-L1’s Scientific Endeavors
- Aditya-L1 carries seven payloads to investigate the photosphere, chromosphere, and corona using a range of detectors.
- The payloads encompass instruments like Visible Emission Line Coronagraph (VELC), Solar Ultraviolet Imaging Telescope (SUIT), Solar Low Energy X-ray Spectrometer (SoLEXS), and more.
- Payloads examining solar dynamics in the interplanetary medium contribute to a better understanding of phenomena like coronal heating, mass ejections, and space weather.
Significance of Solar Study
- Solar Influence on the System: The Sun significantly shapes planetary evolution and weather, extending its impact to satellites, electronics, power systems, and even Earth’s climate.
- Predicting Solar Storms: Continuous solar observations are essential for tracking Earth-bound solar storms and predicting their potential impacts.
- Gateway through L1: All solar storms heading towards Earth pass through L1, making it a crucial point for monitoring.
Key Feature: Mighty LAM Engine
- The Liquid Apogee Motor (LAM) engine, developed by ISRO’s Liquid Propulsion Systems Centre (LPSC), is vital to the Aditya-L1 mission’s success.
- LAM has played pivotal roles in missions like Mars Orbiter Mission (Mangalyaan) and Chandrayaan-3.
- LAM engines facilitate satellite and spacecraft orbital adjustments, conserving fuel and ensuring optimal positioning.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Election- Constitutional provisions
Mains level: One nation, one election plan, advantages and concerns and challenges and federalism
What’s the news?
- The government forms a committee to explore the possibility of One Nation, One Election.
Central idea
- On September 1st, the Central government established a committee chaired by former President Ram Nath Kovind to assess the viability of the ‘one nation, one election’ (ONOE) proposal. This concept revolves around synchronizing the timing of Lok Sabha and State Assembly elections across all states to reduce the frequency of electoral processes across the country.
What is the ONOE plan?
- Concept: The ONOE plan aims to synchronize the timing of the Lok Sabha and State Assembly elections across all states in India to reduce the frequency of election cycles nationwide.
- Historical Context:
- After the enforcement of the Constitution on January 26, 1950, the first-ever general elections for both the Lok Sabha and State Assemblies occurred simultaneously in 1951-1952.
- This practice continued for the following three Lok Sabha elections until 1967, streamlining the election process.
- Disruption:
- In 1959, the cycle was disrupted as the Central government invoked Article 356 of the Constitution, leading to the dismissal of the Kerala government, due to a perceived failure of constitutional machinery.
- Subsequent to 1960, defections and counter-defections among political parties led to the dissolution of several State Legislative Assemblies.
- This fragmentation resulted in separate election cycles for the Lok Sabha and State Assemblies.
- Current Scenario: Presently, only specific States such as Arunachal Pradesh, Sikkim, Andhra Pradesh, and Odisha conduct their assembly polls concurrently with the Lok Sabha elections.
Reports and Perspectives on ONOE
- Law Commission of India (LCI) Report – 2018:
- The LCI, led by Justice B. S. Chauhan, issued a draft report in August 2018 that scrutinized simultaneous elections.
- The report acknowledged the constitutional and legal complexities surrounding this proposal.
- It emphasized that the current constitutional framework necessitates amendments for the plan to be realized.
- The LCI also recommended seeking approval from at least 50% of the States for such an overhaul.
- Despite feasibility challenges, the report recognized potential benefits, including cost savings, reduced administrative burden, timely policy execution, and focused governance.
- Historical Context – LCI Report 1999:
- Notably, the LCI, headed by Justice B. P. Jeevan Reddy, supported the concept of simultaneous elections as early as 1999.
- This historical context underscores that the idea has been debated over time.
- Balancing Perspectives:
- The reports and perspectives reveal a dualistic landscape: ONOE offers advantages like efficient governance and reduced election strain, but it’s hampered by practical and constitutional complexities.
- In assessing ONOE’s viability, the focus is on a well-rounded understanding that considers both the potential benefits and the intricate challenges.
Concerns Regarding the One Nation, One Election Plan
- Feasibility and Constitutional Implications:
- The Constitution outlines fixed tenures (Article 83(2) and 172) for the Lok Sabha and State Assemblies, raising doubts about the feasibility of simultaneous elections.
- The possibility of mid-term government collapse necessitates a clear mechanism for holding fresh elections or imposing the President’s rule.
- Federalism and Conceptual Incompatibility:
- ONOE seems to conflict with the federal structure, contradicting the idea of India as a Union of States (Article 1).
- Altering this balance might affect the autonomy and authority of state governments.
- Frequency, Accountability, and Blending of Issues:
- Frequent elections allow citizens to address national and state issues separately, enhancing accountability.
- ONOE’s merging of issues might dilute accountability mechanisms and lead to a less-focused governance approach.
- Cost Misconceptions:
- While the Central government highlights the substantial costs of frequent elections, critics argue that the actual expenses are not as massive.
- The analysis questions whether the Election Commission’s expenditure of ₹8,000 crore over five years, amounting to ₹1,500 crore annually or ₹27 per voter per year, is a significant expense for maintaining India’s democratic pride.
Way forward
- Comprehensive Constitutional Review:
- Engage legal experts to meticulously assess necessary constitutional amendments for ONOE.
- Develop a contingency plan to handle midterm government collapses, ensuring stability and smooth transitions.
- Balancing Federalism and Centralization:
- Initiate dialogues with state governments to understand and address their concerns about centralization.
- Craft a balanced framework that respects both federal principles and national electoral efficiency.
- Hybrid Accountability Model:
- Explore a hybrid approach that retains staggered elections for select states while implementing ONOE for others.
- Maintain distinct accountability mechanisms for national and state issues, promoting effective governance.
- Transparent Cost-Benefit Analysis:
- Conduct an independent and transparent assessment of the costs and savings associated with ONOE.
- Present factual data to address misconceptions and inform stakeholders about the financial implications.
- Pilots and Gradual Implementation:
- Begin ONOE implementation through pilot projects in a limited number of states.
- Assess challenges, gather insights, and refine the approach before nationwide adoption.
Conclusion
- The proposal for one nation, one election envisions synchronizing Lok Sabha and State Assembly elections to curtail the frequency of polls. The Indian democracy’s complex dynamics and diverse contexts warrant a comprehensive assessment before implementing such a transformative change.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Hunger Index,
Mains level: GHI, Subnational Analysis, India's Calorie Undernourishment challenge, efforts and way forward
What’s the news?
- Despite boasting the world’s largest public distribution system and comprehensive food security schemes, India’s standing on the Global Hunger Index (GHI) remains alarming.
Central idea
- The 2022 GHI ranked India a staggering 107 out of 121 nations, trailing behind Nigeria (103) and Pakistan (99). The GHI, encompassing calorie undernourishment, child malnutrition, and under-five mortality dimensions, highlights India’s ongoing battle against these challenges.
Extent of the Issue
- The State of Food Security and Nutrition in the World report for 2022 reveals a staggering statistic – India is home to approximately 224.3 million undernourished individuals.
- Alarming disparities surface among various states, prompting the utilization of subnational data to develop a more nuanced and localized hunger index.
- By harnessing such data, India can assess the extent of undernourishment at the state and union territory level, a crucial step towards achieving the Sustainable Development Goals aimed at eradicating hunger and malnutrition.
The State Hunger Index (SHI)
- Indicators: The SHI is derived from the Global Hunger Index (GHI) framework, utilizing four main indicators:
- Prevalence of stunting, wasting, and under-five mortality among children below five years of age.
- Body Mass Index (BMI) undernourishment among the working-age population.
- Calorie Undernourishment Replacement: Calorie undernourishment, a GHI indicator, is replaced by BMI undernourishment due to data unavailability post-2012.
- Data Sources: SHI calculations involve data from various sources, including:
- National Family Health Survey (NFHS-5)
- Longitudinal Ageing Study in India (LASI)
- Calculation: Normalized values of the indicators are combined using techniques recommended by the GHI.
- Score Range and Categories:
- SHI scores range from 0 to 100.
- Higher scores indicate higher hunger levels.
- The categories of SHI scores are as follows:
- Below 10: Low hunger
- 10-20: Moderate hunger
- 20-30: Serious hunger
- 30-40: Alarming hunger
- 50 or above: Extremely alarming hunger
Findings of the State Hunger Index (SHI)
- Alarming Hunger Levels: States like Bihar, Jharkhand, and Chhattisgarh have alarmingly high SHI scores of 35, indicating significant hunger levels.
- Moderate Hunger Levels: States such as Gujarat, Uttar Pradesh, Assam, Odisha, Madhya Pradesh, Tripura, Maharashtra, and West Bengal score above the national average (29), indicating moderate hunger levels.
- Lower Hunger Levels: Chandigarh stands out with a notably low SHI score of 12, suggesting relatively lower hunger levels.
- Moderate Hunger Category: States like Sikkim, Puducherry, and Kerala have SHI scores below 16, placing them in the ‘moderate hunger’ category.
- Serious Hunger Concerns: Several states score below the national average but above 20, pointing to serious hunger challenges in these regions.
Calorie Undernourishment: A Critical Challenge
- Deteriorating GHI Score: Over the past few years, India’s Global Hunger Index (GHI) score has worsened primarily due to the increasing prevalence of calorie undernourishment. This underscores the urgent need to address this challenge effectively.
- Escalating Proportions: Data from the Food and Agriculture Organization reveals that the proportion of calorie undernourishment has been on the rise since 2017, reaching a concerning 16.3% in 2020. This trend mirrors statistics from over a decade ago, such as those from 2009.
- Government Disputes and Data Concerns: Despite these alarming figures, the Indian government has raised doubts about the accuracy of the data and methodologies employed in calculating the GHI. However, the absence of empirical evidence to support these disputes leaves room for further clarity.
- Data Limitations: Notably, a challenge in understanding the scale of calorie undernourishment stems from the lack of recent National Sample Survey (NSS) rounds on nutritional intake since 2011-12. This survey previously offered insights into the prevalence of undernourishment at both national and subnational levels.
- Impact on Health and Development: Calorie undernourishment directly affects health and development, leading to weakened immune systems, stunted growth, impaired cognitive development, and increased susceptibility to diseases.
- Economic and Social Implications: The persistence of calorie undernourishment has far-reaching socio-economic consequences, hindering productivity, reducing human capital potential, and perpetuating the cycle of poverty.
Way forward
- Urgent Focus on Calorie Undernourishment: Recognize the urgent need to address calorie undernourishment, which has contributed to India’s declining GHI score.
- Reviving NSS Rounds: Prioritize conducting new National Sample Survey (NSS) rounds on nutritional intake to obtain updated and accurate data on undernourishment levels.
- Evidence-Based Approach: Encourage the Indian government to substantiate their concerns about GHI data accuracy with empirical evidence.
- Collaborative Efforts: Collaborate between government agencies, NGOs, researchers, and communities to formulate and implement targeted strategies.
- Alignment with SDGs: Align efforts with Sustainable Development Goals (SDGs), particularly Goal 2 focused on eradicating hunger and malnutrition.
Conclusion
- While the GHI is not immune to criticism regarding its methodology and aggregation techniques, it remains a critical tool for gauging undernourishment and child nutrition. Despite strides in reducing extreme poverty, disparities persist in addressing food insecurity, hunger, and child malnutrition. India must prioritize targeted interventions to overcome these challenges and fulfill its commitment to sustainable development.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: China’s economic slowdown, its ripple effect, Economic Growth Comparison with India
Central Idea
- The recent news of China’s economic slowdown has sparked a range of responses. China’s concerns about stagnation and the middle-income trap have shifted to fears of deflation, raising global implications. To comprehend the root causes and gravity of China’s current economic dilemmas, it is crucial.
Background: Unstable Growth and Strategic Choices
- Premier Wen Jiabao’s Concerns (2007): Premier Wen Jiabao raised alarms in 2007, highlighting instability, imbalances, a lack of coordination, and unsustainability as China’s economic challenges.
- 2008 Global Financial Crisis Strategy: China responded to the 2008 crisis by investing heavily in infrastructure (railways, highways, energy, and construction) to maintain double-digit growth and stabilize the economy.
- Deferred Structural Issues: While this strategy spurred growth, it deferred addressing issues like low consumption, regional disparities, and inadequate social security measures.
- Leadership Imperative for Growth: The need to sustain prosperity for domestic legitimacy drove China’s focus on high growth rates, even if it meant overlooking structural concerns.
Current Realities
- Transition to the New Normal: President Xi Jinping’s 2017 shift focused on quality-of-life issues, acknowledging the limitations of export-driven, investment-heavy growth.
- Acceptance of Slower Growth: China entered the new normal, accepting slower growth rates and requiring adjustments in economic expectations.
- Challenges in Transition: Slower export growth due to rising labor costs from increased wages and social security investments led to unemployment challenges.
- Balancing Priorities in the New Normal: Adapting to the “new normal” entails managing the delicate balance between sustainable growth, addressing structural issues, and maintaining social stability.
Escalating Challenges and the Evergrande Crisis
- Trade War and De-risking Impact: The escalation of challenges was fueled by the impact of the US-China trade war and the implementation of de-risking strategies. These factors introduced complexities to China’s economic landscape.
- Evergrande Crisis Unveiled: The Evergrande crisis, spanning from 2020 to 2023, emerged as a significant event exposing vulnerabilities within China’s housing sector. The crisis highlighted potential issues of misregulation and systemic risk.
- Path-Dependency Concerns: The Evergrande crisis exacerbated concerns about China’s economic dependence. The fear of a crash landing became more pronounced, underscoring the importance of addressing structural challenges.
- Complexity of Structural Problems: The challenges faced by Evergrande shed light on broader structural issues present within China’s economy. The crisis revealed the intricate interplay of development challenges and regulatory oversights.
- Policy Implications and Regulatory Oversight: The Evergrande crisis triggered discussions about the need for stronger regulatory oversight and effective policy responses. Stabilizing the housing market has emerged as a critical concern for the government.
China’s economic slowdown and its ripple effect
- Global Trade Impact: China’s economic slowdown has implications for global trade. As one of the world’s largest economies and trading partners, China’s reduced economic activity affects international trade flows, impacting both suppliers and consumers worldwide.
- Commodity Markets: The slowdown has led to decreased demand for commodities such as crude oil, cement, and steel. China’s status as a major consumer in these markets has caused a cooling of prices, impacting countries that rely on exporting these commodities.
- Supply Chain Disruptions: China plays a critical role in global supply chains. Its economic slowdown and disruptions in production have affected supply chain dynamics, causing delays and disruptions for companies worldwide.
- Investor Sentiments: China’s economic challenges have led to cautious investor sentiments. Uncertainties about the Chinese economy have influenced global financial markets and investment decisions.
- Global Economic Growth: China’s slowdown contributes to lower global economic growth rates. The country’s reduced demand for goods and services affects other economies, particularly those that heavily depend on exports to China.
- Regional Trade Partners: Neighboring countries that have strong economic ties with China, such as those in Asia, are directly impacted by China’s slowdown. Reduced demand for their exports to China affects their economies as well.
- Currency Exchange Rates: China’s economic slowdown can impact currency exchange rates. Fluctuations in China’s economic performance can influence the value of its currency, affecting exchange rates globally.
Future Outlook
- State-Owned Enterprises (SoEs) Challenges: State-owned enterprises, due to preferential treatment and political networks, pose ongoing challenges. Their resistance to change and reliance on political influence can hinder necessary reforms for economic growth.
- Evergrande Crisis and Systemic Issues: The Evergrande crisis exposed vulnerabilities within China’s housing sector and revealed potential systemic issues. Addressing these challenges is crucial to preventing further disruptions in the economy.
- Middle-Income Trap and Value Chain Advancement: The looming middle-income trap poses a dilemma for China’s economic trajectory. To avoid stagnation, China must navigate this challenge and advance its position in the global value chain, which requires innovation and upgrading industries.
- Economic Growth Comparison with India: Despite the challenges, China’s projected 5% growth rate still surpasses India’s anticipated 6.1% growth rate. China’s size and economic influence make this growth rate significant and impactful on global markets.
Conclusion
- China’s economic challenges underscore the need for strategic decisions in a shifting landscape. Achieving growth while addressing internal imbalances and global uncertainties remains a formidable task. As China’s economy evolves, its choices will resonate on the international stage, reshaping the perception of its rise and risk appetite.
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