The Indian Finance Ministry has revealed that amid the US-China trade war, its exports to the two countries have not only increased but it is also looking forward to enlarging its China Plus-One Strategy.
The China Plus-One Strategy is a model being adopted by companies to diversify their operations as China loses its competitive edge. Under this model, companies add another Asian country, which offers cheap land and labour, a large market, and preferential investment policies.
Claiming that trade tensions between China and the US contributed to the decline of world output and trade, the ministry said that India recorded $44.8 million in exports to the USA and $14.6 million to China in 2019.
The US-China trade war began in 2018 after US President Donald Trump accused China of unfair trade practices and imposed tariffs on more than $360 billion of imports. China accused the US of trying to stop it from emerging as a global power and retaliated with tariffs of $110 billion on US products.
Amid the tensions, the Indian government has granted relief measures to exporters including lower duties and taxes on exported products, a special scheme for higher export credit disbursement and a fast clearance window to boost trade.
But the coronavirus epidemic has put a question mark over the revival of global economy: after a long drawn-out trade war, the US and China signed a trade deal on 15 January, however, the epidemic has hit Chinese manufacturing since then.
As per the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), China’s factory activity fell to 40.3 last month, the lowest level since the survey began in 2004, and down sharply from the 51.1 reading in January.
On Saturday, manufacturing activity in China shrank to 35.7 — almost 25% less than the 50-mark that separates growth from contraction.
India has recorded an increase in exports with the US despite higher tariffs and the end to the Generalised System of Preferences, an import subsidy facility, which assisted Indian exports to the tune of $5.6 billion.
Indian External Affairs Minister S. Jaishankar on Monday said that coronavirus outbreak has shown that China is central to the world economy. “The fact that emissions over China has ended shows the manufacturing shutdown. Significant consequences will follow.”