Trading with China

Iron ore shipped out of Karnataka comes back to us as safety locks,  hand-railings and door-closers.  This is how we conduct trade with China. The locks they send us carry the  ‘Godrej’ brand name. The Mumbai company has its reasons for outsourcing  production of locks. That such business model entails  potential loss of jobs in India doesn’t appear to be anyone’s concern.  Our manufacturing  sector may have issues with our labour laws; may have a grouse against our trade unions.  But losing out industrial jobs to China, by outsourcing production and also exporting the needed raw material (iron ore) cannot be a sustainable  way to promote bilateral trade.

Indian IT companies are pretty cut up with the Obama regime that seeks to curb US companies outsourcing  IT services that take away jobs from  America.  But we willingly submit ourselves to trade practices that create jobs in China at India’s expense. What’s more, Indian IT companies that have set up shop in China are obliged to train Chinese graduates into software professionals to meet manpower needs of their domestic  IT sector.

The Hindu in an op-ed piece published on the eve the Chinese Premier Wen Jiabao’s  visit to India, oberved that the consumer goods we import from China  include, besides, safety lock and door-closer,  paper weight with embedded  image of Goddess Saraswati and  table top glass idols of Ganesha. Do we need to import such items ?  It is not as if we can’t make as good a door knob as the Chinese do. It has to do with our eagerness  to promote trade; has to do with China’s  ‘tradeablity’  that  stack  rules  in their favour.  WTO regulations are there for others.

China’s economic model builds up trade imbalance with countries they deal with. They also use trade relations to develop production potential in their domestic sector.  China, which allowed Spanish company Gamesa to set up a factory  in Tianjin five years back, has since developed its own wind-energy sector  to grab 85 percent of the domestic market. China, they say, is looking for export of its wind turbine. According the New York Times, the Spanish wind turbine company that set up shop in China, were required to train  Chinese manpower for developing a network of component suppliers. It is the same story with desktop computers, solar panels and a host of other items  –  ‘Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers’.  “Companies like Gamesa have been so eager to enter the Chinese market that they not only bow to Beijing’s dictates but have declined to complain to their own governments, even when they see China violating international trade agreements”, says NYT article.

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2 Responses

  1. China has its own rules. It subsidizes and keep its currency abnormally low thereby gaining undue advantage in pricing its exports.

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