Strains in Sino- Indian trade, economic ties
Wave of anti- dumping duties threatens bilateral relations: experts
An increase in India’s anti-dumping probes against Chinese products amid political tension in a border area will damage bilateral trade and economic ties, experts cautioned Sunday, saying that China should appeal through the WTO to address frequent trade remedy investigations by India.
The Indian government last week imposed anti- dumping duties on 93 items from China including chemicals, machinery, steel, fibers, yarn, rubber, electronics and consumer goods, The Hindu Business Line reported Friday.
The report did not specify the rates of the anti- dumping duties. It also said that 40 other cases concerning imports from China have been initiated by relevant Indian authorities.
The number of Chinese products subject to anti- dumping duties by India is quite large this time and such a situation is unusual and highly negative, said Tu Xinquan, deputy dean at the China Institute for WTO Studies at the Beijingbased University of International Business and Economics.
Tu told the Global Times Sunday that the trade imbalance between China and India is a major reason for the large number of products involved.
In 2016, India’s exports to China decreased by 12.3 percent year- on- year to $ 11.748 billion while India’s imports from China were up 2 percent to $ 59.428 billion, according to information posted on the website of the Embassy of India in China. India’s trade deficit with China rose by 6.28 percent year- on- year to $ 47.68 billion last year.
“Indian products are less competitive than
Bai Ming
Research fellow at the Chinese Academy of International Trade and Economic Cooperation China- made products and India is not happy about it … in recent years, the country has been taking rising protectionist actions against China and has launched many anti- dumping probes into Chinese products [ to protect its own industries],” Tu said.
Tu said that India is committed to developing more manufactured products under the ‘ Make in India’ campaign, but that will still take a long time.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that India’s trade defi cit with China is caused by their diff erent industrial structures and India should take a more mature stance in dealing with it.
Trade friction also exists between China and the US as well as China and the EU, but neither the US and EU resorts as frequently to trade remedy measures against China as India, according to Bai.
“It is unwise for India to pursue trade protectionism against China, a move seen as closing down its market,” he said.
India initiated 12 probes against Chinese products in the fi rst half, becoming the coun- try with the most trade remedy investigations against China, Gao Feng, spokesman of the Ministry of Commerce ( MOFCOM), said at a press conference on July 6. During the same period, 11 investigations were launched by the US.
Considering the previous friendly Sino- Indian relationship, China did not actively respond to India’s frequent anti- dumping investigations, but as India has crossed the line and gone a little too far this time, China should appeal to the WTO as there are many unreasonable aspects of India’s anti- dumping investigations against China, according to Tu.
The political tension between the two countries caused by the ongoing military stand- off in a border area also brings challenges to the bilateral economic and trade relationship, experts noted.
The Sino- Indian economic and trade relationship provides much scope for cooperation if political issues are not involved, Tu noted.
“A stable economic and trade relationship between China and India benefi ts both parties and bilateral economic and trade relations should not be politicized,” he said.
If bilateral economic and trade ties worsen, Chinese companies will be hurt more because more Chinese businesses are seeking growth in the Indian market, experts said.
The MOFCOM told the Global Times in an interview in July that China is willing to make eff orts with India to properly tackle trade friction via talks, negotiations and industrial cooperation.
The ministry said that China attaches much importance to its relationship with India, and it has actively linked bilateral development strategies and deepened pragmatic cooperation.
“It is unwise for India to pursue trade protectionism against China, a move seen as closing down its market.”
A trade war between China and India seems to be looming after the latter moved last Wednesday to impose antidumping duties on 93 products from China. Now Chinese companies must reconsider the risks of investing in India amid strained bilateral trade ties, and India should also be prepared for the possible consequences for its ill- considered action.
Even before the decision on duties, India was already the country with the most trade remedy probes against China, initiating 12 investigations into Chinese products in the first half of this year, according to statistics from China’s Ministry of Commerce. Of course, Chi- na could easily retaliate with restrictions on Indian products, but that doesn’t make much economic sense for the country. According to the Embassy of India in China, India’s exports to China fell by 12.3 percent year- on- year to $ 11.75 billion while India’s imports from China rose by 2 percent to $ 59.43 billion, resulting in a trade deficit of $ 47.68 billion.
It is understandable for the Indian government to be eager to narrow the trade deficit with China, but trade remedy measures should not be used as shortcuts, a strategy that will only backfire. If India really starts a trade war with China, of course China’s economic interests will be hurt, but there will also be consequences for India.
First, it is not just Chinese companies that will face a setback due to the anti- dumping measures – India’s consumers will also lose. Although Indian manufacturers are reportedly catching up with their Chinese peers, there is currently no alternative to many Chinese products in the Indian market, so Indian consumers will be the chief victims of the antidumping policy targeting Chinese products.
Second, given the tense bilateral trade ties, China may consider temporarily suspending investment or economic cooperation projects in India to ensure the security of these investments. Chinese companies should also be alert to the potential investment risk amid the growing policy uncertainties in India and should reevaluate such projects.
Many Chinese companies have accelerated their investment in India over the past few years amid strong optimism over bilateral ties. According to a report in the Times of India in March, the Indian government was in talks with both Indian and foreign companies to introduce $ 62 billion investment in the country, which might create 1.7 million jobs.
Chinese companies accounted for about $ 32 billion of the proposed total. For instance, Sany Group planned to invest nearly $ 10 billion in wind power, while Dalian Wanda Group considered investing about $ 5 billion in real estate projects.
These Chinese- sponsored projects were expected to ease the bilateral trade imbalance. But as trade relations deteriorate, Chinese investors, increasingly concerned about potential risk, must reconsider their options. Many will probably shelve their projects, especially the large ones.
The author is a reporter with the Global Times. bizopinion@ globaltimes. com. cn