Bookmark and Share

India Criticizes Renminbi Undervaluation,Calls for Diversifying away from Chinese Imports

0 Comment

India has become the latest country to join in the bashing of Renminbi undervaluation saying it leads to a massive advantage for Chinese exporters.A research paper from India’s Central Bank says that its artificially boosts China giving it a competitive advantage over Indian exports.Note Brazil another one of the famed BRIC quartet has too been complaining about Chinese imports swamping its industry.Note Brazil has seen massive currency appreciation in recent years due to a combination of high interest rates and strong economic fundamentals.

India is also growing concerned about the growing trade deficit with China which totals almost $19 billion.Note it is the same like Brazil where machinery and low tech non commodity imports are killing their domestic industries.The paper calls that India should reduce dependence on Chinese imports which has gone up to 10.7 per cent during 2009-10 from 7.3 per cent five years ago.To avoid the implications in terms of imports, there is a strong need to diversify imports of these items.

The pressure on the Chinese to appreciate the yuan keeps growing by the day.Earlier strong US pressure had made China appreciate its currency by a few percentage points as the US Congress threatened to bring legislation against China labelling it as a currency manipulator.

India being hurt by undervalued yuan: RBI

China’s policy to keep its currency, the renminbi or yuan , artificially undervalued gives it a huge economic advantage and impacts India’s trade, says a research paper released by the Reserve Bank.

In the paper, ‘The Implications of Renminbi Revaluation on India’s Trade’, S Arunachalaramanan and Ramesh Golait of the RBI have said that an artificially undervalued currency gives China a distinct advantage in the export market.

“By keeping renminbi (RMB) undervalued against the US dollar (USD) and depreciating it in line with the USD in the international market without taking into account the economic fundamentals of China, it invariably and distinctly provides competitive advantage over its trade competitors and trade partners including India,” the paper said.

Read More


Abhishek Shah

No Responses so far | Have Your Say!