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@ Martian2
What WTO or ethics your are talking about? china creates trade barriers, restrictions, devalue its currency etc. etc. its a fact.
BTW, this incident shows the way how India should tackle chinese menace.
Please provide more information on how this is in any conflict with WTO agreements etc.
Does, "blackmailing foreign companies into employing local workers and revealing source codes" sound familiar?[/I]
Oh, Indians... -_-
I disagree. In theory, you may be correct to a limited extent. However, American and European companies are notorious for protecting their profit margins and generating shareholder value. Also, the importation of expensive Western manufacturing equipment, replacement parts, components, and salaries for Western plant technicians, engineers, and managers mean that a Western telecoms plant in India will be far more expensive than a Chinese version.
I've heard many similar arguments here in the United States and it never turns out that way. For example, they promised us lower prices from increased competition and greater efficiency in proposing to deregulate the electricity market. Instead, they are now charging us a new "distribution fee" in addition to the old "generation charge." To make a long story short, I am paying twice to thrice the monthly bills for electricity.
Anyway, I don't think that India can force an American or European company to manufacture in India under WTO rules. India has singled out Huawei and ZTE based on the pretext of "security concerns." This dirty trick/hardball tactic won't work and do not apply to American and European telecoms companies.
This is what happens when you don't have Indian companies that can manufacture such gear.
I never suggested otherwise. However, this behavior from the Indian government is new and very un-Indian. Oh well, so much for pacifist Gandhian India. I like the old India better. I think India has decided that it wants to become more like China.
I was surprised by the Indian government's decision to "squeeze" Huawei and ZTE. India is showing an economic ferociousness and determination that I don't believe that I've seen before.
In the past, China played hardball with U.S. companies. However, Chinese action was entirely legal. The U.S. made a serious error in not writing more conditions for China's entry into the WTO. You can't complain if you failed to foresee the rapid growth and importance of China's domestic market and government procurement.
On the other hand, India is playing hardball with China and taking it one step further. India found a public-relations weakness in the supposed PLA roots of Huawei. Using this PLA specter and the absurd ghost of 1962 (which was 48 years ago and happened before most of us were born), India has decided to ignore the WTO obligations and proclaim that Huawei and ZTE may have to be banned on "security concerns."
I think I'll call this the Indian variation of the traditional Chinese "hardball" strategy. In this Indian variation, Huawei and ZTE will have to keep bending over and satisfy a long stream of Indian demands.
In conclusion, India is doing to China what China did to the U.S. However, the key difference is that India seems to be "cheating" and violating WTO rules. This is different from the upright Chinese, who never gave the Americans an extra inch than what was called for in the WTO accession obligations. Come on India, remember Gandhi!
You are making baseless accusations. The most obvious and easiest to disprove is that China has "devalued its currency." To my knowledge, China has appreciated her currency by 21% in the last five years from 8.27 yuan per dollar to the current 6.83 yuan per dollar (see newslink below).
On the other hand, the Indian Rupee started 2005 at 43.62 per U.S. dollar (see Monthly Average Graph (Indian Rupee, American Dollar) 2005 ). The Rupee is currently at 45.18 per U.S. dollar (see Rupee strengthens to 45.18 against dollar ).
During the last five years, China's currency has appreciated 21% against the U.S. dollar. On the other hand, India's Rupee has depreciated by roughly 3% (e.g. increase from 43.62 to 45.18 Rupees per dollar). Are you serious about making the ridiculous claim that China has been devaluing her currency, when it is India's currency that has actually fallen in value against the dollar?
Analysts: China Policy Chnges Mulled; Spillover Effects Feared | iMarketNews.com
"Wednesday, May 12, 2010 - 14:09
Analysts: China Policy Chnges Mulled; Spillover Effects Feared
Wednesday's fixing brings the yuan's gains against the greenback to 21.22% since currency reforms were announced on July 21, 2005, including that day's one-off 2.1% revaluation."
See post #7. India can block Chinese imports "if the Chinese imports are hurting Indian companies." Since India doesn't have a telecoms manufacturing industry, there is no reasonable basis to block the import of legitimate merchandise goods from China for the civilian market.
It does not matter how much you have appreciate your currency. The fact is that it is still pegged to the USD that gives you an unfair advantage and disadvantages almost everybody in Asia including the Koreans. So the currency is still not free floating.
I have no idea on how to overcome Indian logic. An Indian made the claim that China cheats by devaluing her currency. I provided proof that China has appreciated her currency by 21% in the last five years. During the same time, India has depreciated her currency by 3%. In total, India has gained a roughly 25% advantage against Chinese manufacturers.
Despite the facts, you are still going to claim that China has an unfair advantage? There is nothing further that I can do. Many countries peg their currencies to the U.S. dollar to control inflation and/or due to an insufficiently developed financial system. Pegging the dollar to the U.S. currency is not cheating. India has gained an unfair 25% advantage since 2005 and you're still complaining. Give me a break.
Regarding the Koreans, they are in the same situation as India. In 2005, approximately 1000 Korean Wons equaled one U.S. dollar. Today, it requires 1100 Korean Wons to buy one U.S. dollar (see Korean Won to US Dollar Exchange Graph). During the last five years, the Korean Won has depreciated roughly 10% against the U.S. dollar.
Let's summarize. During the last five years, India's Rupee has depreciated 3% against the U.S. dollar. The Korea Won has depreciated 10% against the U.S. dollar. The Chinese Yuan has appreciated 21% against the U.S. dollar. Tell me again, which country is cheating by devaluing their currency and gaining an unfair export advantage?
Let me explain you in more simple terms and give you example of Shanghai property where now anybody with a house is very rich.
Imagine that in 2005 you can buy 2 houses in Shanghai for 100 Yuan. But now because there is very high demand then now can buy only 1 house for 100 yuan. So the house in Shanghai has apprecaited 50% because of increased demand for rich houses.
In the same manner when there is a higher trade surplus by China then there is more demand for Yuan and it should appreciate.
But on the other hand, China is not floating it freely and keeping it fix to the Dollar. Indian Rupee or Korean Won change rate daily to the USD depending on the trade surplus and the price of commodities and demand for Oil etc. but Chinese Yuan remains fixed everyday.
This makes the exports of other countries more expensive than China in USD terms.
Now let us see this in real exchange terms:
Chinese Yuan to US Dollar Exchange Graph
In 1990 1 USD = 4.8 Yuan
1n 2010 1 USD = 7 Yuan.
So depreciation in 10 years = 2.2 Yuan or 46%
But for INR:
Indian Rupee to US Dollar Exchange Graph
In 1990 1USD = 16 Rupees
In 2010 1USD = 44 Rupees
So depeciation in 10 years = 28 Rupees or 175%
So now you see how Chinese government is cheating the world?
Why did you pick 1990? Why not 1950?
I picked five years ago, because it's reasonable to claim that China's currency policy has disadvantaged India's manufacturers in the last few years. To the contrary, the opposite is true.
Instead, you picked a silly date of 1990. Back then, India was still a closed economy. India did not liberalize until 1991.
Here's the bottom line. China's currency policy has resulted in a roughly cumulative 24% (e.g 3% Indian depreciation plus 21% Chinese appreciation) advantage for India's exporters in the last five years. For Korean exporters, the cumulative advantage is roughly 31% (e.g. 10% Korean depreciation plus 21% Chinese appreciation).
Stop complaining that China's currency policy is hurting your exporters. Your exporters are far more competitive today than they were five years ago.
Indian telecom ban violates WTO rules, say experts
"Indian telecom ban violates WTO rules, say experts
By Ding Qingfen and Wang Xing (China Daily)
Updated: 2010-05-06 09:16
BEIJING - India's move to prevent or make it more difficult for telecommunication companies to buy equipment from Chinese companies is a violation of the World Trade Organization (WTO) norms and clearly smacks of trade protectionism, experts said on Wednesday.
[B]"India cannot reject Chinese imports citing security reasons. An import ban is warranted only if the Chinese imports are hurting Indian companies," he said.[/B]
[Note: Thank you to charles koon for finding this article.]
what a country cant stop an import for security reasons......?????????????
then any country can sell arms to the anti nationals in another country.....and the affected country cant do anything about it coz a ban on arms is against wto ??????either the article is crap or the so called experts were hired from a mental asylum"