COVID-19 outbreak takes heavy toll on India’s exports to China in February

Weighed by the impact of coronavirus (COVID-19) outbreak, India’s exports to China and Hong Kong put together slumped 41% just in February while its imports declined more than 10%. However, a sudden jump in exports to United States and United Arab Emirates during the month meant India’s overall exports turned positive for the first time in seven months.Official trade data reviewed by Mint, which is yet to be released, showed India’s exports to China dropped 13.7% in February to $1.1 billion while shipments to Hong Kong declined 62.4% to $681 million. Similarly, imports from China due to supply chain disruptions fell 13.3% to $4.4 billion while imports from Hong Kong which was less affected by COVID-19 outbreak picked up 3.7% to $1.1 billion.

Clubbing trade data from China and Hong Kong is important as China in recent years have been exercising greater administrative control over Hong Kong, even though Hong Kong is a founding member of the World Trade Organization (WTO). As reported on 15 April last year how China is trying to mask the extent of its bilaterally sensitive trade surplus with India by routing exports via Hong Kong.

India has seen exponential growth in trade linkages with its northern neighbour since the outbreak of the SARS virus in China in 2002-03 that caused 349 deaths. In 2002-03, India’s total trade with China stood at a paltry $4.8 billion which has now expanded more than 18 times to $87 billion in 2018-19. India exports mostly raw materials and industrial inputs to China such as organic chemicals, mineral fuels, cotton, ores, plastic materials while it imports electronic items, machinery, organic chemicals and plastic items.