A high-powered roadshow held in Mumbai on November 8, 2024, has ignited excitement for Bharat Tex 2025, India's premier textile exhibition. The event brought together industry leaders, government officials, and export promotion councils to showcase the strength of India's textile value chain and promote the upcoming expo.
Roop Rashi, Textile Commissioner of India, expressed her enthusiasm for the collaborative spirit driving Bharat Tex. She praised the industry's commitment to showcasing India as a one-stop shop for all things textile, embodying the "India that is Bharat" ethos. Rashi highlighted the government's role in ensuring a robust ecosystem for the industry, including access to raw materials and favorable market conditions.
Narendra Goenka, Chairman of Bharat Tex 2024 and AEPC, set the stage by emphasizing the vital role of the textile industry in India's economy. He highlighted its position as the second-largest employer and a significant contributor to GDP and export earnings. Goenka lauded the government's vision for Bharat Tex, aiming to rival major international textile shows and propel India towards its ambitious export target of $100 billion by 2030.
Bhadresh Dodhia, Chairman of MATEXIL, provided a detailed overview of Bharat Tex 2025, scheduled for February 14-17 at Pragati Maidan and February 12-15 at India Expo Mart. He outlined the comprehensive showcase planned across both venues, covering the entire textile value chain from fibre to fashion, including co-located shows on garment machinery and dyes & chemicals. Dodhia emphasized the organizers' focus on attracting top-tier international buyers and delivering impactful knowledge sessions.
Dr. Siddharth Rajagopal, Executive Director of TEXPROCIL, delved into the intricacies of Kasturi Cotton, an initiative to brand and elevate Indian cotton in the global market. He explained the rigorous quality checks, traceability through blockchain technology, and sustainability focus underpinning Kasturi Cotton. Rajagopal positioned Kasturi Cotton as a movement to redefine global perceptions of Indian cotton and ensure higher returns for farmers.
Navdeep S. Sodhi, Partner at Gherzi Textile Organization, provided insights into the mega trends shaping the textile and apparel industry. He identified three major waves of transformation: the phasing out of the Multi-Fibre Arrangement, the rise of China, and the current wave driven by sustainability, digitalization, and diversified sourcing. Sodhi emphasized the need for India to adapt to these trends and capitalize on the opportunities presented by shifting supply chains.
In his second presentation, Sodhi analysed the Indian textile and apparel industry's trajectory, outlining the investments and strategic pillars needed to achieve the government's ambitious growth targets. He stressed the importance of public-private partnerships, infrastructure development, and a supportive policy environment to propel India's textile industry to new heights.
The Mumbai roadshow served as a powerful platform to build momentum for Bharat Tex 2025. The event underscored the commitment of industry stakeholders and the government to position India as a global textile powerhouse. With its focus on innovation, sustainability, and collaboration, Bharat Tex 2025 is poised to be a landmark event for the Indian textile industry.
Source: Fashionating World
After experiencing an 11 per cent contraction in exports in 2023-24 (FY24) due to a dip in exports for 10 consecutive months from April to January, the Tiruppur textile industry is back on track in 2024-25 (FY25). The cluster, which contributes 55 per cent of the country’s total knitwear exports, posted a 13 per cent increase in the first five months of this financial year (FY25), with August seeing a 22 per cent rise — the highest in over two years. Additionally, global majors like Primark, Tesco, Tommy Hilfiger, Marks & Spencer, and Warner Bros. Discovery Global Consumer Products, among others, are lining up to place orders with manufacturers from this textile city. According to the Tiruppur Exporters’ Association (TEA), a major reason for this shift is the Green Tiruppur sustainable strategy adopted by the manufacturing units, which has made the hub more attractive to buyers in the US and Europe. Moreover, the recent political instability in Bangladesh has also made Tiruppur an attractive option for global apparel majors. Companies from the US, such as GAP, Carter’s, and Walmart, along with European giants like Next and Duns, and Australian companies like Target and Woolworths, have placed orders during the first five months.
The textile industry is traditionally energy and water-intensive and produces substantial greenhouse gas emissions. However, investments in zero liquid discharge, green energy, and tree plantations have positioned the Tiruppur knitwear cluster to comply with environment, social, and governance standards, making it a carbon-negative cluster. This has attracted companies keen on green compliance to the region. “Companies here are promoting Green Tiruppur. We are planting 2 million trees and generating nearly five times the green energy required, from wind and solar, which totals around 1,900 megawatt (Mw), while our requirement is only around 300 Mw," said K M Subramanian, president of TEA.“We are also using almost 100 per cent recycled water out of the total water requirement of 150 million litres every day for processing our fabrics,” Subramanian added. The manufacturers are supplying the remaining power to the grid. During the first five months of the current financial year, the region’s exports were valued at Rs 14,679 crore, a 13 per cent increase from Rs 12,995 crore during the April to August period of 2023-24. In August alone, there was a 22 per cent rise, reaching Rs 3,114 crore, up from Rs 2,550 crore in August 2023. This comes at a time when the region's overall exports fell by 11 per cent in 2023-24, to Rs 30,690 crore, compared
to Rs 34,350 crore in 2022-23. This decline was due to multiple factors, including the war in Ukraine, the financial crisis in Europe and the US, and global business disruptions. Tiruppur has around 28,000 manufacturing units involved in various processes across the textile value chain, providing employment to roughly 800,000 people. These include knitting, dyeing, bleaching, fabric printing, garmenting, embroidery, compacting, calendaring, and other ancillary units.
Source: Business Standard
Synopsis The home textile industry derives 70-75% of its revenue from exports — the US alone accounts for 60% — and the remaining 25-30% from the domestic market. India’s home textile industry is set to stitch a 6-8% growth this fiscal year following a 9-10% rebound in revenue growth last fiscal year, a CRISIL Ratings analysis of 40 companies has indicated. These companies account for 40-45% of the industry revenue. Such a growth is anticipated on the back of resilient demand from the US and expansion in the domestic market. The credit profiles of home textile companies will remain stable, supported by healthy cash accrual and moderate capital expenditure (capex) plans on the back of deleveraged balance sheets, the analysis stated. The home textile industry derives 70-75% of its revenue from exports — the US alone accounts for 60% — and the remaining 25-30% from the domestic market. Gautam Shahi, Director, CRISIL Ratings, says that other than the US, the European Union (EU) forms 15-16% of the import share of the industry. This market could see a muted growth in the current fiscal year given the economic situation in the region as well as the EU’s preferential trade tariffs for exports from Pakistan. “The domestic Indian market forms the remaining 25-30% of the overall industry’s revenue. The Indian home textiles market is largely unorganised, and the organised players are making continuous efforts to expand their market share in India,” he says. International cotton prices had fallen below the domestic prices between June and September 2024, driven by a surge in cotton supply from Brazil and the US. However, with the commencement of India’s cotton season, the gap between domestic and international cotton p international cotton prices had fallen below the domestic prices between June and September 2024, driven by a surge in cotton supply from Brazil and the US. However, with the commencement of India’s cotton season, the gap between domestic and international cotton prices is expected to narrow, protecting India’s export competitiveness international cotton prices had fallen below the domestic prices between June and September 2024, driven by a surge in cotton supply from Brazil and the US. However, with the commencement of India’s cotton season, the gap between domestic and international cotton prices is expected to narrow, protecting India’s export competitiveness. With domestic raw material prices remaining close to international prices, the operating margin is likely to remain stable at 14-15% this fiscal year. The margin will remain insulated from the recent volatility in freight cost as most exports are on a free-on-board basis. Shahi adds that some of the major categories exported from home textile products from India in FY24 included furnishing articles and bed sheets (38- 40%), carpets (30-32%) and terry towels (17-18%), which together form 85-90% of the home textile exports (in value terms). “For 5 months fiscal 2025 (April to Aug 2024), the carpet segment has recorded the highest YoY value growth (14%), vs a lower growth in the other categories. The other categories (curtains, ropes etc.) are relatively miniscule and will not meaningfully contribute to the overall home textile growth,” he states. On the capex front, the home textile companies had invested Rs 8,500 crore to add capacity over fiscal years 2019-2024. With revenues scaling up gradually, the industry’s capacity utilisation is expected to remain at 60-70% this financial year. Pranav Shandil, Associate Director, CRISIL Ratings, highlights that with steady operating performance and moderate capex in fiscal year 2025, the interest coverage for home textile companies should remain stable at 5-6 times. “Healthy cash accrual is likely to reduce dependence on external debt for working capital, which will keep the total outside liabilities to tangible net worth ratio low at 0.6-0.7 times this fiscal,” he states. That said, any significant slowdown in the US or a surge in domestic cotton prices compared with international prices will be monitorable.
Source: Economic Times
Synopsis India's External Affairs Minister S Jaishankar called for immediate action to address the significant trade deficit with Russia, which has reached USD 25.11 billion due to increased crude oil imports. He emphasized the need to remove trade barriers, promote national currency settlements, and explore collaborations in energy, connectivity, and human resources to achieve a more balanced and robust trade relationship. Mumbai, External Affairs Minister S Jaishankar on Monday called for "urgent" measures to address the issue of widening trade deficit between India and Russia. While India's exports to Russia stood at only USD 2.24 billion in April-August this fiscal, imports soared to USD 27.35 billion during the period. The trade deficit is aggregated at USD 25.11 billion. The high trade deficit is mainly on account crude imports. Russia emerged as India's biggest supplier of crude oil, which is converted into fuels like petrol and diesel in refineries, after Russian oil was available on discount following some European nations shunning purchases from Moscow over its invasion of Ukraine in February 2022. Addressing the India-Russia Business Forum here, Jaishankar also pitched for removal of non-tariff barriers and regulatory impediments to help improve the trade balance with Russia. "The balance of trade needs urgent redressal since it is so one-sided. It is imperative that non-tariff barriers and regulatory impediments are speedily addressed for this to happen," he said.
The bilateral trade currently stands at USD 66 billion, and the goal of reaching USD 100 billion is "more than realistic", he added. Further, he advocated for mutual settlement of trade in the national currencies, especially in the "current circumstances". "Special Rupee Vostro Accounts are right now an effective mechanism. However, even in the short run, a better trade balance with national currency settlements is the answer," he added. You Might Also Like: India not nervous about ties with US after Donald Trump's return to White House, says EAM Jaishankar Jaishankar said the meeting between Prime Minister Narendra Modi and President Vladimir Putin at the Annual Summit in Moscow and last month in Kazan provided a "strategic direction". "A partnership between an India that has an 8 per cent growth rate for multiple decades ahead, and a Russia that is a key natural resources provider and a major technology leader will serve both of them and the world well," he said. Continued attention is needed on the three connectivity initiatives between two economies, Jaishankar said, referring to International North- South Transport Corridor, Chennai-Vladivostok Corridor and the Northern Maritime Route. "It is natural that there would be concerns, such as banking and payment related issues, logistical challenges like shipping, insurance and reinsurance as well as market access. Obviously, we have to find solutions that work to the comfort level of those actually involved in trade," he said. In energy domains like oil, gas, coal or uranium, India will always be a major player in the international markets. "This applies as well to the demand for fertilisers of various kinds. Constructing a mutually beneficial arrangement will help us both address the volatility and the uncertainty of our times," the minister said. India and Russia can also partner to address the "demographic unevenness" or to capitalise on the global workplace model, he said, adding that this will require a focused initiative that "customises human resources" for Russian market. He also said non-economic domains are also important, such as using education and films for a larger societal but also an economic connect between the two countries. Russian Deputy Prime Minister Denis Manturov was also present at the event, which was supported by Indian industry lobby grouping Ficci and had many businessmen in attendance, including Mahindra's Anish Shah.
Source: Economic Times
Synopsis India's Commerce Minister Piyush Goyal set an ambitious goal of reaching $2 trillion in exports by 2030, emphasizing the need for collective efforts to overcome non-tariff barriers. Goyal urged the Indian Institute of Foreign Trade to contribute by studying these barriers and leveraging free trade agreements to benefit businesses and create jobs. New Delhi: Commerce and industry minister Piyush Goyal Monday said that collective effort is required to achieve the “big” exports target of $2 trillion by 2030 and said that nontariff barriers should be studied which will help India’s free trade agreement negotiations. “Let us partner to achieve the export target of $2 trillion by 2030, given that we will cross $800 billion this (fiscal) year. We will have to really put in a lot of effort collectively to achieve $2 trillion.
Source: Economic Times
Synopsis The Central Board of Direct Taxes (CBDT) has introduced monetary limits for waiving or reducing interest on tax payments. This move aims to streamline the process and provide relief to taxpayers facing genuine hardships, while also including safeguards to minimize misuse. The central board of direct taxes (CBDT) has set monetary limitations for waiver or Reduction of Interest on Tax Payments with riders. According to the circular issued late night Monday, principal chief commissioners of Income Tax can waive up to Rs. 50 lakhs, chief commissioners or director generals of Income Tax can waive between Rs. 50 lakhs and Rs. 1.5 crores, and principal chief commissioners of Income Tax can waive interest above Rs. 1.5 crores. The notification will be effective Tuesday. The interest waiver or reduction will be considered if payment of the amount would cause genuine hardship to the taxpayer, or if default was due to circumstances beyond their control, the circular said. Taxpayers must also co-operate in assessment or recovery proceedings, the circular added. While there was provision to waive interest in the reducing or waiving interest payable under Section 220(2) of the Income-tax Act, there was no monetary limit for the waiver. Experts say the move aims to streamline the process and provide relief to taxpayers facing genuine hardships. "The circular simplifies the waiver process for compliant taxpayers, while safeguards help minimize misuse," Rajat Mohan, senior Partner, AMRG and Associates said. "Although a surge in waiver requests may initially impact tax collections during the transition period, the overall effect on revenue is expected to be minimal, reinforcing the circular’s balance between taxpayer support and fiscal responsibility," he added.
Source: Economic Times
Synopsis India's trade with the United States has shown remarkable growth despite losing its Generalized System of Preferences (GSP) status in 2019. A report by the State Bank of India highlighted India's rising exports in sectors like footwear, minerals, chemicals, and machinery, indicating the country's growing competitive edge, particularly against China. New Delhi: Despite losing Generalized System of Preferences (GSP) status under the Trump administration's first term, India's trade with the United States demonstrated notable resilience and growth, highlighted a report by State Bank ofIndia. The report noted that while the GSP status has yet to be restored, India has seen rising exports in several key sectors where it has gained a comparative advantage over major competitors like China. It noted that footwear, minerals, chemicals, and machinery have all shown growth, reflecting India's deepening integration into global value chains and the country's ability to capitalize on shifting trade dynamics. The report said "India's GSP status has still not been restored, a commodity wise breakup reveals rise in India's export of certain commodities in which it has gained comparative advantage over China". The report highlighted that from 2017 to 2021, a detailed commodity analysis revealed that India has developed a Revealed Comparative Advantage (RCA) in exports of metals, minerals, chemicals, footwear, textiles, and intermediate clothing goods, with RCA values consistently above 1 in these sectors. This indicates a competitive edge, particularly as India positions itself as a favorable alternative to China in these industries. The report also added that the ongoing supply chain relocations and potential for a second Trump administration, or "Trump 2.0," may further enhance India's role in sectors such as pharmaceuticals, electronics, and textiles, which are likely to see gains as companies and countries reassess their dependencies. "Further, given the global supply chain relocation and Trump 2.0 sectors such as Pharmaceuticals, Textiles, Electronics are likely to gain" the report added. A closer look at India's iron and steel exports to the U.S. further highlighted this trend. In 2018, the U.S. imposed tariffs of 25 per cent on steel, 10 per cent on aluminum, and approximately 30 per cent on washing machines. Nevertheless, Indian iron and steel exports to the U.S. surged by 44.7 per cent from FY20 to FY21. India has maintained a trade surplus with the U.S., demonstrating the robustness of its export sector even amid restrictive tariffs. India's expanding foothold in the U.S. market and its comparative advantage in specific sectors position it well to continue reaping economic benefits, as global supply chains evolve and trade policies shift.
Source: Economic Times
We refer to the DGFT PN 27 dated 23rd October 2024 prescribing annual RoDTEP return and suggesting that RoDTEP claims in excess of actual duties/taxes/levies actually paid will be required to be surrendered by the exporters. As we understand, the RoDTEP rates are based on, besides other data submitted by various exporters, the cost of transportation of inputs and export products from/to the port. We are located far away from the port and so such costs in our case are bound to be higher than that of the exporters closer to the port. So, our claims based on the RoDTEP rates determined as an average of duties/taxes/levies borne by a cross section of exporters are also likely to be lower than the actual duties/taxes/levies paid by us. Will we be allowed to claim the difference between the actual duties/taxes/levies paid by us and the actual amount of our RoDTEP claims?
The DGFT PN referred above only talks of surrendering any duty credits claimed in excess of the duties/taxes/levies actually paid but it does not talk of giving you any duty credits in case the duties/taxes/levies actually paid exceed the amount of duty credits claimed under the RoDTEP scheme.
We have received drawback against certain shipments where we have realised the payment after the initial 9 months period allowed by RBI. Are we required to surrender the drawback amount?
No, so long as the bank has credited the amount of export proceeds in your account and has marked off the entry in the EDPMS and regularised the matter by granting an extension in the period for realisation of export proceeds. You may generate the BRC for the payment received and submit the same along with the extension letter to the Customs, if they demand surrender of the drawback amount.
We refer to the Kerala High Court judgement in the case of Sance Laboratories Pvt. Ltd., [WP(C) NO. 17447 OF 2023] striking down Rule 96(10) of the CGST Rules, 2017 as ultra vires Section 16 of the IGST Act, 2017. We are not located in the jurisdiction of the Kerala High Court. Can we use this judgement to contest the demands based on this judgement?
Yes. Exporters, who are not within the jurisdiction of the Kerala High Court, can take a plea based on the ratio of this case, to contest rejection orders of refund claims or recovery proceedings of refund granted. However, please note that the government may appeal against this judgement to the Supreme Court.
Under Merchanting Trade Transactions (MTT) can we remit payment for the import leg before we receive payment for the export leg or before shipment has been made?
Yes. However, the entire MTT must be completed within nine months from the date of shipment or import leg payment whichever earlier. Also, the outlay of foreign exchange should not exceed beyond four months, i.e. the export leg receipt must be within four months from the date of import leg payment.
Source: Business Standard
The necessity of integrating blockchain technology and artificial intelligence into the National Institutes of Fashion Technology (NIFT) curriculum has been underlined by Union Minister Giriraj Singh.
The Minister for Textiles stated at a combined convocation event of four NIFT campuses in Delhi that India is moving closer to being Viksit Bharat, and that within the next four to five years, recent NIFT graduates should be giving jobs rather than looking for them.
During the event, Singh encouraged the recent graduates to join the start-up ensemble and contribute to India’s unicorn ecosystem. According to a statement released by the textiles ministry, Singh highlighted during the ceremony the urgent necessity to include blockchain and artificial intelligence (AI) in the curriculum of all 19 NIFTs.
The convocation ceremony for the National Institute of Fashion Technology’s (NIFT) 2023–24 graduating class was held at Bharat Mandapam. Several luminaries attended the occasion, including Rachna Shah, Secretary (Textiles), Rohit Kansal, Additional Secretary (Textiles) and Tanu Kashyap, Director General of NIFT. Also in attendance were the campus directors from each of the four sites.
Students from four NIFT campuses—NIFT Delhi, NIFT Raebareli, NIFT Kangra, and NIFT Panchkula—participated in the joint convocation. NIFT, which was founded in 1986 and currently has 19 campuses around India, is well known for its top-notch fashion education and its programs that equip students for leadership positions in the clothing and fashion industries.
Source: Apparel Resource
To curb raw material imports from China and promote textiles, the Uttar Pradesh government is looking to set up nearly a dozen private textile parks in the state. The textile parks would be established under the UP Textile and Garmenting Policy 2022. Districts where these parks will come up include Gorakhpur, Mau, Bhadohi, Aligarh, Baghpat and Shamli. The first private textile park will be set up in Shamli district with an investment of ~726 crore. The Shamli project--Lonex Textile Park, spanning 27 acres, will be operational by December 2025. This will provide 5,000 direct and indirect jobs. It will comprise 17 production units, including for weaving, dyeing, printing and garmenting. India’s textile industry is expected to grow at a compound annual growth rate (CAGR) of 8.9 per cent during 2023–2032 and the domestic textile and apparel market, valued at around $165 billion in 2022, is expected to touch $350 billion by 2030. In the backdrop of this, the Yogi Adityanath government is positioning the state as a potential textile and garment hub in South Asia. Traditionally, Uttar Pradesh boasts of major textile hubs of Varanasi, Lucknow, Bhadohi, Gorakhpur, Kanpur among others. According to UP handloom and textile principal secretary Alok Kumar, the proposed private textile parks will not only boost local production but also reduce reliance on raw materials from China and other states. Moreover, the textile parks will capitalise on disruption in the textile sector in Bangladesh following political unrest, which reportedly forced the closure of almost 1,000 small and medium textile units in that country. As India is targeting garment exports of $100 billion in the next five years, the state is strengthening its textile value chain. At the same time, under the central government’s PM Mega Integrated Textiles and Apparel (PM Mitra) scheme, a mega Textile Park is being developed covering Lucknow and Hardoi districts over 1,162 acres. With investment of about ~10,000 crore, the project will generate 300,000 direct and indirect jobs. About 400 big and small textile manufacturing and processing plants are likely to come up under the project. Leading companies like Reliance Industries, Arvind Mills, Vardhman, Ahuja Textile Mills among others are expected to set up their units under this. The textile sector is among the largest employment generators in UP and the government is propelling it with policy interventions. Earlier, the Centre had announced seven PM Mitra parks located in Tamil Nadu, Telangana, Gujarat, Karnataka, Madhya Pradesh, UP and Maharashtra.
Source: Business Standard
LAHORE: The value-added export-oriented textile industry is facing an extreme financial crunch as its major portion of liquidity remains stuck due to delay in release of sales tax refunds for the last four months by the Federal Board of Revenue and just a meagre amount has been released last week. These concerns were raised by the executive committee members of the Pakistan Readymade Garments Manufacturers and Exporters Association with its Zonal Chairman Dr Ayyaz Uddin in the chair. The meeting was called to ponder on the financial crisis faced by the garment exporters due to long delay in ST refunds. The participants of the meeting said that the FBR did not release any fund in October and has now committed to release funds for RPO’s, issued until September 30. Thus, only funds for the month of July will be released, as almost all the RPO’s for August were issued up to 10th October. “We request the FBR to extend RPO dates to 10th of every month” demanded PRGMEA chairman. He said that the exporters are solely dependent on timely refunds to manage their cash flow effectively. “The FBR’s failure to fulfil its commitments has put the undue pressure on the value-added textile industry at a time when we can least afford it.” Dr Ayyaz Uddin said the steps being taken by the tax agency are commendable but since it had been agreed to release the refunds within 72 hours, the best course would have been to clear all the pending export claims, as the refunds of sales tax of over Rs4 billion collected in previous month of October could not be paid even four weeks after the due date. The PRGMEA North Zone Chairman, expressing gratitude for the release of some amount of sales tax refunds, called for a speedy disbursement of the remaining substantial figure of ST refunds pending for the last four months. Dr Ayyaz Uddin observed that during a meeting with the PRGMEA, the Member of Inland Revenue in April this year it was agreed that the sales tax refunds would be issued by the 10th of every proceeding month but this commitment of the FBR has not been fulfilled yet. “Effectively now the exporters will have four months of their cash blocked by the FBR. The four months delay of working capital for the exporters is totally unfair, unjust and also unacceptable, as it will ultimately hamper the exports growth and inflow of precious foreign exchange,” the PRGMEA EC members added. “We welcome directives of the Prime Minister Shehbaz Sharif and Finance Minister Aurangzeb to the Federal Board of Revenue to clear all pending refunds of exporters, removing bottlenecks from the new refund payment system of the FBR,” the chairman said. He asked the PM to also get his directives implemented on immediate basis and in their true spirit, as the exporters especially of SME sector, are facing a severe liquidity crunch due to delay in payment of sales tax refunds despite launch of the new system by the FBR.
Source: Business Recorder
Synopsis China's trade surplus is expected to reach a new high this year, potentially reaching $1 trillion. This surge, driven by strong export growth and falling export prices, is raising concerns about global trade imbalances. The situation could escalate tensions with major economies and potentially provoke a response from President-elect Donald Trump. China’s trade surplus is on track to hit a fresh record this year, increasingly leaving it on a collision course with some of the world’s biggest economies by aggravating an imbalance in global commerce that risks provoking President-elect Donald Trump. The difference between Chinese exports and imports is set to reach almost $1 trillion if it continues to widen at the same pace as it has in the year to date, according to Bloomberg calculations. The goods trade surplus soared to $785 billion in the first 10 months, according to data released last week, the highest on record for that period and an increase of almost 16% from 2023. “With Chinese export prices still falling, export volume growth was enormous,” Brad Setser, senior fellow at the Council on Foreign Relations, said on X. “The overall story is of an economy that is again growing off exports. China has been relying more on exports to compensate for the weakness of domestic demand that Beijing has only recently tried to redress by injecting stimulus into the economy. The increasingly lopsided picture has generated pushback from a growing number of countries, and the new Trump administration is likely to impose tariffs that would reduce the flow of exports to the US. Countries from South America to Europe have already raised tariff barriers against Chinese goods such as steel and electric vehicles. Foreign companies are also pulling money from China, with foreign direct investment liabilities dropping in the first nine months of the year, according to data released on Friday. Should the decline continue for the rest of the year, it would be the first annual net outflow in FDI since at least 1990, when comparable data begins. The response from Beijing so far has been to promise more support for companies, with the state council announcing Friday it would lift financial support to industries to promote stable foreign trade growth, foster economic development, and stabilize employment. Chinese companies have been ramping up their export performance over the past few years. By contrast, the slowing economy, increasing electrification and rising replacement of foreign manufactured goods with domestic alternatives are suppressing demand for imports. The result in October was the third widest surplus in history that came just below June’s record. The trade surplus calculated in yuan hit 5.2% of nominal gross domestic product in the first nine months of this year, the highest since 2015 and well above the average level for the last decade. The surplus with the US rose 4.4% so far this year from the same period last year. It increased 9.6% with the European Union and jumped almost 36% with the 10 south-east Asian nations in Asean, the latest data shows. Imbalances are also growing with many other nations. China now exports more goods to almost 170 countries and economies than it buys from them, the most since 2021. A currency war may be brewing as well. India’s central bank has said it’s ready to let the rupee weaken if China lets the yuan drop to counter US tariffs. A falling yuan would make Chinese exports cheaper and could further widen the surplus with India, which hit $85 billion so far this year, 3% higher than in 2023 and more than double the level five years ago.
Source: Economic Times
