China mysterious disease outbreak: Indian exporters fear likely impact

Amid the looming threat of a medical emergency due to a spike in respiratory illness cases in China, Indian exporters are closely monitoring the situation and are apprehensive about the potential repercussions on trade if the situation worsens.

Considering that China is India’s largest import partner and several industries depend on raw materials from the neighbouring country, a further deterioration in the situation could adversely affect trade. This concern is particularly telling at a time when global trade has slowed due to ongoing geopolitical tensions and macroeconomic factors, such as high inflation.

China is also India’s fourth-largest export destination.

The surge in China’s respiratory illness became a global issue last week when the World Health Organization sought more information about China, citing a report on clusters of undiagnosed pneumonia in children by the Program for Monitoring Emerging Diseases (ProMED), news agency Reuters reported on Tuesday.

To compound the issue, China, the world’s second-largest economy, is already slowing down and grappling with a crisis in its real estate market.

Ajay Sahai, director-general and chief executive officer of the Federation of Indian Export Organisations, said that the situation in China is a serious cause for concern, given that global trade is already facing numerous headwinds.

“The intensity and spread of the disease are on exporters’ minds, particularly in sectors such as iron and steel, aluminium, copper, steel, marine, and certain agricultural commodities,” Sahai said.

Arun Garodia, chairman of Engineering Export Promotion Council India, stated that if the situation in China is not contained soon, India’s trade with China will start being affected as early as next month.

“The Chinese economy has not been doing well, evident from a decline in our exports to the country. As far as engineering goods are concerned, both exports and imports may be impacted since several machinery and industrial equipment are imported from China,” Garodia explained.

Similarly, the textile sector may also be negatively impacted, as pigments, paint tools, and other items are imported from China, according to industry officials.

While engineering exports jumped 7.2 per cent year-on-year to $8.1 billion in October, outbound shipments to China witnessed a 6.4 per cent contraction to $213 million. On a cumulative basis, exports of such products to China declined by nearly 3 per cent to $1.4 billion in April-October, according to government data.

During the first seven months of the current financial year (2023-24), India imported goods worth $60 billion from China, down 0.4 per cent compared to the same period a year ago. As for exports, they increased by 0.8 per cent to $8.9 billion.

Key exports to China include coffee, cereals, petroleum products, copper, and cotton, among other items. Key imports include machinery, plastics, chemicals, and textile-related items.