India may gain from exports moving out of China: survey

12 Oct '19

2 min read

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India can potentially be one of the big winners from the US-China trade war, according to a Credit Suisse survey, which says shifting of $350-550 billion of exports out of China is ‘inevitable even if slow’. The survey of 100 companies with global sales of $1 trillion said firms in China plan to move production to Vietnam, India, Taiwan and Mexico.

The Credit Suisse report lists three main themes that inform the $350-550 billion ‘shift’, according to a news agency report.

Multiple pressures to move manufacturing out of China are likely to peak now because 80 per cent of the finished goods sold to consumers come under tariffs only now. The report connects the dots to similar goods in earlier lists which saw price rise, lower demand and a shift in production.

Companies surveyed said "they would shift manufacturing out of China even without tariffs". They list a ‘shrinking Chinese workforce’ as one of the primary issues.

"In five years though, with the Chinese manufacturing workforce shrinking by another 9-15 million after a 20 million decline since 2015, we expect $350-550 billion of exports to move out of China. It could be more, if other countries improve absorption capacity: Vietnam is too small (but should gain the most), Bangladesh a pure-play on apparel, and India has seen good import substitution in electronics but is struggling to grow apparel exports....In the near- term, tariffs would raise prices in the US (13 per cent of firms absorbing them), and shift Chinese exports to other countries (possibly at lower prices)," the Credit Suisse document added.

Fibre2Fashion News Desk (DS)

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