Please enable JavaScript.
Coggle requires JavaScript to display documents.
Trade Wars leading Currency wars (India not gaining advantage: why? (In…
Trade Wars leading Currency wars
Past
Fin Crisis of 2008
started with the collapse of Lehman
Brothers
followed by a global contagion
affect.
concern in developed countries was to
avert a sharp slide on economic growth curves
Hence, developed countries embarked on expansion of fiscal and monetary policies==>spending more and keeping interests low
Then came in the protectionist non-tarrifff barriers leading tohigher duties on imports
Subsequent to 2008
USA, European kept interest low to stoke demand
China, japan, S.Kora kept currencies to low to offset protectionist barriers
2018
USA slapping barriers on Chineese goods
High tariff makes products expensive, but weak yuan can offset impact
Past three months, Yuan depreciated almost 8%
Impacts on India
Country is a net importer of energy and higher prices will put more pressure on fiscal deficit and CAD (imports expensice)
fear of the capital flight with worsening Macro economic situation
would curtail the Central Bank's flexibility in use of instruments to address high inflation, slowing growth and
weakening rupee.
Such protectionist measures, devaluation of currency may lead to Currency War
India not gaining advantage: why?
In news
UNCTAD: Indonesia, Vietnam and Phillipines getting huge investments amidst trade war between china and USA
Why china being let down?
Labour advantage is china vanishing
China accused of tech theft and coercion methods
We are at lower part of smile curve(into only assembly)
Ecosystem not amenable for integration into global value chains
not into global value chains
Much trade is between firms, not between consumer and producer(india not utilising this)
Impossible to separate trade policy from investment policy(examine)
India hasnt been exporting labour intensive goods like how japan, Korea did in 1960s