EFFECT OF COVID-19 ON INDIA CHINA TRADE

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As COVID-19 has play a very bad impact on the world economy. Almost  every economy shutdown due to implimentation of  national lockdown across the world , and   Access to the outside world has shrunk; almost every county has severed their supply chains with China. Lockdown has shrunken our business , work ,education,  social life, evening previously spent with friends are now passed plugged into laptops and mobile phones. The lockdown by India imposed has affected the domestic trade too. in India lockdown extend by Modi government till 19 may , and in this long period entire nation  shut down almost each and every business, every job, startup , even small business  effected by this lockdown , each and every person of the nation are in their house  doing nothing , using mobile and laptop.

In China their is also lockdown which is now open as China is a big exporter  of a large amount of commodity across world, and to India  because  a large number of manufacturing unit in China. and all the manufacturing unit are shutdown either closed the product due to global pendamic  .

As per the official Chinese data, a 12.4% decline in India- China trade was seen for the month of January and February 2020. China’s export during this period was about 67.1 billion Yuan.

Many sectors have suffered huge losses due to the imposition of the lockdown. The medicines imported from China have seen a huge jump in their prices. Paracetamol imported from china has seen a hike in its price by up to 40%. India imports 70% of its medicines and medical raw material from China. Due to which we will soon see a price jump in medicines.

China has been a leading exporter of electronic products. Televisions and mobile phones whose 75% and 85% of the components respectively are Chinese made, are going to be hit. Supply from China is shut since December 2019, which caused a shortage of cheaper basic products. DAIKIN, a Japanese air-conditioner manufacturing company has already informed its retailers that the company is going to be increasing prices by 5% to 7%. Products which can be made easily in our own country are imported from China because they are cheaper. Discounts earlier received on mobile phones and other electronic items will be cut off and are expected to hike in price, there are expectations that there will be a 10%-20% increase in the price of electronic products.

As India has shut down the exports, it will make the textile industry suffer. India is one of the largest producers and exporters of cotton yarn. India exports about 25% of its annual cotton and cotton yarn to China. The cotton export is being held up completely.  The fabric export has seen a sharp decline. The cost of raw cotton has been reduced by Rs.200 to Rs.300, because there is no demand from China.

Toys will get costlier because the toys imported from China which cost about Rs.10, if made in India costs around Rs.17, this is due to machinery. China manufactures toys on a larger scale. Whereas in India the production is on a smaller scale as compared to China, and without the advance machinery as in China.

Out of every 15 diamonds of the world 14 are cut and polished in India. India exports 36% of its diamonds to China, this will cause India to lose around $1.05-1.3 million. India’s gold market saw a 92% decline in demand for this Akshaya Tritiya, the annual spring festival Hindus  for which, consider it to buy gold and demand of yellow mettle is very high during this festival.The alloy is mixed with gold to give it strength and durability, and  the platinum used to gold rhodium polish are imported from China; this will force the retailers to increase their making charges, resulting in an overall increase in the price of gold and silver jewellery.

As China is the largest exporter of iron and steel in 2019 having exported 87.3 million metric tons which equals approximately 15.8 % of global exports and its expected to increase in the price of the production after covid -19 As regards steel, although Chinese export prices of steel do influence Indian export realisation, imports from China of pipes (Chinese share 32.0% of total imports of this category in April-January’20), GP/coated products (Chinese share 14.3%), electrical sheets

India faced a similar slowdown back in 2008 which caused the GDP growth to fall from 9.8% to 3.9%. The Great Recession of 2008 made China the economic powerhouse. This slowdown is due to the lockdown where all the factories and workplaces are closed. It is expected that after the lockdown opens the demand will be back on track, but it will take time because people have suffered a pay cut and are left with lesser money to spend on wants, and due to the shortage of imports from China, people will have to pay more for the same than they paid earlier. Japan has earmarked $2.2 billion to help its manufacturers shift production out of China. India can be the next best location after  China; because India has a lower labour cost and is easily accessible to other countries. and ,India is working MNC’s planning to shift their production units from China in the post coronavirus world. The Finance Ministry has asked a select group of industry representatives to send “implementable” suggestions on an urgent basis to make the country a global manufacturing hub

THANKS !

Deshdeepak

 

 

 

Data source- google and govt. of India and china official website.

 

 

 

 

 

 

 

 

 

 

 

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