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?
RE:Rise of the Re: What can India do?
by David Dak on Jun 21, 2007 07:23 AM Permalink
Your argument about Chinese practice is pure imagination. China's competativity is not due to the low payment for their workers but high productivity, sound infrastructure and a spirit of enterprise. Your sour grape attitute toward China is not helpful to your country and your fellow Indian.
RE:Rise of the Re: What can India do?
by Sudeep M on Jun 21, 2007 02:27 PM Permalink
I think it's also because they liberelised their market way before us. In absolute terms, I don't believe that a free market economy and free trade necessarily is the answer, but from our own failure, we're forced to believe so. Even though I agree with you, I think we need to be careful when using words like "spirit of enterprise" because might give wrong meaning that Indians does not have the "correct" attitude for development (economic:- because, I feel India is not socially and culturally poor)
RE:Rise of the Re: What can India do?
by gatzzz on Jun 21, 2007 03:31 PM Permalink
@David:
I think your understanding of Chinese industries and economy is incorrect. Ramdeo has correctly stated on how Chinese maintained their exports even though their yuan was getting strong. Further the apex Chinese bank has pegged dollar to counter the yuan getting stronger. By doing this they have maintained the yuan to stop growing at a pace i.e. slowed it down. US has been very vocal including president Bush making comments at this act. We dont need that kind of situation in India because ultimately it will be the common man suffering. Being democratic, we should think of alternative measures like quality of products and innovation to counter the growing rupee. This will increase the exports inturn benifitting our economy.
RE:Rise of the Re: What can India do?
by on Jun 23, 2007 06:35 PM Permalink
I agree with David... China's higher productivity is not only limited to the workers but is every where including staff, management, govt., judiciary, police, hospitals...the list is never ending. I feel that the reason is , no time wasted on gossip on politics( 1 party, no general elections), religion ( most do not follow any religion now). This is inspite of working 5 days a week and enjoying 2 days week end which most of we Indians are deprived of.
