India concerned about widening trade deficit with China

[Dillinger]

You mean something on top of the endless Non-Tariff Barriers you've got ?

Tit-for-Tat mein maraa jaiii gaaa !

Nope, no one does that better than us. For example, China can produce the most cost effective solar panels in the world- the GOI simply mandated through regulations that all solar power projects would have to use made-in India panels after a certain time-period lapse. It's worked, in such terms it can only be selective- you can't just wall up your whole market just like that.

 

[Chinese-Dragon]

Nope, no one does that better than us. For example, China can produce the most cost effective solar panels in the world- the GOI simply mandated through regulations that all solar power projects would have to use made-in India panels after a certain time-period lapse. It's worked, in such terms it can only be selective- you can't just wall up your whole market just like that.

Hmm, that's fascinating. I didn't know about that.

 

[Dillinger]

Hmm, that's fascinating. I didn't know about that.

See, we do isolate industries where we have a long terms plan and are already providing ample impetus. But then all nations have done that at some point of time. The Indian manufacturing scene suffers from a very different sort of issue, self imposed handicaps like malformed labor policies, low labor mobility, severe red-tapeism, government inefficiency ( 2 ministries of the same government fighting with each other to ensure that a project gets scuttled). Production processes and shop-floor expertise is and has been accrued by every nation in a phased manner- it is neither difficult nor herculean. It requires patience. What is required though is the urgent resetting of the broad paradigms that drive the sector here. Will take the better part of this decade though.

 

[Hemanth]

When i visit the link i see **** shaped words which i dont understand

 

[Lightningbolt]

Please feel free not to argue then. I'm not here to cheerlead your argument. A bit more civility and a bit less assumption that you have all the answers won't certainly hurt for a civilised discourse. Imposing barriers against Chinese imports will cause India to collapse? I thank you very much for your advice but we are not about to surrender our sovereignty to you. Consumption will collapse? You probably think that the RBI (that would be the Reserve Bank of India)doesn't understand any economics when they raise interest rate to dampen consumption. You are right, you should stick to arguing with those who think like you. You certainly show no capacity to understand any point of view other than you own.

Increasing interest rates is to reduce the inflation rate which has spiked due to the collapsed Rupee. RBI is doing that to increase consumption by making goods cheaper so people can afford to buy more things.

Stopping affordable goods to enter the Indian market means your inflation will be higher due to importing from more expensive sources. High inflation destroys the middle class and the poor and makes manufacturing impossible in India because all inputs such as raw materials and components become too expensive to buy.

Learn economics kid before arguing with us.

 

[xuxu1457]

Did you pull that bolded part from your hat ??

Chinese software industry is worth 2.5 Trillion CNY (40 billion USD)

China Software Industry Reached RMB 2.5 Trillion - New Market Research Report Available At Researchmoz.us

India's domestic software industry worth is 10 billion USD. IT exports are worth 70 billion.

2.5trillion Yuan is 400billion $, IT secter includes IT manufacturing and IT softer, China whole IT secter is nerely 11trillion Yuan (1.8trillion $) in 2012,
IT manufacturing--8.46trillion Yuan(directely provide 10million jobs, export 700billion$, import 489billion$),
IT softer--2.5trillionYuan(408 billion $, export 40billion$)

as number made in 2012 in China
phone 1.18 billion unites
Laptop and PC：354 million unites(the world made 367million unites in 2012, 96% of them are made in China, no matter which brands if you buy that must at least have part made in China)
TV: 128 million unites
IC :82.3 billion unites

 

[anonymus]

Increasing interest rates is to reduce the inflation rate which has spiked due to the collapsed Rupee. RBI is doing that to increase consumption by making goods cheaper so people can afford to buy more things.

Stopping affordable goods to enter the Indian market means your inflation will be higher due to importing from more expensive sources. High inflation destroys the middle class and the poor and makes manufacturing impossible in India because all inputs such as raw materials and components become too expensive to buy.

Learn economics kid before arguing with us.

Your economic understanding is horrible.

When central bank increase interest rates, it sucks out liquidity from market thus making it costlier for firms to raise capital, both strategic and working capital while reinforcing the savers to park their money with Banks thus leading to deferred consumption.

Deferred consumption is a phenomenon in which a played forgoes immediate consumption in favor of later consumption.

Rising interest rate increasing consumption!!!!!

Only in "Chinese Economics". CCP slaves are known to bend laws of both Science and Social Science to suit their agenda.

 

[sovcomflot]

Increasing interest rates is to reduce the inflation rate which has spiked due to the collapsed Rupee. RBI is doing that to increase consumption by making goods cheaper so people can afford to buy more things.

Stopping affordable goods to enter the Indian market means your inflation will be higher due to importing from more expensive sources. High inflation destroys the middle class and the poor and makes manufacturing impossible in India because all inputs such as raw materials and components become too expensive to buy.

Learn economics kid before arguing with us.

Increasing interest rates is to reduce the inflation rate which has spiked due to the collapsed Rupee. RBI is doing that to increase consumption by making goods cheaper so people can afford to buy more things.

Source: http://www.defence.pk/forums/centra...ning-trade-deficit-china-6.html#ixzz2fsPX9Col

What you say is theoritical in economics ,written by Monetarist theorists,but normally Raising interest rates normally tends to reduce consumption in the short term.If interest rate is hiked too much then It will end up creating recession also.

 

[Bang Galore]

Increasing interest rates is to reduce the inflation rate which has spiked due to the collapsed Rupee. RBI is doing that to increase consumption by making goods cheaper so people can afford to buy more things.

Stopping affordable goods to enter the Indian market means your inflation will be higher due to importing from more expensive sources. High inflation destroys the middle class and the poor and makes manufacturing impossible in India because all inputs such as raw materials and components become too expensive to buy.

Learn economics kid before arguing with us.

Kid? Thank you old man but you are the one in reqirement of some learning. RBI is increasing to dampen demand, inflation simply does not reduce in the face of increasing demand. Your understanding of economics is beyond ridiculous. Interest rates hikes are never done to increase consumption, it is why there is an inflations v/s growth argument at all times.

Your understanding of imports into India is almost as ridiculous. Not all imports are essential, demand for some can be dampened simply by increasing tariff. In other cases, demand will turn towards local sources where available (not all imports have only another foreign competitor, there are plenty where the alternative is Indian). Only in certain areas will demand force the buyer to look at slightly more expensive alternatives. I'm not convinced that a damping down of Chinese imports will necessarily increase the CAD, that is based on a simplistic notion that all Chinese imports will necessarily need a replacement & that will have to be necessarily from another foreign country. India is not an import driven economy. The impact of inflation by higher tariffs will be largely minimal. You need to learn to be a bit more circumspect in your arguments, certainly nothing in your knowledge base justifies the irrational exuberance.

 

[Lightningbolt]

Your economic understanding is horrible.

When central bank increase interest rates, it sucks out liquidity from market thus making it costlier for firms to raise capital, both strategic and working capital while reinforcing the savers to park their money with Banks thus leading to deferred consumption.

Deferred consumption is a phenomenon in which a played forgoes immediate consumption in favor of later consumption.

Rising interest rate increasing consumption!!!!!

Only in "Chinese Economics". CCP slaves are known to bend laws of both Science and Social Science to suit their agenda.

Wrong.

Increasing interest rates means the savings of people are higher which increases consumption long term as they gain more money from the savings. Increasing interest rates reduce inflation by decreasing money supply. Decreasing inflation makes goods affordable to consumers. They are doing that to increase the purchasing power of consumers. They realise consumption is the only engine of growth India has and due to the collapsed Rupee the inflation is way too high for ordinary consumers to buy goods as they now have to spend more of their income on the same goods.

Try harder, maybe then your economy wouldn't collapse as it does every few years

With the Indian 'logic' no wonder the Indian economy is such a laughing stock with such high inflation and collapsing Rupee. Indians lack basic understanding how things work in reality and brainwashed by jingoistic propaganda.

 

[anonymus]

Wrong.

Increasing interest rates means the savings of people are higher which increases consumption long term as they gain more money from the savings. Increasing interest rates reduce inflation by decreasing money supply. Decreasing inflation makes goods affordable to consumers. They are doing that to increase the purchasing power of consumers. They realise consumption is the only engine of growth India has and due to the collapsed Rupee the inflation is way too high for ordinary consumers to buy goods as they now have to spend more of their income on the same goods.

Try harder, maybe then your economy wouldn't collapse as it does every few years

With the Indian 'logic' no wonder the Indian economy is such a laughing stock with such high inflation and collapsing Rupee. Indians lack basic understanding how things work in reality and brainwashed by jingoistic propaganda.

I do not entertain retards.

If your peanut size brain could not comprehend cause effect relationship of Economics, it if inferior genes that you got from your parents that are at fault.

Try to educate yourself. There is an invention called internet which exist solely for this purpose.

Wait, that is regulated in China .

 

[Bang Galore]

You mean something on top of the endless Non-Tariff Barriers you've got ?

Tit-for-Tat mein maraa jaiii gaaa !

Non tariff barriers are available dime a dozen. The solar example that @Dillinger quoted is one that might be challenged at the WTO by the U.S. However since it is GoI spending that money (some $20 billion), they are not about to hand it over to any Tom, Dick & Harry no matter what the WTO rules. They will simply change the nature of the requirement forcing the Americans & the Chinese to change or will simply end the project at that point leaving the Americans with a Pyrrhic victory. However unlike with the Chinese, the Americans have their own leverages & a negotiated settlement will probably be reached.

Against Chinese imports, India can do any of the following.

# Increase tariffs in any sector that the Chinese are dominating where there are Indian or India manufactured competitors available. Alternatively (depending on volume), do as the Chinese do & insist that certain products be manufactured in the country including by the Chinese manufacturers in the face of punitive tariffs.

# Levy anti-dumping duty against Chinese goods. This will affect only the Chinese imports & not those of other countries. The Chinese can go to the WTO but that is a process that will consume substantial time by which time facts on the ground would have changed. India would have the option to issue fresh levies if there is an adverse ruling or continue the old one irrespective of any WTO ruling(unlikely) since all that will allow the Chinese to do is to levy equivalent duties(value) on Indian exports. That works if the U.S. or Europe threatens but as the Chinese have been pointing out, "they don't want to buy anything from India" in the first place. In such a case, leverage is very poor.

# Simply disallow Chinese products/companies from sectors/geographical areas citing security concerns. That will bottle up all Chinese technological, infrastructure companies immediately.

# Raise quality and safety issues. The Chinese are especially vulnerable since perception already exists that Chinese products don't comply with the same standards as other countries.

a report of its own technical arm, the Central Electricity Authority (CEA), reveals that part of this capacity, based on Chinese equipment, has come up in violation of operational and safety norms.

The 41-page report by a committee under CEA Chairman A S Bakshi was recently given to the power ministry. It lambasts Chinese power gear on all key operational parameters - operating load factor, heat rate, auxiliary consumption, frequency of forced outages, breakdowns, etc - and safety mechanisms, putting in the dock around 12 per cent, or 25,000 Mw, of India's installed capacity.


Many private power generators, such as Reliance Power, Sterlite, Lanco and Adani, besides some state-government ones, have bought equipment from Chinese firms. "Chinese turbines do not have safety functions like turbine stress evaluator and auto turbine run-up systems. The level of automation or control systems of Chinese turbines is not in line with present-day turbine designs and technology... leading to the possibility of compromised safety and mal-operation," the report said. Total outages for Chinese units based on domestic coal are substantially higher than the ones from Bharat Heavy Electricals Ltd (BHEL).

The main idea here is not to hurt Chinese imports but to nudge them to take into account and address India's concerns. Trade is both desirable & necessary and trade war are not the best ways to resolve these issues. These are options which are best threatened but not used.

 

[Viet]

to Indian friends: let Chinese do trades with themselves. You can replace China´s imports at cheaper prices from Vietnam.

 

[Lightningbolt]

Kid? Thank you old man but you are the one in reqirement of some learning. RBI is increasing to dampen demand, inflation simply does not reduce in the face of increasing demand. Your understanding of economics is beyond ridiculous. Interest rates hikes are never done to increase consumption, it is why there is an inflations v/s growth argument at all times.

Your understanding of imports into India is almost as ridiculous. Not all imports are essential, demand for some can be dampened simply by increasing tariff. In other cases, demand will turn towards local sources where available (not all imports have only another foreign competitir, there are plenty where the alternatiove is Indian). Only in certain areas will demand force the buyer to look at slightly more expensive alternatives. I'm not convinced that a damping down of Chinese imports will necessarily increase the CAD, that is based on a simplistic notion that all Chinese imports will necessarily need a replavement & that will have to be necessarily from another foreign country. India is not an import driven economy. The impact of inflation by higher tariffs will be largely minimal. You need to learn to be a bit more circumspect in your arguments, certainly nothing in your knowledhe base justifies the irrational exuberance.

It's clear you have zero understanding of basic economics kiddo.

When inflation is higher than deposit rates, the consumption rate decreases. Demand is affected by inflation. Inflation is affected by interest rates. To increase demand you keep prices in check. It's very clear what the RBI is doing, by increasing interest rates they are trying to keep inflation in check to increase consumption. It's also a double affect as higher deposit rates makes savings more valuable as Indian consumer rely on their savings to consume. What you are talking about is borrowing. Borrowing money becomes difficult when the price of capital is higher but that is offset by increasing the value of savings. If inflation is high, then wages rise to keep up with inflation called wage inflation which makes inflation problem even worse. If wage inflation does not keep up with the inflation, then consumers lose purchasing power as their income buys less and their savings are being inflated away. Thus consumption goes down. So to increase consumption, they want to make sure wage inflation is kept in check and the value of savings are preserved.

India is not an import dependent country?
Not even you believe that nonsense mate.

Name me what India can produce itself?
You import everything from oil to manufactured goods to weapons. There ain't a darn thing your country can produce.

India is very much an import dependent country that exports very little.

 

[Armstrong]

Non tariff barriers are available dime a dozen......................The main idea here is not to hurt Chinese imports but to nudge them to take into account and address India's concerns. Trade is both desirable & necessary and trade war are not the best ways to resolve these issues. These are options which are best threatened but not used.

But each & every one of them can be reciprocated in kind & perhaps even extended to something beyond India & China due to the enormous leverage that China enjoys !