India not to join global chorus on yuan appreciation

Discussion in 'Foreign Relations' started by ajtr, Oct 25, 2010.

  1. ajtr

    ajtr Veteran Member Veteran Member

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    India not to join global chorus on yuan appreciation


    TOKYO: India, mindful of its import dependency, is unlikely to join the global rhetoric urging China to let its currency appreciate. India depends on cheap project imports from China to jump-start its big-ticket infrastructure projects, especially in power.

    Disclosing this ahead of a meeting scheduled between Prime Minister Manmohan Singh and Chinese premier Wen Jiabao, a source said the currency issue would have to be dealt within the larger context of growth. “We don’t want drastic solutions that would imperil growth,” he said.

    On his part, Mr Singh is expected to put pressure on the Chinese to lower import barriers, both tariff and non-tariff, especially with respect to pharmaceutical imports from India. China is India’s biggest trading partner and enjoys a huge trade surplus, implying that a cheaper yuan will lower India’s import bill.


    PM to raise China’s role

    “Our imports are now cheaper. We depend on them for large buys in sectors like power,” said the source.

    Unlike India, the US economy needs a demand thrust, which it hopes to manage by getting a favourable shift in the yuan-dollar parity that would make US exports more competitive.
     
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  3. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    I am hoping beyond hope for it to rise. I will be in China for the next year, and I have plastic to pay. A stronger RMB is more money in my pocket.
     
  4. pmaitra

    pmaitra Moderator Moderator

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    Ok, and so who pray is this source? Making statements under conditions of anonymity is a nice alibi. Newspapers and reporters often use this smart ploy to pass forward one's opinion as neutral news without looking biased by simply inserting phrases like, 'said the source', 'it is believed', 'it is common knowledge' etc.. Zero citation, zero reference.

    Now, what are those goods that India must import that cannot be sourced domestically or from elsewhere cheaper than those from China? I'd like this particular source to kindly specify, without which this report is basically subjective and ambiguous.

    I am not saying we need to go against China at the drop of the hat, but we need to know why we should support or oppose the appreciation of the Yuan.
     
  5. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    my first reaction to this report is there is more to it than what meets the eye. the real attempt seems to be india should not be seen as colluding with the west in cornering the prc and the reason sighted is just an attempt to make the move look reasonable.

    other than that completely agree, unnamed sources are just another way of pushing around one's own opinion with greater legitimacy, but then this report appears on ET which happens to be part of a group which leaves no chance to bash the prc so quite likely the report could be true and then it has been widely reported, though quite possible the same ET news has been circulated around but then quite possible they could just be furthering some industrial groups interests.

    my assumption is the equipment being talked about is with reference to things used in the power generation and other heavy industrial/infrastructure related products. in power generation domestic companies like BHEL are just not able to keep up with the demand of such equipment and so chinese equipment is being sourced. for the 11th 5yr plan india was supposed to install 78,000MW of electricity, under last year's review it was cut short to 62,000MW and now even that looks like a distant dream, reasons for the same are many but our domestic companies not being able to keep up with demand is certainly a key factor.

    now if the same product sourced from china saves the project owner 5-10% on the over all costs of that project then it is worth it. when the project costs run into 100s/1000s of crores then even 1% saving is worth it and if a depreciated yuan is doing that then why not.
     
  6. Iamanidiot

    Iamanidiot Elite Member Elite Member

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    Ritesh the road infrastructure has to be drastically improved not able to see that in this five year plan
     
  7. Sridhar

    Sridhar House keeper Moderator

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    Didn't we complain earlier our companies are at disadvantage because of this ? Are we more concerned about our imports rather than our exports ?
     
  8. amoy

    amoy Senior Member Senior Member

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    a mixed feeling towards RMB appreciation.

    anyway the upside is I can buy cheap like "National Geographic" magazine on line. years ago us$ 1 @ rmb 8.2, but now @ 6.7 or so, quite a saving. also a gospel for Chinese going abroad no matter for study or emmigration or tours.

    China is only trying to cushion what's inevitable, like Japan did decades ago
     
  9. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    yes pretty much so and land acquisition is a huge-huge factor and with that environmental clearance has also become a big enough factor.

    actually rupee is also depreciated to quite an extent, west doesnt talk about it because it doesnt quite hurt them as yet and west hates a commie china which luckily for us takes all the blame.
    exports are growing at around 15% annually now, and they could get back to 20%(+) fig as was the case prior to global economic melt down but for that the west needs to completely recover.
    our exports and imports need not necessarily have to depend on rate of exchange of yuan, we can as well reply in kind and artificially depreciate the rupee further and keep the indian exports more than competitive.
     
  10. Ray

    Ray The Chairman Defence Professionals Moderator

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    If China appreciates it currency, then their industry will slow down for obvious reasons.

    It will also affect the internal economy and will have an adverse effect on the Chinese population.

    This would be rather a serious situation for China.

    One can try to bring China to have a genuine convertibility of her currency, but one would have to drag China into this neighing and kicking!

    A resurgent China does not auger well for the West and so, it will continue pressing China to have a real convertibility of her currency rather than the current fictitious and make belief one that suits China's convenience!
     
    Last edited: Oct 25, 2010
  11. badguy2000

    badguy2000 Respected Member Senior Member

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    In fact, the labor intensive industry sections have never be the main sections of CHinese GDP,but it hires lots of low-educatoned peasant workers and quite sensitive to the exchange of RMB.

    So,I think the appreication of RMB would have quite limited direct impact on CHina main industry sections,but it might cause troublesome unemployment.
     
  12. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Labour intensive industry is the core of exports, which is the core of the economy. Although it might be fake needed construction now.
     
  13. badguy2000

    badguy2000 Respected Member Senior Member

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    mark!surround to watching!
     
  14. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    If you can't take the heat of truth, don't enter the kitchen.
     
  15. pmaitra

    pmaitra Moderator Moderator

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    I don't know if labour intensive jobs are a significant contributor to Chinese GDP, but I am sure labour has been and is the most significant contributor to Chinese GNP. Starting from the Lima-Huancayo Railway line in Peru (completed in 1908) in the past to building ports and infrastructure in different countries today, Chinese labour has always been extensively used.
     
  16. Sridhar

    Sridhar House keeper Moderator

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    India and China to explore MOU on Road transport & Highways Sector

    By Frontier India | September 16th, 2010 | Category: External Affairs | No Comments »
    India and China have decided to work out a Memorandum of Understanding (MoU) for Road Transport and Highways. Under the MoU, both sides would seek to enhance cooperation in highway construction, exchange of technology and investments. This was discussed by Kamal Nath, Indian Minister for Road Transport & Highways, when he met Li Shenglin, Chinese Minister of Transport in China.
    Nath says that India has embarked on a massive National Highway development programme under which it is proposed to construct 7000 km of National Highways every year over the next few years. The quantum jump targets provided huge opportunities to the Chinese construction companies as also the Chinese financial institutions to enhance their engagement with India. He also informed that the preferred mode of highway development in India is Public Private Partnership. 60 % of the national highways would be developed under the BoT (Toll) mode, while another 25 % would be taken up on BoT (Annuity). Already several Chinese companies are participating in the National Highway Development Project of India.
    Nath also met Lou Jiwei, Chairman, China Investment Corporation (CIC) and Dai Xianglong, Chairman of National Social Security Fund (NSSF) and sensitised them to the opportunities of investing in the National Highways sector of India and of the high returns that the sector promises to offer. Xianglong mooted the idea of the setting up of an India-China Highways Investment Forum for investors, developers and construction Companies which will provide a platform for the policy makers, financial experts and the business leaders to work closely towards enhancing project specific investment flows for mutual benefit. While CCI is a sovereign wealth fund that manages funds worth USD 200 billion, NSSF have a total asset base of RMB 776 billion.


    http://frontierindia.net/india-and-china-to-explore-mou-on-road-transport-highways-sector
     
  17. amoy

    amoy Senior Member Senior Member

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    In
    in this link Renminbi (Chinese yuan) exchange rates 1969-2010 >> http://www.chinability.com/Rmb.htm
    and China's trade statistics 2000-2009 >> http://www.uschina.org/statistics/tradetable.html

    can anyone take time to enlighten why China's export still increases against the backdrops of RMB appreciation?

    Of course I'm glad China is shifting towards domestic demands rather than export - sooner or later. We're definitely beneficiaries, overall speaking, despite detrimental effects on export oriented industries (mainly in coastal areas) as always predicted.
     

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