Modi’s India is beating Xi’s China in the mojo war

Plus: The Birkenstock spread and a trip to Mexico City [Bloomberg]( This is Bloomberg Opinion Today, a spiraling spiel spinning off on Bloomberg Opinion’s opinions. [Sign up here](. Today’s Must-Reads - What [fewer Filipinos]( will mean for the world. - My father and the [blueberries](. - Thomas Mann goes to [Davos](. - The paper company [follies](. - You rang for [uranium](? - Where [Taiwan and China]( meet. - 2024 could be the year of the great [election fakes](. - Chatbots are good for [TSMC](. India’s Bound for Glory — or a Trickle-Down Morass For much of human history, the kingdoms that ruled the Indian subcontinent accounted for vast amounts of the planet’s wealth. Indeed, the Mughals, who came close to uniting the entire region from the 16th to early 18th century, lorded over an economy whose size at its height may have been close to a quarter of the world’s gross domestic product. In comparison, today, the US makes up 13% of global GDP (or a bit under 20%, depending on which metrics you choose). The collapse of the Mughals — undermined by war and the colonial subjugation of the subcontinent by the British — dissipated that bounty and enriched another empire. But is the India of Prime Minister Narendra Modi about to accede to the prosperity of the past? New Delhi commands the world’s 5th largest economy; and, if the bond market’s growing appetite for Indian debt is any indication (and it usually is), financial momentum is on its side. As Matt Winkler [observes]( in his column this week, “At least $1 trillion of government securities traded multiple times annually in the most populous nation and biggest democracy are poised to become the darling of international investors.” Matt adds: “The annualized return of publicly traded Indian companies was 16 percentage points greater than the MSCI Emerging Market Index … Indian companies also appreciated at a faster, unprecedented rate relative to their China counterparts, with an annualized advantage of 37 percentage points in 2023.” However, Andy Mukherjee, [cautions]( that, while India’s trajectory is now outpacing China (after years of being heralded as the next big thing), New Delhi risks tripping up like the People’s Republic under Xi Jinping. Specifically, India’s rate of consumer spending growth — always more expansive than China’s — now appears to be stuck. Says Andy: “Private purchases of goods and services in inflation-adjusted terms are crawling at just 4.4%, its second-slowest pace in more than two decades and much more sluggish than the broader economy.” Modi’s decision to invest in infrastructure — the forte of the bullet train loving Chinese — instead of prioritizing broader-based growth could lead to a long-term decline in Indian consumption. Indeed, Indian consumption is dependent on a relatively small cohort of the population (under 10%). Meanwhile, the number of citizens continues to grow and the impetus to soak up surplus labor has slowed. Citing one analyst report, Andy says: “India’s GDP is 1.2 years behind its pre-pandemic path. For an economy that adds 12 million potential jobseekers a year, that automatically shuts out 1.2 times 12 — or about 14 million to 15 million workers — from the employment market.” And, he adds, “For a country of 1.4 billion people to be driven by just 100 million consumers will store up trouble.” The bond market or the labor market? Let’s see which is the better indicator of India’s future. Meanwhile, at the Incredible Shrinking Giant As if the victory of the Taiwan presidential candidate he despised wasn’t bad enough, President Xi Jinping of China was inflicted with other indignities this week. The population continued to shrink (India took over the No. 1 spot last year). Foreign investors remain skittish: At the World Economic Forum in Davos, JPMorgan Chase Chief Executive Officer Jamie Dimon said anyone thinking of putting money into China has to be “a little worried” because “the risk-reward has changed dramatically.” Or, as John Authers [wrote]( this week, “Investors seem to have suffered a cathartic loss of confidence in China wherever they were based.” He said China’s “period of uninterrupted growth looks now to be over. Once the weakening yuan is taken into account, it’s actually contracting slightly in dollar terms.” In the US, Donald Trump crowed that he could take credit for China’s major wobbles — including its tanking stock markets. And, if he’s re-elected (he took a major step in that direction by winning the Iowa caucuses), “They know it’s not going to be so good for them.” Shuli Ren begs to differ. She [says](, “Trump has an uncanny ability to court controversy. But he has no sway in this matter. In fact, Chinese equities did just fine when he was president.” Instead, she says, the markets are opposed to Xi’s “decision to prioritize industrial upgrades over boosting domestic demand.” In any case, it’s not good for Xi. China doesn’t publish opinion polls on politicians, but the Shanghai Composite Index can be used as a proxy. Shuli notes that it’s testing the pandemic low again. The Chinese, she says, “may be thinking their president is determined to make China poor again.” Telltale Charts “Everyone from local retail traders to Chinese investors seeking refuge from the underperforming mainland market are buying into Japan at the start of 2024. Though many analysts expected a new Japan record sometime this year, few would have expected that — at least at the current pace — it could come by the end of this month. … The Tokyo Stock Exchange’s “name and shame” list — highlighting which firms have publicized steps they’re taking to improve their corporate value — should give heart to those who think 2024 will mark the end of stocks’ lost decades. ” — Gearoid Reidy in “[Japan Can Guilt-Trip its Stock Past 38,915.87.](” “The ‘Birkenstock spread’ might sound like an embarrassing wardrobe malfunction. But it’s one way of seeing how two European footwear companies have performed on the stock market since going public — one in New York, one in London. It should set alarm bells ringing across continental financial hubs, not just the UK. … As more companies opt to list in the US for the promise of a higher price, access to deeper pools of capital and a less risk-averse investor base, Europe limps further behind.” — Lionel Laurent in “[The US Stock Market Is Eating the World. Just Look At Your Shoes](.” Further Reading It’s not just Israel. Pressure [Iran](, too. — Marc Champion [Kim]( just wants to be Kim. — James Stavridis Why Ukraine must [triumph](. — Hal Brands [Argentina’s]( Milei missed a beat in Davos. — JP Spinetto Message to the Fed: [Enough]( already. — Paul J. Davies [Heritage]( is important — except when it’s not green. — Lara Williams Why China will be fine no matter who wins the [Red Sea](. — Minxin Pei Let’s not go to the [GPT Store](! — Parmy Olson Walk of the Town: CDMX Edition I’m late to discovering Mexico City, but I’m glad I finally have — though I must say waking to New Year’s Day alerts that Japan had suffered a major earthquake was a little unsettling in temblor-prone CDMX, the affectionate Spanish shorthand for Ciudad Mexico. It’s a sprawling city and, as much as I love to walk, I was grateful that — at least at my exchange rates —  Uber rides were fantastically affordable. Still, it pays to be on your feet, if only for two to four miles here and there, just to be able to take in the breadth of unfamiliar history, gorgeous architecture, delicious street food and the wonder of a world lost to callous conquerors from Castile. Sometimes, the confluences were incongruous, if not ironic. Such was the case in this contemporary sculpture on a pre-Columbian theme (one of many) displayed at a property in the Coyoacan district popularly called the casa de Hernan Cortes — though the conquistador never lived there and it’s really a former government building. At the casa de Hernan Cortes. Photograph by Howard Chua-Eoan/Bloomberg My friends and I forgot to book slots for the Frida Kahlo museum, and you couldn’t just walk in to buy a ticket. So we wandered around to find the Casa Leon Trotsky (where the Russian revolutionary did live and was killed by an ice pick wielding assassin inspired by Stalin. Alas, it was closed). Still, the street semiotics were witty and helpful. On the corner of Trotsky and Kahlo. Photograph by Howard Chua-Eoan/Bloomberg My friends Catherine Mayer and Josephine Fairley did find a park named for Kahlo, however; and we posed with her and her on-again, off-again spouse Diego Rivera. Intriguing couple, and bigger than life. Diego had a very firm handshake. Photograph by Catherine Mayer A lot of the trip was spent helping two friends prep for their wedding, so apart from the labyrinthine Jamaica Vive flower market and a handful of delightful restaurants, there wasn’t much time for sightseeing. As it turned out, I kept on running into friends from New York, London and Copenhagen who also decided it was time to discover Mexico City. So, I didn’t feel too tardy. The next time, though, I’m booking museum tickets. Drawdown Thanks for hanging in there. Here’s a little bit of schadenfreude for you. “Yes, we do know who you are. But you can’t skip the queue. Your reputation has predeceased you.” Illustration by Howard Chua-Eoan/Bloomberg Notes: Please send cold comfort and feedback to Howard Chua-Eoan at hchuaeoan@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Follow Us Like getting this newsletter? 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