US-China trade spat could lead to dumping of Chinese goods in emerging markets: India Ratings

Any slowdown in Chinese exports to the US on account of the recent imposition of tariffs on Chinese goods could result in a corresponding rise in Chinese exports to other EMs, it said.

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Currently, Chinese exports accounted for about 18% of the total US imports in 2018, representing 2.34% of the US GDP.
A possible collateral damage of the rising US-China trade face-off could be an increased dumping of Chinese goods in Emerging Markets (EMs) including in India, says India Ratings and Research (Ind-Ra).

The Delhi based thinktank believes that in the past, China has showcased such tendency and dumped its products at predatory rates in many markets including in India, a country for which it remains the biggest trading partner.

Any such manoeuvring by the Dragon could potentially disrupt the demand-supply dynamics in the Indian domestic markets, especially for products such as electronic goods, iron and steel and organic chemicals, the thinktank has noted.


Further, another spillover effect of any fall in Chinese exports to the US could potentially put downward pressures on the Chinese yuan (RMB). A likely devaluation in the RMB could stimulate a competitive depreciation in the Indian rupee, failing which the competitiveness of Indian exports could be affected, it said.

Currently, Chinese exports accounted for about 18% of the total US imports in 2018, representing 2.34% of the US GDP.

Any slowdown in Chinese exports to the US on account of the recent imposition of tariffs on Chinese goods could result in a corresponding rise in Chinese exports to other EMs. With Chinese industrial production continuing to grow at around 5% and Chinese exports to the US contracting persistently, over the last few years, Chinese exporters have started penetrating into alternate markets.
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Hence, imports by other Asian EMs from China grew 20.70% in 2018 versus 12.75% in 2010. This has been catalysed by the Chinese manufacturers’ ability to undercut domestic manufacturers in these markets, resulting in lower market share for the domestic players in the EMs, India Ratings observed.

Worth noting is, India’s trade deficit with China, has risen from $38 billion in 2014 to $58 billion in 2018.
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