Cabinet to soon consider new public sector enterprises policy: Sources
Part of the 'Aatmanirbhar Bharat Abhiyan' package, the government in May had announced that there will be a maximum of four public sector companies in the strategic sectors, and state-owned firms in other segments will eventually be privatised. The Union Cabinet will soon consider new public sector enterprises policy that will define strategic sectors, which will not have more than four PSUs, Finance Ministry official sources said on Tuesday. As part of the ‘Aatmanirbhar Bharat Abhiyan’ package, the government in May had announced that there will be a maximum of four public sector companies in the strategic sectors, and state-owned firms in other segments will eventually be privatised. Under the policy, a list of strategic sectors will be notified where there will be at least one and a maximum of four public sector enterprise, apart from private sector companies. In other sectors, central public sector enterprises (CPSEs) will be privatised, depending on the feasibility. According to the sources, it is before the Cabinet and it will be taken up soon. “PSEs will continue to play an important role in defined areas. We need a coherent policy because sometimes you open up some sectors in piecemeal… Now we shall define the areas… where their presence will be impactfully felt,” Finance Minister Nirmala Sitharaman had said while announcing the package in May. On the privatisation of banks, the sources said the government is going as per the plan as far as the strategic sale of government stake in IDBI Bank is concerned. The government currently owns a 46.5 per cent stake in IDBI Bank. In January 2019, LIC completed the acquisition of 51 per cent controlling stake in the lender. The state-owned life insurer infused Rs 21,624 crore into the bank. Sitharaman in the budget had proposed plans for the sale of the government’s remaining stake in IDBI Bank. Besides, the sources said, the government is on course as far as initial public offering of insurance behemoth Life Insurance Corporation (LIC) is concerned. Department of Investment and Public Asset Management (DIPAM) is looking at the timing of the LIC listing. The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank, out of total the disinvestment target of Rs 2.10 lakh crore during the current fiscal. The government currently owns 100 per cent in LIC. The sources also said there is no plan to cut additional excise duty levied on petroleum products following the outbreak of COVID-19 pandemic. The government in May hiked excise duty by a record Rs 10 per litre on petrol and Rs 13 per litre on diesel to garner Rs 1.6 lakh crore additional revenue to meet revenue shortfall due to COVID-19 pandemic.
Source: Financial Express
The move will ratchet up the supply of state government bonds at a time when there has already been a sustained increase in the cost of market borrowings across the states. However, the Centre will likely facilitate a mechanism in coordination with RBI to avoid a spiralling of the borrowing costs of these states under this special window. The Centre’s move comes a day after the GST Council failed to arrive at a consensus on how to make good the shortfall in states’ GST revenue from the protected levels. Ten states have refused to accept either of the two borrowing options for states mooted by the Centre, and insisted that the Centre should borrow and transfer them the full compensation amount for FY21 in the year itself. The Centre’s decision reflects its resolve to go ahead with its plan, but it also shows a straining of the Centre-state ties and new power equations emerging at the Council, which has until recently functioned with minimal discord. Justifying the decision, a top government functionary said no state has breached even the original 3% (of GSDP) borrowing target so far this fiscal. The limit was raised to 5% from 3% in the wake of the pandemic, subject to certain riders. The Centre, in contrast, borrowed as much as `7.66 lakh crore, or close to 4% of the country’s GDP, from the market in H1. So the states have much leeway to borrow, the source said, indicating the Opposition’s allegations that the Centre is pushing the states into a debt trap are unfounded. Under the borrowing Option 1, the Centre had put the upper limit of combined borrowing by all states at Rs 1.1 lakh crore. The amount is related entirely to losses due to implementation of GST while it is estimated that total shortfall, which includes impact due to pandemic, would be Rs 2.35 lakh crore for the current fiscal. “Additional borrowing permission has been granted @0.50 % of the Gross State Domestic Product (GSDP) to those States who have opted for Option- 1 out of the two options suggested by the Ministry of Finance to meet the shortfall arising out of GST implementation,” the expenditure department said in a statement. Further, these states would be allowed to utilise the 0.5% of final additional borrowing space allowed earlier without any condition. “Action on the special borrowing window is being taken separately,” the government said. The states don’t have to bear the interest or principal repayment costs; the repayments would be fully adjusted against future collections of the cess, which has been extended beyond June 2022, till such time necessary for servicing the debt fully. Already, the gross State Development Loan issuance expanded by a substantial 56.8% to Rs 3.53 lakh crore in H1FY21 from Rs 2.25 lakh crore in H1FY20. The net SDL issuance rose by an even higher 91.4% on year in H1FY21 to Rs 3.02 lakh crore. The weighted average yield of state government dated securities (across states and tenures) auctioned October 6 was at 6.80%, 23 bps higher than week ago and 31 bps higher than that in the first week of September. The states to use the borrowing facility for GST are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand. The Centre, in view of the Covid-19 pandemic, had in May allowed an additional net borrowing of up to Rs 4.28 lakh crore (2% of GSDP) to states for FY21. While 0.5 pecentage point (pp) of the extra borrowing window (Rs 1.07 lakh crore) is available to all states unconditionally, one pps was to be made available in four equal tranches with each to “clearly specified, measurable and feasible reform actions”. The balance 0.5 pp was to be accessed by states, subject to their ‘completely achieving’ the milestones in at least three out of four reform areas. This last condition has now been waived for the states using the Option 1 of special GST window.
Source: Financial Express
He said India offers an "unexplored potential" of USD 21.1 billion for global exporters and its exporters look at a USD 16.8 billion opportunity with the key trading partners. Indian imports from key trading partners can rise by USD 21 billion, while the set of 10 countries represent export headroom of only USD 17 billion, a report by a foreign lender said on Tuesday. Imports from the US, Malaysia, Indonesia, Singapore and the UK have the greatest opportunity for growth, Standard Chartered Bank said in its study, adding that the largest trading partner US alone enjoys a USD 5.7 billion opportunity. It can be noted that the Indian government has been looking at ways of increasing exports, especially on the manufacturing front through production linked incentives scheme, as the country tries to serve businesses looking at opportunities beyond China. As economies and businesses look to recover from the impact of COVID-19 pandemic, there will be markets and sectors with new opportunities to grow trade, the study said. “Businesses in India and across the world have faced unprecedented challenges over the last few months. Looking ahead, they need to look for new growth avenues and build more resilience,” the bank’s managing director and head of trade for India and South Asia Gaurav Bhatnagar said. He said India offers an “unexplored potential” of USD 21.1 billion for global exporters and its exporters look at a USD 16.8 billion opportunity with the key trading partners. Thailand and Germany are the largest markets with export potential for Indian businesses’ perspective, representing an opportunity of USD 2.6 billion each, as per the study. From a growth perspective, Thailand is the topmost with an opportunity of 48 per cent of the present exports to the country, followed by Indonesia at 26 per cent and Malaysia at 25 per cent. The research contrasts actual export values with potential export values ? calculated by an economic model ? to uncover medium-term opportunities, looking to a post-COVID-19 world as economies begin to reopen, it said. The scope covers high-potential exports, defined as goods or services where businesses have added value within the borders of their home market, it added.
Source: Financial Express
With the US imposing restrictions on textiles from China and New Delhi too not that keen anymore to import from its neighbour given the standoff along the border, the Indian textile industry could well be at the start of something big. However, a lot of the growth might actually happen locally and not from international markets. “India is dependent on China in terms of synthetics, certain kinds of fibres, yarns and fabrics as the capacity here is limited. We are also dependent on China when it comes to textile and garment machinery,” explains textile expert Dr Rajesh Bheda, who has been closely tracking the industry for over 20 years. India imports $460 million worth of synthetic yarn and $360 million worth of synthetic fabric (nylon) from China annually as well as over $140 million worth of accessories like buttons, zippers, hangers and needles. This excludes machinery such as knitting machines, lace-making machines, spinning machines and more. “Machine-made Chinese imitations of so many textiles, traditionally made by Indian weavers and craftspeople are now flooding our markets from fake Banarsi sarees to even mirror work and Chikankari embroidery, juthis and chappals,” says Laila Tyabji, one of the founders of Dastkar, a Delhi-based NGO working for the revival of traditional crafts in India. Even though nearly 80 per cent of the silk threads that weavers use across the country come from China, Banaras-based textile designer Hemang Agrawal feels there is a good homegrown industry in India that produces silk even as supplies are now coming in from other South Asian countries like Vietnam. “Chinese silk is one yarn that is important. But at the same time, there are other options available. India produces brocade silk, Vietnam also produces silk yarn, so that way we have the capability to be sorted,” Agrawal said. The Indian Silk Export Promotion Council (ISEPC), which is sponsored by the government, said India was not only the second-largest producer of raw silk but also the world’s largest consumer of pure silk. “A gradual increase in the quantum of indigenously produced Indian silk yarn over the last five years has brought about a corresponding decline in the country’s dependence on imported silk yarn, mostly from China,” said ISEPC senior director Sanjeev Kumar.In order to reduce the country’s dependence on imported silk, the Textile Ministry is implementing a restructured scheme called “Silk Samagra” to improve the quality and domestic production through, ISEPC said. Following the US govt imposing sanctions on Xinjiang cotton — which accounts for almost 80 per cent of China’s cotton production — India’s cotton exports should also be looking up. “If you look at the global cotton consumption, then China is around 30 per cent. Out of that around 25 per cent cotton comes from this province of China. Stopping products from China will see the focus on Indian cotton likely to go up. Our yarn exports to Bangladesh and Vietnam may increase,” says Dr Bheda, who also runs a consulting firm specialising in textiles and apparel. Experts across the textile industry indianexpress.com spoke to were unanimous that an embargo on Chinese textiles and apparel imports would augur well for the Indian textile industry since China has been dumping a lot of their products into the country at dirt cheap prices by undercutting Indian manufacturing. “So, if finished products stop coming from China, that is good for the country. With the ban on Chinese textiles, there is the possibility of Indian traditional textiles getting more recognition in the domestic market,” said Agrawal. In fact, several major apparel exporters from India have already started receiving increased orders or are in active discussions with large international buyers looking at increasing their sourcing from India, ISEPC’s Sanjeev Sharma said.The Indian textile market, despite its size, has continued to struggle in the global market. With Vietnam being the world’s third-largest garment manufacturer and Bangladesh continuing to boost its garment export from $26 billion to more than $33 billion in the last five years, India’s export has remained stagnant at around $36 billion. According to data, textile exports have dropped 5 per cent in 2019-20 financial year. Moreover, due to the COVID-19 pandemic, India’s garment exports are likely to decline by 30-35 per cent this financial, according to Crisil Research. Even though India as a garment exporter has not been able to make significant gains in the last 10 years unlike its neighbouring countries like Bangladesh and Pakistan, Dr Bheda said Vietnam has started grabbing the attraction of international players shying away from investing in China. To become globally competent in the sector, Textiles Secretary Ravi Capoor said the government was coming up with a National Textile Policy with a focus on indigenous manmade fibre products. (Source: Pixabay.com) “Even during the present COVID pandemic and previous US-China trade war, the country that benefited the most is Vietnam. Vietnam has attracted a lot of investments from other countries, including China. Bangladesh has also been seen as a greater interest by the international buyers,” he elaborated. “Will Indian exports to the US increase? Yes, it will. But will it increase so much that everything which is not going to the US from China is coming to us? Definitely not. Other countries will benefit a little more than us,” said Agrawal, a NIFT alumni. “In India, setting up new plants and factories is extremely time-consuming and often investors find it frustrating. In our administrative procedure it takes longer to get all approvals, unlike Vietnam, which has established credentials of setting up new plants and giving nod in a shorter time,” Dr Bheda said. According to the data presented by the Textile Ministry, from March 2018 to April 2019, the Indian textiles exports has noted a -5 per cent growth. (Source: Pixabay.com) In fact, to become globally competent in the sector, Textiles Secretary Ravi Capoor said the government was coming up with a National Textile Policy with a focus on indigenous manmade fibre products. “The government has analysed the export data of top-40 manmade fibre (MMF) products and found that India has a minuscule share of just 0.7 per cent in the total global market of $150 billion. Similarly, in the top-10 technical textile lines, India just has a share of 0.6 per cent out of the total global market size of $100 billion,” he said at the annual general meeting of the Confederation of Indian Textile Industry (CITI) on September 23. Echoing the government line, Tyabji said few countries have the traditional skills that India has or the skilled hands to make them. “Crafted products and handlooms are handmade, and by their nature, their production is a slow process. Given the increasing global interest in green processes and slow fashion, this is something we should promote as a strength, not a weakness.”
Source: Indian Express
With one month left for Deepavali, the shops at E.K.M. Abdul Gani Textile Market (Gani Market) in the city witnessed brisk sales on Tuesday. The weekly market with 740 shops began on Monday night and went on till late Tuesday, as traders from across the State thronged the market and made bulk purchases. “About 80% of the regular traders arrived at the market and the business was good,” said S. Sakthivel, secretary, Erode Gani Market Weekly Textile Trader’s Association. He told The Hindu that due to COVID-19 pandemic, traders from Karnataka did not turn up. “Merchants from various districts in the State visited the market and purchased materials for Deepavali,” he said. While traders prefer Mumbai and Kolkata for readymade garments and Surat for saris, they buy dhotis from Erode, Salem and Namakkal districts and towels from Uttukuli in Tiruppur district. Other garments are from Tiruppur, he said. Due to the return of workforce to North India, hike in price of yarn and closure of dyeing units, there is a 30% drop in overall production, he added. Mr. Selvaraj said that they expected good business for the next three weeks. A few traders expressed confidence that increase in cash flow among people would improve their business. “The pandemic had kept people away from buying materials in the last seven months. But, now they are ready for the festival season,” said a trader.
Source: Indian Express
Every sector, be it Event, Infrastructure, Transport, Education, Textile and many more has suffered a lot because of the global pandemic. The lockdown has taken down not only the jobs from people worldwide but also many lives. In Gujarat, the Textile Industry has come across huge destruction in the specific area. On Monday the official of FOSTA (Federation of Surat Textile Traders Association) said that the textile industry of Gujarat has faced a huge loss due to COVID-19. The textile industry was all set to prepare for the wedding season. In India when the case of COVID-19 started to show up, it led to a nation-wide lockdown. The lockdown was imposed if not to put a full stop on it but at least to bleak the number of cases. The workers of the industry are yet to receive their due payments. Rangnath Sarda, The Director Of FOSTA said, “Clothes worth Rs 10,000 crores were supplied in the month of February-March across the nation. We are yet to receive the payment. The business has got badly affected. Around Rs. 9,500 crore is stuck in the market and there is no chance of getting the money back. Even If it comes it will be after Diwali”. “In September we were able to do only 35 percent of the business. Also, wedding Season is due till November and if we receive our payments we will be able to revive the business,” added Rangnath. A textile businessman, Bhairav Singh said, ” COVID-19 affected our business extremely, during the wedding season which usually arrives in February, March, and April. Almost 50 percent of our business suffered this year due to the pandemic. We haven’t received our payments for the clothes which we export in bulk to different states. We are hoping that business will return to normal after Diwali’. The Covid-19 cases continue to rise worldwide, with people facing much hardships. The Covid-19 tally on Tuesday stood at 71,75,881, with people hoping for an early respite.
Source: The India Saga
This is the first time that RBI has come out with economic scenario analysis for the country (Monetary Policy Committee Report, October’20). When we in India first heard of Covid-19 pandemic at the beginning of the current year, we knew it has originated in China and knowing the impressive stride China has taken recently to revitalise its economy, we convinced ourselves that the country would be able to face the crisis head on. Meanwhile, the devil had engulfed almost all the nations. Today, nearly 1.07million have lost their lives to this virus, more than one-sixth of global youths have lost their jobs, more than 90 million people have been reduced to extreme poverty, according to recent estimates. In India this calamity has taken lives of nearly 0.11 million people, unemployment rate exceeded 7.0%, income inequality has also risen much, although no firm estimates are available. Along with global GDP and global trade, both of which have been predicted to contract by 4.5% and 11.9%, respectively, India’s GDP contraction has been predicted to be one of the highest. One plausible explanation provided earlier was the prolonged lockdown undertaken by the country, which has enabled it to reduce the mortality rates (stringency index developed by Oxford university) but the economic impact was disastrous. It is an extremely difficult choice for a democratic government that is accountable for loss of human lives more than anything else. In addition, one major distinction between advanced economies and emerging economies like ours concerns the existing social welfare measures. The unemployment benefits by the US were boosted and in the European Union, around 40 million workers were placed in furlough schemes. As a result, the gross public debt as a percentage of GDP in advanced countries jumped from 105% to 132% during the year. With the prevailing low or negative interest rates, the repayment may not pose a serious risk. India’s scenario is different and it would be interesting to list out the critical economic factors that need special focus in the remaining period of the current fiscal year to get the economy back to rails. Indian economy has been predicted to de-grow by 4.9% in 2020 by IMF before growing by 5.4% in 2021. These figures may undergo a change in the revised estimates due next week. This is the first time that RBI has come out with economic scenario analysis for the country (Monetary Policy Committee Report, October’20). The base line forecasts (with assumptions that inflation will come down and no recurrence of Covid) de-growth at 9.5% in the current fiscal and rebound of a positive 10.1% in FY22. It projects GCF as a percentage of GDP to rise from 25.4% in the current fiscal by 2.3% in FY22. The CAD projected to be 0.5% of GDP in FY21 is to move up to (-) 0.6% of GDP in FY22 to reflect more import demand. A Scenario 1 (faster normalisation of supply chains with early arrival of vaccines leading to lower output losses) places GDP contraction at 7.5% in the current fiscal and stronger growth of 11.6% in the next year, while Scenario 2 ( adverse scenario: second wave of infections, continuing inflation, volatility in capital flows and exchange rates) puts GDP contraction in the current year at 11.5% and slower growth of 7.2% in FY22. It is apparent that strong assumptions on the specifics in an extremely volatile future enable RBI to put the eventualities under the probable scenario analysis framework, which is, however, in line with the practice of predicting the future. The question is to what extent the strength of the demand conditions would pull up the positive elements being observed in some parts of the economy like agri-growth, good monsoon, rise in rural income, increased sales in cars and two-wheelers. Consumer confidences on the economic scenario, employment and income have been viewed positively by the latest survey. The Industrial Outlook survey by RBI has put manufacturing in the expansion zone in the coming quarters. The PMI for manufacturing at 56.8 in September is encouraging. RBI has also attempted a dynamic factor model with the aid of 27 monthly indicators (IIP,PMI, auto sales, non-oil exports, non-oil, non-gold imports, power supply, OECD composite leading indicator, port cargo, rail freight, cement and steel consumption etc), which shows that index of economic activity is rising from April to September with more rapid recovery in industry as compared to services ( retail trade, transport, hotels, restaurants etc). This index is regressed with GDP to set up a dynamic factor model. Private final consumption expenditures (PFCE), the primary driver of aggregate demand, had a steep fall in Q1FY21 more in urban areas compared to their rural counterparts. Consumer non-durables, tractor and two-wheeler sales are rising. A rise of more than 16% in Government final consumption expenditures (GFCE) is the lone factor supporting demand growth and it has to maintain its current share in Q3 and Q4 of FY21. However, gross fixed capital formation as a percentage of GDP is declining. The investment climate is to be made brighter with more liquidity in the system, soft interest rates and more risk sharing modules under PPP to attract private investment. Defence, railways and road transport have accounted for more than 75% of the capex. Oil and gas, irrigation and energy sectors are to incur rising capex in the balance months to keep up the momentum.
Source: Financial Express
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
812.65 |
USD/Ton |
0% |
14-10-2020 |
|
VSF |
1442.39 |
USD/Ton |
1.04% |
14-10-2020 |
|
ASF |
1820.39 |
USD/Ton |
0% |
14-10-2020 |
|
Polyester POY |
806.70 |
USD/Ton |
1.69% |
14-10-2020 |
|
Nylon FDY |
1992.58 |
USD/Ton |
0.37% |
14-10-2020 |
|
40D Spandex |
4416.39 |
USD/Ton |
0% |
14-10-2020 |
|
Nylon POY |
944.25 |
USD/Ton |
0.79% |
14-10-2020 |
|
Acrylic Top 3D |
2267.68 |
USD/Ton |
0% |
14-10-2020 |
|
Polyester FDY |
5353.20 |
USD/Ton |
0% |
14-10-2020 |
|
Nylon DTY |
1011.16 |
USD/Ton |
1.49% |
14-10-2020 |
|
Viscose Long Filament |
1866.19 |
USD/Ton |
0% |
14-10-2020 |
|
Polyester DTY |
2007.45 |
USD/Ton |
0% |
14-10-2020 |
|
30S Spun Rayon Yarn |
1903.36 |
USD/Ton |
1.19% |
14-10-2020 |
|
32S Polyester Yarn |
1501.87 |
USD/Ton |
5.21% |
14-10-2020 |
|
45S T/C Yarn |
2379.20 |
USD/Ton |
4.23% |
14-10-2020 |
|
40S Rayon Yarn |
1605.96 |
USD/Ton |
0.93% |
14-10-2020 |
|
T/R Yarn 65/35 32S |
2111.54 |
USD/Ton |
0% |
14-10-2020 |
|
45S Polyester Yarn |
2022.32 |
USD/Ton |
0.74% |
14-10-2020 |
|
T/C Yarn 65/35 32S |
1918.23 |
USD/Ton |
2.79% |
14-10-2020 |
|
10S Denim Fabric |
1.18 |
USD/Meter |
1.02% |
14-10-2020 |
|
32S Twill Fabric |
0.67 |
USD/Meter |
1.81% |
14-10-2020 |
|
40S Combed Poplin |
0.97 |
USD/Meter |
1.40% |
14-10-2020 |
|
30S Rayon Fabric |
0.49 |
USD/Meter |
0.92% |
14-10-2020 |
|
45S T/C Fabric |
0.67 |
USD/Meter |
0% |
14-10-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14870 USD dtd. 14/10/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
LAHORE: Textile sector’s profits plunged by 62 per cent YoY in FY20, where the decline in the year’s profits was accentuated by dismal 4QFY20 performance due to the Covid-19 outbreak. During the year, textile exports dropped by 6pc YoY (+9pc YoY in PKR terms) to $12.5 billion where the decline was largely attributable to lower quantity exported. In 8MFY20 (pre-Covid-19), textile exports were up 8pc YoY. The last four months witnessed a drop of 29pc YoY due to either postponement or cancellation of orders amidst Covid-19. Exports accounted for 71pc of the total sales of our sample companies in FY20 (65pc in FY19). Local revenues were affected more by Covid-19 (down 21pc YoY in FY20) with the closure of retail shops during the lockdown period. As a result, overall revenues declined by 3pc YoY in FY20, saved by an average of 16pc YoY PKR depreciation vis-à-vis USD. Gross Margins too came under pressure, declining by 2.2ppts YoY to 14.5pc in FY20 from 16.7pc last year. This was largely due to weak economies of scale due to the pandemic, higher cotton prices as local production declined further, and higher energy costs. To highlight, cotton prices jumped by 5pc YoY to Rs8,984/mound during 2QFY20, the main cotton procurement period, over the news of cotton shortage. Other income of our sample also declined by 60pc YoY during FY20 mainly due to lower dividend income from investments in power companies affected by circular debt. In 4QFY20, our sample companies dived into losses, where the deterioration in the bottom-line was due to low volumetric sales amid global pandemic. Sales declined by 38pc YoY and 37pc QoQ in 4QFY20 with both export and local sales declining. Overall gross margins in 4QFY20 were down by 7.8ppts YoY and 5.3ppt QoQ to 9.0pc. Experts believe that Pakistan’s textile exports are likely to depict a strong recovery given Pakistan’s far superior improvement in coronavirus cases compared to its peers. Prior orders, which were cancelled or postponed, have largely returned as global economies are opening up. Moreover, purchasers are also shifting towards Pakistan from countries like India and Bangladesh, where the pandemic is still restricting economic activities. Key risks for the sector are the rise in cotton prices due to the shortage of cotton crop and as well as the second wave of Covid-19.
Source: Pakistan Today
Exports rose 9.9% over a year earlier to $239.8 billion, up from August's 9.5% growth, customs data showed Tuesday. China became the first major economy to rebound to pre-virus growth levels in the second quarter of the year. (Photo source: Reuters) China’s trade growth accelerated in September as the world’s second-largest economy recovered from the coronavirus pandemic. Exports rose 9.9% over a year earlier to $239.8 billion, up from August’s 9.5% growth, customs data showed Tuesday. Imports gained 13.2% to $202.8 billion, up from the previous month’s 2.1% contraction. Exporters have benefited from China’s relatively early reopening from its shutdown to fight the virus and from global demand for masks and medical supplies. They are taking market share from foreign competitors that are hampered by anti-disease controls. China’s global trade surplus swelled 6.6% over a year earlier to $37 billion but was down sharply from August’s $58.9 billion gap. Exports to the United States rose 20.5% over a year ago to $44 billion despite higher US tariffs in a fight with the Trump administration over Beijing’s technology ambitions and trade surplus. Imports of American goods rose 24.5% to $13.2 billion. China became the first major economy to rebound to pre-virus growth levels in the second quarter of the year. The government reported 3.2% economic growth over a year earlier. Forecasters expect that to accelerate in the three months that ended in September. Automakers and other large manufacturers are back to normal activity, helping to drive demand for imported iron ore, copper and other industrial materials. Importers have benefited from a slump in prices of oil and other commodities due to weak demand. Retail sales are weaker as consumers who are uneasy about possible job losses put off major purchases. Consumer spending returned to pre-virus levels in August but was only 0.5% above a year earlier. Economists have warned some Chinese exporters of smartphones and other high-tech goods might face trouble due to restrictions imposed by Washington on their access to US components on security grounds. Washington has cut off supplies of components for companies including China’s most prominent tech brand, Huawei Technologies Ltd. The Trump administration is lobbying European and other allies to avoid Chinese suppliers as they upgrade to next-generation telecom networks. That could weigh on exports of technology products Beijing is promoting to propel economic development.
Source: Financial Express
