Speaking this week, Arup Raha, head of APAC Economics at Oxford Economics, emphasized that China has enough fiscal capacity to provide a short-term economic boost.

Raha emphasized that the challenge facing China is not its ability to provide fiscal support, but its willingness. He noted that while some stimulus measures, including those introduced earlier this month, have been implemented, the general consensus is that these efforts remain insufficient.

Earlier this month, China announced a 6 trillion yuan package to support the heavily indebted local government sector, which has been hit hard by the slump in the property market. Analysts, however, noted that the measures fell short of investors’ expectations for more comprehensive fiscal stimulus.

Raha is now quite optimistic that China will implement a stimulus equivalent to "between 1 to 2 to 3 percent" of gross domestic product (GDP) "sometime around March," providing a short-term boost to growth.

"In our opinion, there is fiscal space. They have the ability to help the economy, they are waiting for the right moment," he said.

Raha warned, however, that China continues to grapple with significant structural challenges that threaten its long-term growth.

“It is important to remember that the structure of the issues means that the longer-term trajectory is for softer growth. Yes, there will be a short-term spike depending on policy and that's what we expect to see, but the long-term is still cautious for China," he said.

India, on the other hand, has emerged as the global favorite, fueled by expectations that it will attract foreign direct investment (FDI) originally earmarked for China.

While disagreeing with descriptions of India as a "good growth story", Raha said Oxford Economics disagreed with the "extent" of positive sentiment around India.

"We're not going to disagree with any of that, it's all true, [and] India is unfolding as a good story. [But] we won't go along with that bit with some degree of positive attitude to the history with India,” he said.

Raha noted that part of his reservations stemmed from India not being the main beneficiary of the China Plus One strategy, a concept encouraging investors to diversify operations outside of China to other countries in the region.

According to Statista, India's gross FDI inflows have reached USD 71 billion in FY 2023-24. Meanwhile, preliminary data from January to October 2024. show that China's cumulative FDI inflows fell by 29.8 percent, totaling approximately 693 billion yuan (about US$95.6 billion).

Raha emphasized that there are two key factors to consider when investing in India.

"The first is the domestic market, which is probably a good idea - it's a big domestic market, with a lot of people, and it's growing," he said.

However, he pointed out that the FDI inflows attracted by China at its peak were not driven solely by its large domestic market, but also by the country's capacity to produce and export goods.

“And if India hopes to come close to that [in terms of FDI]there are a lot of things in the structure of the economy that are not really aligned,” he said.

He added: "When you look at India, if the marginal dollar is moving away from China, it's not -- it's going to India to some extent because of the China plus one strategy, but India is probably number four."

Raha noted that India currently ranks behind countries like Vietnam, which benefit more from the China plus one strategy.

Therefore, he stressed, there is a certain amount of caution that needs to be exercised regarding the FDI that India can expect.

"We are positive about India and remain positive, but our caution is about the extent to which people are overly optimistic," he said.

"It's a good growth story, but probably not as good as people are hoping it will be."