The world’s punching bag

The fault, dear Mr Naik, is not across the Himalayas

Mint has a very good editorial in response to the accusation that China is “systematically killing” Indian manufacturing.

Admittedly, there are geopolitical considerations at stake for India. But as the trade deficit with China widens over the last few years, it’s giving vent to populism, not some concerted strategy…
And if India wants its domestic manufacturing to compete at comparable costs, it should stop trying to block outside firms, and ask how it can better internal conditions. But that would mean a concerted policy that improves financing conditions, not to mention land acquisition clarifications and better regulations. Protectionism is just so much easier, no? [Mint]

3 thoughts on “The world’s punching bag”

  1. To be sure, the inefficiencies within our system account for a good part of the problem. But that does not in anyway take away from the fact that the blatant currency manipulation by the Chinese is a major reason for the ballooning trade deficit in China’s favor. And I believe we are well within our rights to take protective steps to offset this – I do not see any sound economic or strategic reasons for India to play defensive on this issue . Surprisingly, the Mint article does not even mention this issue of currency manipulation.

    Also, while I do not have any data to support it, I am sure a large part of imports from china are low-end labor intensive goods – in effect it is killing employment in India.

  2. @sai,

    “But that does not in anyway take away from the fact that the blatant currency manipulation by the Chinese is a major reason for the ballooning trade deficit in China’s favor. And I believe we are well within our rights to take protective steps to offset this – I do not see any sound economic or strategic reasons for India to play defensive on this issue”

    If China has kept its currency artificially undervalued, that means Chinese imports for Indian customers are artificially cheap.

    That is pro-Indian customer. Sure, it makes life tough for Indian manufacturers in industries competing with Chinese imports, but it also makes life easy for Indian industries who need Chinese imports. The industries will keep adjusting, but the Indian customer, on the whole, benefits.

    The Chinese are subsidizing us, why stop it?

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