Wednesday 11 February 2009

India, China Trade War Brews

India has launched a series of trade investigations into Chinese products, raising “serious concern” from the Chinese government.

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  1. India, China Trade War Brews

    India has launched a series of trade investigations into Chinese products, raising “serious concern” from the Chinese government.

    Zhang Hong, Caijing
    11 February 2009

    China’s Ministry of Commerce expressed disapproval over India’s recent trade restrictions on Chinese products, saying they will severely impact bilateral trade relations.

    Since October 2008, India has launched 17 trade investigations, 10 of which were anti-dumping probes, into a wide range of Chinese products. The total value of goods under scrutiny is about US$ 1.5 billion.

    India also imposed import restrictions on Chinese steel, petrochemicals and textiles, and on January 23, the government announced a six-month ban on toy imports from China for health reasons. Up to that point, 60 percent of all toys in India had a Chinese origin.

    China is “seriously concerned about India initiating so many investigations and imposing so many restrictions against Chinese goods in such a short period of time,” said spokesman for the Ministry of Commerce Yao Jian in a statement on the ministry’s Web site.

    China, wrote Yao, “hopes India will show care and restraint in using trade measures during this period of severe challenges in the world economy.”

    Liu Xiaoxue, a scholar of India’s economy at the Chinese Academy of Social Sciences, said India’s recent actions appear to be protectionism, as most of the restrictions were imposed on products from industries suffering decline in India.

    While China may ask the WTO to investigate the cases, Liu said it might not win the appeal since “India’s actions are legal.” He suggested the Chinese government instead solve the dispute through direct negotiations.

    There’s time to spare, said Liu, since the portion of goods exported to India is minor compared to China’s total export volume.

    China is now India’s largest trade partner and importer. According to Indian government statistics, the bilateral trade between the two increased 47 percent year on year from April 2007 to March 2008. Imports from China accounted for 11 percent of India’s overall import volume, sustaining a US$ 16.3 billion trade deficit.

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