If the trade war continues, prices will go up and growth will go down in both the US and China, which contribute $19.4 trillion and $11.9 trillion respectively of the global GDP.
The trade war between the US and China, the two biggest economies of the world, hovered over global growth all of 2018, and it continues to rise. Both the countries, neck-deep in protectionism, raised tariffs on import of certain products of the other or imposed fresh ones to create trade barriers. This affected trade globally; some benefitted from it while some will face adverse effects. Which bracket does India fit in?
Both the economies have seen consequences of the tariff war. The US had accused China of unfair trade practices, which the latter has denied. In the last quarter of 2018, China recorded a GDP growth of 6.6 percent, lowest in 28 years.
Experts feel that India stands to benefit from this situation if it applies appropriate measures with it, as per a report in The Financial Express.
If the trade war continues, prices will go up and growth will go down in both the US and China, which contribute $19.4 trillion and $11.9 trillion respectively of the global GDP. This will affect Indian exports, as per a CARE Rating report. It went on to say that a currency battle could ensue between the two superpowers.
Madan Sabnavis, chief economist at Care Ratings, told the paper that the flow of goods between the two countries has been disrupted by this trade war. "This could affect currencies, with the dollar getting stronger and thus may add to price volatility," he said, adding that it might give exports in India a push but it may not be that significant compared to China's high-end electronics exports. But, textiles could be the lucky sector for India.
Sabnavis further suggested that we must focus on ramping up exports by linking it with small and medium enterprises. "We are to be watchful of what China does in other markets as it may become aggressive and dump goods to make up for loss in the US market," he is quoted as saying in the report.
In an interview, Commerce Minister Suresh Prabhu had said that India's share in the global exports pie is just 1.7 percent as compared to China's 12.8 percent. He had said that during the trade war, India will, therefore, boost its exports to the US and other global markets, because Chinese shipments would become unattractive in this scenario.
"New Delhi is focusing on a handful of items including automotive parts, chemicals, electrical equipment, among others after the US and China slapped reciprocal duties on each other's goods," he had said.
