In a bid to give a fillip to its slowing economy, China is moving out of labour intensive segments and inching more towards machine led, high-tech sectors that can aid its revival. Indian exporters are making the most of this shift to make inroads in a segment where their expertise is highly sought after: handmade craft. Even though China, as per official estimates that came through last year, grew at 6.6%, yet it was the slowest growth ever that the economy had experienced since 1990. Reasons aplenty have been attributed to this slowdown that has enveloped one of the largest consumer economies of the world. The China-US trade war, soaring costs and more cost-effective trade possibilities in neighbouring countries is making China face the brunt of the economic woes that it currently finds itself submerged in. As per the International Monetary Fund’s (IMF) World Economic Outlook 2019, China’s economy slowed in 2018, primarily due to financial regulatory tightening to rein in shadow banking activity and off-budget local government investment, and due to the widening trade tussle with the United States, which escalated the slowdown toward the end of the year. Further deceleration is projected for 2019.
So what does it really imply for India and exports? Affirming the findings, Ajay Sahai, Director General and CEO, Federation of Indian Export Organisations (FIEO) says that the Chinese economy has already exited from certain sectors such as carpets, spinning and leather is expected to be the next one. “China is short of manpower. They are moving to high and medium technology sector and the services sector. To some extent, this is an opportunity for India. Once China slows down, they may not be catering to their own domestic market which will open up the field for Indian entrepreneurs as well.” But it is not as easy as it may appear on the surface. Experts advise caution in assuming too much optimism early on. Madan Sabnavis, Chief Economist, Care Ratings is of the view that whether India can take advantage or not is dependent on certain key aspects. “Firstly we need to be wary of goods being dumped as China may do so in a bid to spruce up their economy. Secondly, a key question is that can we take over their other export markets – at the margin probably yes, but generally no as they would continue to be aggressive in markets in Europe, Latin America and Africa,” highlights Sabnavis.