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中国的通缩与关税 -对印度的影响-Asia Economics -The Viewpoint China’s deflation and tariffs – how they affect India
Morgan StanleyMorgan Stanley(US:MS)2025-08-05 08:17

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the impact of China's deflationary pressures and tariffs on India's macroeconomic outlook and monetary policy [3][4][5]. Core Insights 1. Deflationary Spillovers: China's ongoing deflation and tariffs are creating a lowflation environment in India, affecting corporate pricing power and wage growth [4][5][31]. 2. RBI's Monetary Policy: The Reserve Bank of India (RBI) has cut interest rates by 100 basis points since February 2025, with a significant cut of 50 basis points in June 2025. This easing is expected to support economic reflation with a 2-3 quarter lag [4][15][56]. 3. Inflation Dynamics: Despite the lowflation challenge, high food prices have kept India's headline inflation above target levels, delaying monetary easing [4][10][25]. 4. Trade Exposure: India has a low exposure to global goods exports (12% of GDP), making it relatively insulated from external trade tensions compared to other Asian economies [5][21]. 5. Corporate Sector Challenges: The spillover effects from China's deflation have led to weaker corporate profit growth, which slowed to 7% compared to 9% in 2024. This has resulted in reduced wage growth and hiring in the corporate sector [43][44]. Important Data Points - Inflation Rates: India's headline CPI inflation has been below 4% since February 2025, with WPI tracking at -0.1% year-on-year as of June 2025 [25][31]. - Trade Deficit: India's trade deficit with China has widened by $30 billion over the past three years, reaching $110 billion [31]. - Corporate Revenue Growth: Corporate revenue growth for the BSE500 companies was 7% in Q1 2025, with expectations of recovery as policy easing continues [45]. Additional Considerations 1. Tariff Implications: Current tariffs on imports from India are set at 25%. If a trade deal is reached, this could reduce tariffs, but if not, the indirect effects of trade tensions may weigh on corporate confidence and capital expenditure [20][22]. 2. Future Rate Cuts: There is a high risk of further rate cuts if inflation continues to surprise on the downside due to external pressures [24][56]. 3. Sector-Specific Deflation: Nine manufacturing sectors in India are experiencing intensified deflation, correlating with China's PPI deflation, particularly in metals and electronics [37][41]. Conclusion - The interplay between China's economic challenges and India's domestic policies presents a complex landscape for investors. While India's low exposure to global trade offers some insulation, the ongoing deflationary pressures and potential tariff increases pose significant risks to corporate profitability and economic growth. The RBI's monetary easing is expected to support reflation, but the timing and effectiveness of these measures remain contingent on external economic conditions.