Rise in respiratory illness in China; exporters fear demand concerns
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China is currently witnessing a surge in respiratory illnesses, reportedly caused by the flu and other known pathogens, and has drawn the attention of the World Health Organisation (WHO).
The rising cases of illnesses in the country, which is India’s fourth largest export market, may adversely impact the already sluggish consumption demand and disrupt the supply of vital raw materials, including Active Pharmaceutical Ingredients (APIs) and Electronic Integrated Circuits (EICs), which are essential for India’s fast-growing electronic and pharmaceutical manufacturing industry, exporters said.
This comes at a time when India’s goods exports have significantly dropped this year on account of weak demand from Europe and the United States due to high-interest rates following the Russia-Ukraine war and the geo-political tensions in the Middle East with the outbreak of the Israel-Hamas war.
While exports of engineering, electronic, and pharmaceutical products have shown recovery in key markets such as the US and Europe in October, exports of these items have registered a sustained decline in China due to the deepening property sector crisis.
Exports to China slipped by a sharp 28 per cent to $15.32 billion in FY23, while imports jumped by 4.16 per cent to $98.51 billion.
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Exporters are concerned as China is already facing headwinds that have hit demand. While there is no imminent danger thanks to the maintenance of two to three months' worth of inventory, it is essential to contain the spread, said Ajay Sahai, the head of the Federation of Indian Export Organisation (FIEO).
Official figures reveal that India's engineering goods exports to China experienced a decline of over 18 per cent in October, dropping to $213.24 million from $260.30 million the previous month. The share of engineering exports in India's total merchandise exports is currently at 24 per cent.
India hugely depends on the supply of Active Pharmaceutical Ingredients (APIs) – key element for parma manufacturing in India.
Exporters said that a disruption in the supply of APIs from China was a key fear during the outbreak of coronavirus disease in China. The percentage of API imports from China has spiked from around 1% in 1991 to about 70% in 2019. However, imports have not faced disruption yet.
Chinese health authorities, in line, have not identified any unusual or novel pathogens. They have also supplied the requested data on the uptick in respiratory illnesses and reported clusters of pneumonia in children.
Union health ministry on November 26 asked the state governments to review hospital preparedness, even as it reiterated that there is “no need for alarm”.
The recent surge in illness has reignited concerns reminiscent of the global pandemic experience, during which governments implemented severe lockdowns worldwide, resulting in millions of casualties.
