India’s attempts at boosting its manufacturing sector by capitalizing on the US-China trade war have fallen short, with other Asian rivals benefiting to a much greater extent from escalating tensions between the world’s biggest economies, a study showed.
Between 2017 and last year, India’s total share in US imports rose by 0.6 percentage points to 2.7 percent while China’s portion dropped by about 8 percentage points to under 14 percent, Oxford Economics said.
The biggest beneficiary from the trade diversion in the region has been Vietnam, whose total share in US imports grew by 1.7 percentage points to 3.7 percent in the period.
Photo: AFP
Taiwan and South Korea have also made greater strides than India, increasing their share of US imports by 1 percentage point and 0.7 percentage points, respectively, according to Oxford.
The study underscores the uphill task facing Indian Prime Minister Narendra Modi as he attempts to boost the country’s lagging manufacturing sector, whose share of GDP has remained broadly stagnant at 17 percent for over a decade.
The research also implies that India might struggle to make significant gains if former US president Donald Trump returns as US president and follows through with a threat to impose a 60 percent tariff on Chinese goods.
“The US-China trade war so far has improved India’s export prospects only to a limited extent, dashing hopes that an escalation of the conflict could boost the lagging manufacturing sector,” Oxford Economics economist Alexandra Hermann wrote in a note. “India’s export strengths largely lie in sectors of the ‘old economy,’ where growth potential is limited and competition is fierce.”
India has made substantial advances in boosting electronic exports to the US, but its imports of components from China have surged as well, suggesting there is little value added to domestic manufacturing.
China accounted for about one-third of India’s imports of electronics, machinery, and chemicals and pharmaceuticals last year. For components such as certain semiconductor devices, as much as 67 percent of India’s imports came from China, Oxford said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS