Chinese economic fall may hit India, says Assocham

 China’s market meltdown has had its impact on other economies, but the worse may not be over, and a contagion may spell a gloom on the Indian commodity markets and exports.

China is the world’s largest consumer and importer of commodities, due to which commodity prices have been hit by the crisis in that country.

Prices of copper and iron ore are at a six-year low, while crude has fallen 10 per cent in a week’s time. The effect of China’s crisis has been witnessed on agricultural commodities as well. India exports iron ore, iron, steel, cotton and castor oil to China on a large scale.
In 2014, China’s economic growth accelerated 7.4 per cent which was its lowest level in 24 years. In 2015, the economy is expected to accelerate below 7 per cent. The low rate of economic growth in China is casting its spell on commodity demand across the world. The world commodity prices have crashed due to low demand.

A recent paper by Industry body Assocham analysed the impact of the problems in China on the Indian economy, and said that it was negative for a host of metal and iron ore producers like SAIL, Tata Steel, NMDC and upstream oil producers.

A sharp fall in iron ore, steel and copper prices has equally hit the Indian manufacturers as any other country in the world, it said. 

“Besides, if a bubble-like situation erupts in China, its impact will be seen all around the world to which the Indian economy is too well entrenched. China is the top merchandise trader in the world with over $4.16 trillion worth of trade, followed by the US with $3.9 trillion,” it said.

Automobile exporters and manufacturers, especially Tata Motors are expected to suffer too as China is its fastest growing market, especially for JLR, and the company was investing in the market to drive future growth.