Chinese economy slump may doom Indian Exports further

The Fifth rate cut since November 2014 and the abrupt 4% devaluation of Yuan has clearly indicated that all in not well in China. Though Chinese establishments are hinting towards around 7% growth of GDP, global markets experts are pointing towards more subdued performance of Chinese economy, anywhere around mere 4-5%. The despiration of Chinese government is also pointing towards this point as long term outlook of the Dragon seems quite bearish, considering declining exports and lower growth of domestic economy of China. 

Having that in mind PBOC has slashed rates by 25 basis point on Tuesday, while differential rate cuts have been done for Automobile and retail sector to spurt consumption. On one hand all these indicators points towards desperation of Chinese government to anyhow push its economy but at the same time it sends warning signals to global economy mainly countries with huge exports dependency as threat of low cost export dumping is looming large on them. “That being the reason countries that have huge export dependency too have gone for devaluation of their currency, says Shivkant Vaish,” expert in global economy. It is also quite a grim situation for India as well as exports is also going down on the global level. Till May 2015 Indian exports were down to $44.40 billion during April-May period as against $553.63billion during same period last year, a decline of 17%. 

This is for six months in a row that exports have declined putting pressure on balance of trade and payment, hurting Indian manufacturing. On the contrary, the devaluation of Chinese currency will make Chinese products even more cheaper in comparison to Indian goods at global level, further putting pressure on exports. “Also as the threat of dumping of various goods by China to India is looming large, it will further prove to be detrimental for Indian manufacturing," adds Shivkant. 

Considering these parameters for Indian economy, metals, manufacturing, capital goods sectors doesn’t seem good in coming days and surely the government is keenly looking at the current situation. Experts feel that soon some anti dumping measure will be put in place to insulate the domestic economy from Chinese assault.