China’s factory output shrinks first time in three decades; India gets window to push supply

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March 16, 2020 2:38 PM

In February, China's industrial output dropped by 26.63 per cent from January 2020.

Coronavirus, IIP, china industrial production, IIP in ChinaThis is the first time in the last three decades when the industrial production of China has shrunk.

Coronavirus has brought China’s industrial production to a standstill, giving India a window to push its supplies to fill the gap. China’s industrial production unexpectedly contracted by 13.5 per cent in the first two months of 2020. In February alone, industrial output dropped by 26.63 per cent from January, according to data published by the National Bureau of Statistics. This is the first time in the last three decades when the industrial production of China has shrunk. The contraction in the factory output is observed at a time when the street estimated expansion of 1.5 per cent.

Due to the Covid-19 pandemic, most of the countries are facing business disruption and travel restrictions. This has severely affected businesses worldwide and since the virus originated in China, the highest impact is also felt by the same country. The production in China fell for all categories including manufacturing by -15.7 per cent; utilities by -7.1 per cent; and mining by -6.5 per cent. Industry-wise, the output dropped for most categories including automotive, general equipment manufacturing, railway, textile, metals, etc. 

Also Read: How India can beat China in global trade; domestic pharma, chemical-makers have an edge

Meanwhile, even when the coronavirus outbreak was not in the picture, China was going through a rough time due to the US-China trade war. Now, when the entire country is locked down and trade is severely hindered, experts believe that India has an opportunity to push its industrial production and hence the exports. “There is an opportunity for India to present itself as a serious alternative to China as an investment destination. This would, however, require embarking on structural reforms to present India as an attractive investment destination,” according to the March 2020 report by Brickwork Ratings.

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