Interpreting China: The Economy and its Impact on Foreign Policy

In this conversation, Saheb and Amit examine the three major structural dilemmas facing China’s economy: a persistently low domestic consumption rate of around 40 percent of GDP, making China an outlier among large economies; the Chinese state’s reluctance to adopt fiscal stimulus due to its ideological opposition to welfarism; and a sharp slowdown in real estate investment that has had ripple effects across the broader economy. They also discuss how China’s enduring trade surpluses, particularly with the U.S., EU, and India are generating international pushback. Despite high trade volumes, Amit highlights the limited nature of Chinese investment in India, noting that economic outreach from China is driven less by genuine market interest and more by geopolitical calculations. The episode further explores why China’s engagement with regions like Africa, Latin America, and Southeast Asia cannot substitute for the demand found in Western markets. The episode also looks at how India’s large and growing consumer market could make it a prime destination for companies relocating under the China Plus One strategy, even if Chinese firms themselves remain reluctant to invest directly. Finally, the discussion draws a clear line between China’s diplomatic messaging and its actual economic practices, revealing a gap that continues to shape global perceptions. Episode Contributors Amit Kumar is a Staff Research Analyst at the China desk of the Indo-Pacific Studies Programme. With a broader focus on China, he studies issues at the intersection of the economy, technology and security. His work encompasses writings on the Chinese economy, domestic politics, foreign policy, and India-China trade and security issues. Saheb Singh Chadha is a senior research analyst in the Security Studies Program at Carnegie India. His research focuses on China’s foreign and security policies, India-China relations, and India’s military modernization. He is broadly interested in the geopolitics of South Asia and the Indo-Pacific. Suggested Readings Views From Taipei: Essays by Young Indian Scholars on China by Vijay Gokhale, Suyash Desai, Amit Kumar, and Aadil Brar Review of Foreign Direct Investment (FDI) policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic by Ministry of Commerce & Industry De-risking India’s Trade with China: Identifying Strategic and Critical Vulnerabilities by Amit Kumar China isn't Ready to Shift to a Consumption-Driven Economy by Amit Kumar Is India Warming up to Chinese Investmen t? By Amit Kumar China’s Economy: What Everyone Needs to Know by Arthur R. Kroeber China’s Western Horizon: Beijing and the New Geopolitics of Eurasia by Daniel S. Markey Every two weeks, Interpreting India brings you diverse voices from India and around the world to explore the critical questions shaping the nation's future. We delve into how technology, the economy, and foreign policy intertwine to influence India's relationship with the global stage. As a Carnegie India production, hosted by Carnegie scholars, Interpreting India, a Carnegie India production, provides insightful perspectives and cutting-edge by tackling the defining questions that chart India's course through the next decade. Stay tuned for thought-provoking discussions, expert insights, and a deeper understanding of India's place in the world. Don't forget to

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Interpreting China: The Economy and its Impact on Foreign Policy is an episode from Interpreting India by Carnegie India.

This episode is 00:45:07 long.

This episode was published on May 15, 2025.

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