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been high to the levels that China has been spending more on
Infrastructure than US and Europe combined.
The Chinese exports are falling. Once the worlds largest exporter
now accounts for around 10% of the global exports. This is also due
to the slowdown in the major economies of US and Europe.
Moreover, the demand in the domestic market is also falling. Last
fiscal the domestic demand growth was an anemic 0.3%.
So, what would be the impact of the slow down in the worlds
second largest economy? To what adverse level can that affect our
country which has now fresh blood and is in hurry of the growth
seeing the actions of the new Government of Prime Minister Modi
with his agenda of Development? What will happen to Make In
India drive?
The countries that China trade with will face the effects of the
Chinese slowdown. The extent of the effect would depend on their
exposure with China. The countries like Australia, Brazil, Indonesia
and Canada, which are dependent on commodity exports, would be
the victims of this slowdown because of the falling prices by the
Chinese. Australia is heavily dependent on its exports to China and
with the falling economy of the dragon, it has started to cut the
price of its exports suggesting it as been started feeling the effects.
However, markets of US might be the beneficiaries because the
import would be at the lower price.
Lets talk about how the Indian Economy in specific. Well India is not
linked to Chinese economy in broad sense, hence a direct impact of
Chinese slowdown is not going to effect India adversely in the
negative way. But this slowdown can help India grow.
As mentioned earlier, the slowdown is bringing down the prices of
commodities in the international markets. The reports published by
various agencies prove that the prices of most metals are down in
the range on 6-19 percent. This is beneficial for our economy that
imports such commodities. The direct impact of the lower prices
would be decrease in the cost of production, which in turn would
reach the consumer that was earlier not possible due to high import
prices. However, the reduction in prices would not be beneficiary for
specific companies in the steel industry i.e. Tata Steel and Sail which
have their own mines and have to reduce their prices due to the
reduction of prices in the international markets. But companies like
JSW will benefit because it is importing the raw materials that is now
available at cheaper prices. Below is the snapshot of the commodity
prices in the market and the fluctuations in their prices.