The matches between two countries have fuelled the fire and as a result every one is on the sidelines to watch out the final over of the match. I am not making a live telecast or neither writing up a report on any final cricket match to be held between two countries. I am talking about the battle between economies fires up the stadium of currency.
US and China are now fuelling up the battle between economic development via Currency. The long awaited battle of devalued Chinese currency have been the eye spot for all the over the world. In my previous articles I have explained and brought forth the games those are being enjoyed by china due its low currency valuation. Its true that Chinese goods have replaced US goods from the shopping floors of US itself. China enjoys the base of devalued currency makings its cost of production from all angle very cheap. This also able china to make cheap export and as a result destroys the industrial activity of the importing country.
We don’t need to make a analysis of the US economic conditions since many times by myself and by others the true picture of US economy have been presented on your table.
Even if we look from Indian context china have tried to exploit and damage certain markets and sectors by violating antidumping.
• Very recently India is investigating 15 new cases of dumping of products from China.
• Out of the 15 cases (between March 2009 and February 20, 2010) 11 are against China.
• The other countries on which the duty has been imposed include Taiwan, Korea, Thailand, Malaysia, the US and the UK. Out of the 15 trades 9 of them are being recommended to impose provisional duty.
If we dig in to the business being dropped by china into Indian oceans we find:
• Imports from China to India during April-September in the current fiscal stood at $14.4 billion (Rs.72,395 crore).
• China's exports to India during 2008-09 fiscal stood at $29.4 billion (Rs.1.47 trillion) while it was $21.8 billion (Rs.1.09 trillion) the year earlier.
• The anti-dumping duties imposed are mostly on products which includes fabrics, , auto parts, industrial chemicals, electronic items and machineries.
• Against China, the products on which the duty was imposed includes television picture tubes, ceramic tiles, tyre curing presses, carbon black, radial tyres and certain stainless steel products.The below chart shows the export growth and decline of China.
Impositions of restriction on Chinese products have increased with a fascinating speed. The number of import restriction imposed by India was the highest with 29 cases followed by China and United States with 20 and 15, respectively. Import limitations imposed by the three countries accounted for 52.6% of the total cases reported around the world.
China has been engaged to such antidumping cases due its excessive production. If the china have achieved the GDP growth rate beyond 10% the goods manufactured at their end were sold in our country or US and many other countries at cheap price. This have resulted damages of importing countries manufacturing and economic growth. This also increases the unemployment of the importing country. A solid and a perfect example is the US unemployment of 10%.
Now the situation stand at such a crossing of the road that US have to bring forth anew bill which will protect them from Chinese low cost products created by devalued Chinese currency. The new law proposes to impose tough tariffs to compensate for the unfair export advantage taken over by China. The bill is being supported by every party in US.
If this type of law is being imposed china will be badly hitten on its GDP growth followed with other prospective economic growth areas. In fact the world GDP growth will take back sit but will be beneficial. Growing assets bubble of China and the massive building of inventories and finished goods of china will take a halt. Their will be less fear of any more asset bubbles which might slow down the recovery out of recession of world economy. Now we might get opines that China does not have a devalued currency and also its valuation is well balanced.Now if we take this testimony to be correct then please explain why china is having so many cases of antidumping and why countries like US,Europe India and others are trying to protect them selves.Now please dont say that these economies are jealous of Chinese economic growth.Even if you try to figure out the picture in the other way round the image remains the same.
Now what china will do counter fight US through its various capping polices needs to be watched. Before we get any idea from China to counter fight the matter I am ready to bet that the next step will rattle the dollar, gold and US treasury.
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