China’s Economic Slowdown: Impact On India

China economic slowdown will adversely affect India’s economy, warn experts…

Dragon Effect

1. 
   As of October this year, India faces a deficit of roughly $4.2 billion in its trade with China.
   


2. 
   In fact, according to experts, the trade deficit has soared by 26 per cent, over the same month last year; as exports from India to China have dropped.
   


3. 
   Exports in September and October were down by a third in 2013, while imports by India from China are still growing.
   


4. 
   Engineering exports alone to India’s neighbor have fallen by 50 per cent, according to the Engineering Export Promotion Council (EEPC), an umbrella body of engineering exporters.
   


5. 
   Similarly, a recent report by CARE Ratings forecasts that Indian cotton exports to China will fall from 11 million bales in 2013-14 to 6-7 million bales in 2014-15.
   


6. 
   Economists say the economic slowdown comes at a bad time for India, since industry is just beginning to recover and growth is still uncertain.
   

Bad News for India?

• 
  For over two decades now, China has been the world’s fastest growing economy, raising global demand for everything – from industrial metals to agricultural commodities, automobiles ad construction equipment.
  


• 
  A decline in Chinese appetite for commodities will be felt most by Indian metal producers like Tata Steel, JSW and SAIL.
  


• 
  JSW and Tata Steel were forced to lower their prices, in line with a drop in Chinese prices. They now fear a dumping from across the border. China, which accounts for nearly half the world’s steel production, is facing a glut, as construction and investment has slowed down.
  

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Did You Know?

According to the Economist magazine, countries with stronger links to China, like Japan, will be more severely affected by the economic slowdown, while GDP in the US and the Euro area would decline by a quarter of a percentage point.

China And Its Economy

China’s economic growth, at constant prices, and economic slowdown to 7.3 per cent in the Sept quarter, expanding at its slowest pace since the Lehman crisis of 2008 (bankruptcy that triggered economic recession across the globe).

The economic slowdown has been attribute to a slump in the property market that dragged down manufacturing output and investment.

According to World Economic Outlook, the country’s economy is likely to slowdown further to 7.1 per cent in 2015 and 6.8 per cent in 2016.

China’s Economic Slowdown: Impact On India