For those folks who keep comparing China and India, the fact is, China is till a closed economy when it comes to transparency. Even with an appreciating Yuan, China has still managed to keep increasing her exports, while India's appreciating Re has resulted in just the opposite. The $64 question is why - why can China keep increasing her exports even while her currency, the RMB has also been apprecaiting, even if marginally? The answer is very simple - most Chinese companies are govt-owned, so govt can do anything it pleases, which it does - workers are forced to work for less, i.e., they have to work extra hours for free, in addition to salary cuts, on paper that is, so that her cost of production seems lower than it actually is, just in case they have to defend against 'dumping' charges. Meanwhile the workers receive free board and bed in govt-owned hostels, in addition to other subsidies, which never show up in the companies balance sheets. So on paper, China's cost of production is very low, but in reality it's much higher. That's how China's been increasing her exports even with a rising Yuan. How does that helps Indian exporters or an appreciating Re?
