Home >Industry >Retail >COVID-19 outbreak takes heavy toll on India’s exports to China in February
China’s industrial production and retail sales fell by 14% and 21% in January and February combined.
China’s industrial production and retail sales fell by 14% and 21% in January and February combined.

COVID-19 outbreak takes heavy toll on India’s exports to China in February

  • India’s exports to China dropped 13.7% in February to $1.1 billion while shipments to Hong Kong declined 62.4% to $681 million
  • Imports from China fell 13.3% to $4.4 billion while imports from Hong Kong which was less affected by COVID-19 picked up 3.7% to $1.1 billion

NEW DELHI : Weighed by the impact of coronavirus (COVID-19) outbreak, India's exports to China and Hong Kong put together slumped 41% just in February while its imports declined more than 10%. However, a sudden jump in exports to United States and United Arab Emirates during the month meant India's overall exports turned positive for the first time in seven months.

Official trade data reviewed by Mint, which is yet to be released, showed India’s exports to China dropped 13.7% in February to $1.1 billion while shipments to Hong Kong declined 62.4% to $681 million. Similarly, imports from China due to supply chain disruptions fell 13.3% to $4.4 billion while imports from Hong Kong which was less affected by COVID-19 outbreak picked up 3.7% to $1.1 billion.

Clubbing trade data from China and Hong Kong is important as China in recent years have been exercising greater administrative control over Hong Kong, even though Hong Kong is a founding member of the World Trade Organization (WTO). Mint reported on 15 April last year how China is trying to mask the extent of its bilaterally sensitive trade surplus with India by routing exports via Hong Kong.

China-- the epicentre of the coronavirus outbreak--was worst affected in February. China’s industrial production and retail sales fell by 14% and 21% in January and February combined. International agencies have significantly reduced their growth estimates for China with the rating agency S&P estimating an unprecedented 10% contraction in China’s economy in January-March quarter while 2020 calendar year growth projection for the world’s second largest economy has been slashed to 2.9% from 4.8% for 2020.

“If the pandemic is not contained soon, China’s demand for cotton, iron ore, and petroleum products from India is likely to suffer. Imports related to pharmaceuticals, automobiles, consumer durable, electronics and telecom/ smartphone equipment could also bear the brunt, hurting these sectors domestically," Crisil said in a report published earlier this month.

Fitch Ltd said while India’s linkages with China are modest, manufacturers in India are heavily reliant on key Chinese intermediate inputs – especially of electronics (60%) and machinery and equipment (47%). “Supply-chain disruptions are expected to hit business investment and exports," it added in a report published this month.

India has seen exponential growth in trade linkages with its northern neighbour since the outbreak of the SARS virus in China in 2002-03 that caused 349 deaths. In 2002-03, India’s total trade with China stood at a paltry $4.8 billion which has now expanded more than 18 times to $87 billion in 2018-19. India exports mostly raw materials and industrial inputs to China such as organic chemicals, mineral fuels, cotton, ores, plastic materials while it imports electronic items, machinery, organic chemicals and plastic items.

After contracting for six consecutive months, India’s merchandise exports turned positive in February, along with merchandise imports, even as the COVID-19 pandemic threatens to derail the recovery process. Data released by the Commerce ministry earlier this month showed exports grew 2.9% while imports picked up 2.5% during the month. The pick-up in exports was led a spurt in exports to UAE (20.5%), USA (12.1%), Malaysia (62.3%) and Indonesia (71%).

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