More reports on: World economy

Alarm bells ring in China as Indian exports zoom by 42%

04 March 2017

India's exports to China rebounded to show a 42-per cent increase in January, sending a signal that China should not ignore its neighbour's increasing competitiveness in the manufacturing sector, a state media report said on Friday.

Data from India's ministry of commerce showed that there was marked increase in Indian exports to China in January (year-to-year comparison) – 52 per cent increase in cotton, more than 810 per cent in inorganic chemicals and nearly 200 per cent in iron and steel.

The data also revealed that China continues to hold a huge advantage in bilateral trade; the total value of bilateral trade was around $6.83 billion in January and India's export share was around $1.34 billion.

The state-run tabloid Global Times said it was important for China to analyse the data to see whether this trend will continue.

''Official data showing India's January exports to China soared 42 per cent year-on-year was overlooked by most Chinese analysts, but it will be a very dangerous venture if China adopts an arrogant attitude toward India's increasing competitiveness,'' it said.

''Scholars should make a careful analysis about the soaring growth to find out whether this is merely a flash in the pan or a result of subtle changes in competition in the manufacturing sector.''

The article doubted whether ''India's higher-than-expected economic growth of 7 per cent from October to December 2016 is authentic and reliable''.

''Meanwhile, less attention is being paid to bright points in the country's economy. What cannot be overlooked is the increasing competitiveness of the manufacturing sector in India,'' it said.

The article added India's manufacturing sector grew by 8.3 per cent in the third quarter of 2016 and that it was a ''…great achievement for India, even if the growth figure may be exaggerated as some analysts suggest''.

It mentioned that rising labour costs in China will work in favour of countries like India and Vietnam.

''Although India is still in its initial stage of developing export-oriented manufacturing industries, the country has great potential to emerge as a regional hub for labour-intensive industries. One recent analysis showed China's manufacturing hourly wage in 2016 was roughly five times that in India,'' the GT article headlined ''China should pay more attention to India's increasing manufacturing competitiveness'' said.

It argued that Chinese manufacturers will face more competition and pressure from a large country like India – more than from Vietnam.

''As labour costs climb in China, Vietnam has become an emerging manufacturing nation, but China doesn't need to panic. However, manufacturing development in a large country like India means more pressure on China. The increasing competitiveness of India's manufacturing sector is an issue of strategic importance and deserves more attention,'' it said.

''On the whole, rapid economic expansion in India is a good thing for China as China's consumer market matures, but Chinese manufacturers will inevitably face increased competition from Indian firms at the same time.''

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