The sharp slowdown in China?s economy, the biggest contributor to global growth, could have a ripple effect on Indian exports with demand for iron ore, cotton and soymeal set to take a beating. Although, most trade and industry representatives said that the immediate fallout would not be much, the situation could turn for the worse if growth continues to slow in the world?s fastest growing economy.
China?s gross domestic product rose 9% in the third quarter from a year earlier, its weakest since the severe acute respiratory syndrome, or SARS epidemic that slashed growth in the second quarter of 2003, the state statistics bureau said in Beijing on Monday. India?s exports to China rose to around $10.8 billion in 2007-08, up from $8.3 billion in the previous year. ?China is the largest buyer of iron ore from India and if its economy slows, we could see a further fall in demand,? said Glenn Kalavampara, secretary, Goa Mineral Ore Exporters Association.
Goa exports the bulk of iron ore from India. He said that already exports are being tipped to fall by 25% – 30% this year due to the global slowdown and the hefty export duty on ore. The fall could be as much 40% – 50% if China stopped buying. India exported around 100 million tonne of iron ore from all ports in 2007-08 (April-March) of which around 80% was to China.
He said that such a big loss could only be compensated if the prices of ore from Indian became competitive. Meanwhile, expecting no immediate impact on cotton exports, a senior official from the East India Cotton Association said that the impact could be seen only in the long run. ?China?s consumption of Indian textiles and cotton is still very healthy and we don?t see any perceptible change in that position as of now,? said an official, who did not wish to be named. India exported around 8.5 million bale of cotton in 2007-08 (October-September) of which around 55%-60% were to China.
?China is an inconsistent market for Indian soymeal and it might scale down its imports this year as the local crop is good and the probable effect of the slowdown,? said Rajesh Agarwal, spokesperson, Soybean Processors Association of India. India?s annual soymeal exports to China vary between 200,000 to 500,000 tonne.