India can win big from inevitable $350-550bn exports moving out of China: Credit Suisse
India could potentially be one of the big winners ...
Peak pressure begins only now
Multiple pressures to move manufacturing out of China are likely to peak now because “80 per cent of the finished goods sold to consumers come under tariffs only now”. The report connects the dots to similar goods in earlier lists which saw price rise, lower demand and a shift in production.
Companies keen to move out
Companies that have spoken to Credit Suisse have said “they would shift manufacturing out of China even without tariffs”. They list a “shrinking Chinese workforce” as one of the main issues: “50 million fewer workers by 2030”. Firms plan to move production to Vietnam, India, Taiwan and Mexico, says the report.
Shrinking workforce
“In five years though, with the Chinese manufacturing workforce shrinking by another 9-15 million after a 20 million decline since 2015, we expect $350-550 billion of exports to move out of China. It could be more, if other countries improve absorption capacity: Vietnam is too small (but should gain the most), Bangladesh a pure-play on apparel, and India has seen good import substitution in electronics but is struggling to grow apparel exports. Hon Hai and Pegatron would be negatively affected, L&T, Havells and Feng Tay would benefit. In the near- term, tariffs would raise prices in the US (13 per cent of firms absorbing them), and shift Chinese exports to other countries (possibly at lower prices).”
Comments.