A question that has been lingering in the minds of Indians for a long time is: What do we do to prevent China from dumping its goods on us? Doesn’t it harm our industries? And why should we not oppose Chinese goods on this?
It was during the tenure of Atal Bihari Vajpayee that China started to mass export to India. Although it initially affected businesses in India, how come it didn’t improve our businesses in the long run?
First and foremost, India’s biggest problem is the import duty. What is an import duty? It’s a tax the government imposes on imported foreign goods. And why do governments impose this tax? Because the government wants to favor local goods and safeguard them from foreign competition. Although this helps temporarily, does it help in the long run? The answer is a big no. In fact, it makes local businesses incompetent, because they always have the government to protect them in case of trouble!
So what should we do to these import duties? We simply scrap them to ease business & trade! But if we scrap them, will not Chinese goods flood our markets and affect our infant industries? How should we handle Chinese dumping?
First of all, infant industries are the direct examples of crony capitalism. In other words, these cronies bribe the government to safeguard their products from (domestic/foreign) competition. This is how monopolies are established.
Moreover, even after 70+ years of independence, if we can’t produce even ONE resounding industry that can withstand Chinese competition, then what are we actually proud of as a nation? Only if we face competition will we become competitive. Just let Indians have more choice – whether they buy Chinese or Indian made products doesn’t matter. Because if Indians select Chinese products more, Indian industries will have to sharpen the axe. And by dumping cheap goods, China gives its wealth away at a loss to us. In other words, it reduces their wealth and increases ours. But first things first, remove the import duty!
Here’s another way to look at this. China is not trading but dumping goods. China doesn’t operate on the basis of the free market. So if they sell cheap, workers get a raw deal, and if they sell costlier, the price deciders aka exporters get more profits. And how do they dump cheap products? By subsidies! In other words, China subsidizes its exporters (citizens foot the bill). Although this gives temporary employment, in the long run, China loses money! Had China sold costlier products, it would’ve been considered as trade. But in our context, it’s pure dumping. When we jump in to buy something at a cheaper price in our day-to-day life, why can’t we do this vis-à-vis China?
We do not need to “protect” our industries, because they don’t think before imposing their super profits on us. So if someone competes with them vis-à-vis price or quality, we tend to go towards them instead. And what happens to our industries? They either reform or go bust. And this is where the xenophobic patriotism charade kicks in – to protect themselves from competition. But for the sensible people, it won’t cut ice.
So from hereon, let’s not look askance at Chinese products, and instead welcome them home with open arms!