image rotation

MARKET WATCH 07 JUNE, 2019

NATIONAL

INTERNATIONAL

Commerce Minister Piyush Goyal tells Indian industries, exporters to depend less on govt subsidies and grants

Commerce and Industry Minister Piyush Goyal also urged state governments, export promotion councils and industrial bodies to make efforts to engage with the world from a position of strength. Piyush Goyal, Union Minister of Commerce and Industry and Railways, urged representatives of industry, trade and exports bodies to reduce dependency on subsidies and grants from the Central Government and strive to make industry and production more competitive and self-reliant, said a government press release. Goyal made the statement while addressing a joint meeting of the Board of Trade and the Council of Trade Development and Promotion, organised by the Ministry of Commerce and Industry and the Directorate General of Foreign Trade (DGFT) in New Delhi today. The commerce minister said that when subsidies have been done away with, businesses grew. In this context, he cited the example of LED bulbs which have become affordable due to higher production. He explained that when production takes place on a large scale, domestic manufacturing and business grows. This leads to import substitution and also improves the quality of products. The meeting was attended by ministers and officials from Civil Aviation ministry, Housing and Urban Affairs ministry, Commerce and Industry ministry, NITI Aayog, departments of Commerce, Revenue, Shipping, Road Transport and Highways, Civil Aviation, Promotion of Industry and Internal Trade, Agriculture, Information Technology, Textiles, MSME and other Ministries of Government of India. Piyush Goyal also urged state governments, export promotion councils and industrial bodies to make efforts to engage with the world from a position of strength. He said, “India and the world are now going through challenging times due to trade barriers and falling economic growth. Therefore, there is greater need for focussed efforts to maintain our position and grow in world trade. This forum provides an opportunity to work with synergy among all stakeholders so that improvements can be made in the framework, monitoring process for internal trade, industrial growth and exports.” Goyal took over from Suresh Prabhu to become the Minister of Commerce and Industry in Modi’s new Cabinet on May 31. He also holds the office of Ministry of Railways since 2017. Goyal first made his mark in the BJP as a treasurer and held portfolios in coal, power, railways, and finance. Goyal was also provided with the finance portfolio in May 2018, which he held till August, while Arun Jaitley was recuperating from a kidney transplant. He presented the interim Budget in the Parliament in January 2019.

Source: Economic Times

Back to top

Textile industry aims to become $350 billion by 2025

"It is high time that the industry changes its approach to move into the second growth phase and aim for exports of around $100 billion from the current $40 billion," Textiles Secretary Ajit B Chavan said at the CII Texexcel 2019, the National Textiles 4.0 Summit here. "We need to come up with detailed plans that can take the industry to its next level. All these years we have focused on more production scale, but now the focus has to be on quality and other aspects to improve our competitiveness," he added. In view of the US China trade war, India needs to create a level playing field for local players and protect the domestic industry. "India needs to create trade barriers for China to prevent it from dumping cheap textile products into India. The textile industry aims to be a $350 billion industry by 2025 from the current $137 billion," said Chairman, CII National Committee on Textile & Apparel & Managing Director, Grasim Industries Dilip Gaur said. "We immediately need to address the issue of being cost driven rather than innovation driven. India needs to develop and grow man-made fibre to remain competitive in the global market," Gaur added. In order for manufacturers to attain competitiveness, it will be a boon to integrate the concepts of Textile 4.0 with manufacturing excellence, said Prashant Agarwal, Joint Managing Director, Wazir Advisors. He said, the country needs to make itself competitive in the global market and that is the only way, all other means are temporary. "The US China trade war holds a lot of opportunities for India, but we need to be competitive. We need to have smart factories," Agarwal added. He said, there is a lot of emphasis on sustainability and the world is looking at factories to reduce the use of resources and water. ” Companies should also look at reducing carbon footprints. India should look at presenting itself as a competitive manufacturing nation," Agarwal added.

Source: Money Control

Back to top

Government to push for lower GST on auto, textile sectors

The centre may also make a case before the Council for the need to bring in at least some petroleum products into the GST ambit. The Central Government would like the Goods and Services Tax (GST) Council, slated to meet later this month, to address the distress in India’s export sector on account of the US withdrawing preferential trade terms and an ongoing global slowdown by tweaking the GST rate on products which figure heavily in India’s export basket. There is a strong demand, among others, for reducing GST on auto parts and some textile goods, which the Central Government is likely to support. It will also be pitching for a single authority to process GST refunds. “The whole idea is to reduce the time for refunds. Exporters’ main grudge has been that they are constantly facing a liquidity crisis as refunds do not come on time and impatient suppliers in the global supply chain are unwilling to wait for payments, forcing Indian exporters to borrow at high costs,” said officials. While some auto parts are currently taxed at 18 per cent, others are taxed at 28 per cent. The Automobile Component Manufacturers Association has been demanding that all auto parts be uniformly taxed at 18 per cent for some time. The auto-components industry accounts for 2.3 per cent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. There is also a move to reduce GST on some textile product lines which are now taxed at 18 per cent to 12 per cent, as well as on finishing agents such as dyes etc., used by the textile industry in order to help the sector which earned about $38 billion in 2018. The centre may also make a case before the Council for the need to bring in at least some petroleum products into the GST ambit. Officials point out that there are three categories of petroleum products: Industrial fuels such as crude oil used as industrial inputs; transportation fuels like petroleum, diesel, aviation turbine fuel and household fuels like kerosene and LPG. “The entire range of petroleum products is taxed at multiple points in the country... Central excise and state VAT are among these taxes. To top it, there is no input tax credit for the industry,” pointed out Sumit Dutt Majumder, former chairman, Central Board of Direct Taxes. “There can be a case for industrial fuels which are used as inputs being brought under GST,” he added.

High GST rates

Currently, some auto parts are currently taxed at 18 per cent and others at 28 per cent. The Automobile Component Manufacturers Association has demanded that all auto parts be uniformly taxed at 18 per cent for some time. Meanwhile, the textile industry has been seeking a reduction in GST on some textile product lines which are now taxed at 18 per cent, as well as on finishing agents such as dyes etc., which are used by the sector which earned $38 billion in 2018.

Source: Indian Express

Back to top

RBI removes charges on NEFT, RTGS transactions

RTGS is meant for large-value instantaneous fund transfers while the NEFT is used for fund transfers up to Rs 2 lakh. The Reserve Bank of India (RBI) on June 6 said it has done away with charges on NEFT and RTGS transactions. "In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems. Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week," the central bank said in a statement. RTGS is meant for large-value instantaneous fund transfers while the NEFT is used for fund transfers up to Rs 2 lakh. The RBI's monetary policy committee (MPC) cut its repo rate by 25 basis points to 5.75 percent, changing its policy stance to accomodative from"neutral".

Source: Indian Express

Back to top

Indian textile, apparel market grows to 100 bln USD in FY 2018-19: consultancy firm

The Indian textile and apparel market has grown at a compounded annual growth rate of 10 percent since the fiscal year 2005-06 to 100 billion U.S. dollars in the fiscal year 2018-19, according to a theme paper released by Wazir Advisors, a management consultancy firm, Thursday. Of the 100 billion U.S. dollar market size, apparel demand constituted 74 billion U.S. dollars, followed by technical textiles and home textiles at 19 billion U.S. dollars and 7 billion U.S. dollars, respectively, said the paper released at a textile summit organized by the Confederation of Indian Industry (CII). However, the Indian textile industry will have to change its approach and mindset if it aims at 100-billion-U.S. dollar export by 2025 from the current level of 40 billion U.S. dollars, said Ajit Chavan, secretary of the Textile Committee, Ministry of Textiles, at the summit. "All these years we have focused on more production scale, but now the focus has to be on quality and other aspects to improve our competitiveness," Chavan said. The Indian textile and apparel industry contributes two percent of the country's GDP and 13 percent of the country's export earnings, apart from employing 45 million people in the sector.

Source: Xinhua

Back to top

India will not push for GSP benefits from US, says Piyush Goyal

The scheme provided India tariff-free access to the US market. All benefits have stopped since June 5. India will try to build up export competitiveness in its own right without depending on the Generalized System of Preferences (GSP) scheme provided by the US, said Commerce and Industry Minister Piyush Goyal on Thursday. Addressing the media for the first time since taking charge, Goyal said India graciously accepts the fact that development assistance hitherto provided by other nations has stopped. The scheme provided India tariff-free access to the US market. All benefits have stopped since June 5. “It’s not something that any of the exporters raised as a matter of life and death. It has had an impact on some sectors, some places...1 per cent, 2 per cent...India is no more an underdeveloped or least developed country that we will look at that kind of support,” said Goyal. “We also believe that in our development cycle, several countries were giving us support to help us to move out of our problems faster,” Goyal said. But if certain countries have chosen a different path, we will reorient ourselves to be competitive, he added. The US move had evinced mild reaction from the new dispensation in New Delhi. In an official release, India had said the American move was ‘unfortunate’ and hinted at further talks on the matter. New Delhi also pointed out that GSP benefits were ‘unilateral and non-reciprocal in nature extended to developing countries’, and that they couldn’t be used for advancing Washington DC’s trade interests and non-discriminatory benefits. India is the largest beneficiary nation under the GSP and exported goods worth $6.35 billion under the US’ oldest preferential trade scheme last year. With regard to products having GSP benefits of 3 per cent or more, exporters might find it difficult to absorb the loss, the Federation of Indian Export Organisations (FIEO) said. Despite having a minimal impact on India’s overall outbound trade with the US, specific exports from India in a diverse set of sectors such as jewellery, leather, pharmaceuticals, chemicals, and agricultural products are set to face higher costs and competition, the FIEO said. India’s total benefits from GSP tariff exemptions amounted to $260 million in 2018, according to the data from the Office of the United States Trade Representative. However, this was only a small portion of India’s overall exports to the US in the same period, which stood at $51.4 billion. Considering this, some senior policymakers in the government have advised against pushing the GSP issue further with the US, sources said. However, traders have pointed out that Indian exports remained under pressure due to increasing competition from low-cost rivals, and that surrendering GSP claims would mean handing away market share.

Source: Business Standard

Back to top

India's containerised exports grow 6% during Jan-March even as rupee appreciated: Maersk India

The rupee appreciated marginally by 0.88% during the period even though it touched a low of Rs 71.81 in February. India's containerised exports reported a stable growth of 6% in the JanMarch quarter even as the rupee appreciated, signalling a strong demand for Indian exports while imports declined 2.2% over the same period, a report by Maersk India said. The rupee appreciated marginally by 0.88% during the period even though it touched a low of Rs 71.81 in February. The overall export-import trade grew at 3% in the quarter. While north and west India drove trade with European and Mediterranean countries, highest growth in exports to the United States came from east India at 17%. The overall export trend was driven by robust performance in refrigerated cargo, engineering and pharmaceuticals, largely by the eastern and western regions of India with commodities like plastic, rubber, textile , vehicles and vegetables as the key drivers. "Exports have remained strong even as the rupee appreciated against the dollar, which shows a strong demand for Indian exports, " Steve Felder, managing director, Maersk South Asia said. To be sure, global containerised trade has moderated due to a broad-based slowdown due to fall in private consumption, trade risks, financial volatility and political uncertainties. "Considering the tensions in the global trade environment, we are off to a positive start to 2019 on exports, and the market is expected to strengthen after the elections," he said. Felder pointed out that Indian exporters today are expanding their geographical range and product diversification and are moving towards higher value -added manufacturing and technology driven items in their basket. Refrigerated cargo exports also grew at 6% with commodities like vegetables, fruit and nuts, fish, meat, pharmaceuticals and chemicals driving the reefer import-export trade. Saudi Arabia, USA, Germany, Belgium and Spain were among the highest export countries for India’s refrigerated cargo with chemicals, pharmaceuticals, meat and vegetables driving this demand; while Russia (chemicals) and Italy (fruit and nuts) remained the strongest partners from the refer imports standpoint. "The government’s efforts to grow international trade are already visible through the plethora of initiatives over the past year, including the relaxation of cabotage regulations and favourable regulatory environment, emphasized by the grant of infrastructure status to the logistics industry. However, India needs to drive and indeed fast-track investment-led infrastructural upgrade of roads, intermodal transportation and cold chain infrastructure, which would benefit the farmers and small and medium enterprises. The ‘Make in India’ initiative is further expected to act as a catalyst in advancing our manufacturing sector to the international market,” Felder said. “As the Indian logistics sector gears itself for a deeper implementation of new emerging technologies like blockchain and artificial intelligence, the industry needs to focus on skill development to enhance the export growth. The government’s efforts to grow international trade are already visible through the plethora of initiatives over the past year, including the relaxation of cabotage regulations and favourable regulatory environment, emphasized by the grant of infrastructure status to the logistics industry. However, India needs to drive and indeed fast-track investment-led infrastructural upgrade of roads, intermodal transportation and cold chain infrastructure, which would benefit the farmers and small and medium enterprises. The ‘Make in India’ initiative is further expected to act as a catalyst in advancing our manufacturing sector to the international market,” said Felder.

Source: Economic Times

Back to top

India lost USD 13 billion to trade misinvoicing: Report

India lost a staggering USD 13 billion, over Rs 90,000 crore, to trade misinvoicing, equivalent to 5.5 per cent of the value of the country's total revenue collections in 2016, according to a report by the US-based think tank Global Financial Integrity. In 2016, almost two-thirds of Indian imports that appear to be most at risk for some degree of potential revenues losses are imports from just one country, China, which was by far India's largest source of imports in that year, GFI said in its latest report released this week. The report, "India: Potential Revenue Losses Associated with Trade Misinvoicing", analyses India's bilateral trade statistics for 2016 (the most recent year for which sufficient data is available), published by the United Nations (Comtrade). "Trade misinvoicing is a reality impacting India and every other country of the world. Imports coming into a country can be over-invoiced in order to shift money abroad, or imports can be under-invoiced in order to evade customs duties or value-added tax (VAT)," the report said. Similarly, exports going out of a country can be under-invoiced in order to shift money abroad. Exports are occasionally over-invoiced, in order to reclaim VAT taxes for example, it said. Regardless of which method is used, it said, the results are the same: large amounts of tax revenues not being collected. India should encourage all governments to adopt and fully implement all of the Financial Action Task Force's (FATF) anti-money laundering recommendations, the report suggested, adding that laws already in place should be strongly enforced. " India should encourage all governments to require multinational companies to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries and staff levels on a country-by-country basis," it said. Of the total estimated potential lost revenue of USD 13 billion, approximately USD 4 billion was due to export misinvoicing and approximately USD 9 billion due to import misinvoicing, it said. USD 13 billion can be converted to over Rs 90,000 crore as per the prevailing exchange rate. The USD 9 billion in import misinvoicing can be further broken down by uncollected VAT tax (USD 3.4 billion), uncollected customs duties (USD 2 billion), and uncollected corporate income tax (USD 3.6 billion), the report said. In 2016, some Indian imports most at risk for high values of import under-invoicing were edible fruits and nuts, sugar, vehicles and cereals. Looking at both high-risk commodities and high-risk trade partners in 2016, the think tank found that under-invoiced imports of edible fruits and nuts from Ghana, mineral fuels from Australia and South Africa and electrical machinery from China were highlighted as potential high-level risks for revenue losses. Trade misinvoicing is a method for moving money illicitly across borders, which involves the deliberate falsification of the value, volume or quality of an international commercial transaction of goods or services by at least one party to the transaction. This typically happens when exporters and importers submit false information about shipments on invoices to customs authorities when shipping exports or receiving imports. There are four main types of misinvoicing-- import over-invoicing, export under-invoicing, import under-invoicing and export over-invoicing.

Import over-invoicing is done for the purpose of shifting money abroad.

For example, instead of paying USD 100 per unit for an import, you can arrange for the invoice to read USD 120 per unit and upon payment put the extra USD 20 into a foreign bank account. Therefore, although you are actually paying USD 100 per unit for the goods, the falsified invoice enables you to pay USD 120, with USD 100 going to the actual producer and USD 20 going someplace else, often into an offshore account. Import over-invoicing is a common method of illegally moving money out of developing countries and results in illicit outflows of funds from a country, the report explained. Similarly, export under-invoicing can also be used for shifting money abroad. In this method, the invoice is falsified to show that the price of goods being exported is lower than the actual price being paid by an importer abroad. Trade misinvoicing is also used to bring illicit funds into countries. A key method of illicit inflows includes import under-invoicing. This type of trade misinvoicing is often used for the purpose of evading the payment of customs duties and VAT paid on imports. For example, instead of paying USD 100 per unit, you can arrange for the invoice to read USD 50 per unit and save on the duties and VAT that would have been payable at the higher unit price. Upon paying the invoice at USD 50, you still owe the remaining USD 50 to the original producer abroad and therefore must also have a separate means of shifting money abroad in order to complete the transaction. Lastly, export over-invoicing is also used to bring illicit funds into countries. In this fourth major type of trade misinvoicing, the prices listed on export invoices are falsified to show that exports are priced at higher levels than what importers abroad have invoiced. While this may result in exporters paying higher amounts of export taxes than are actually due, such tactics are used to benefit companies that are seeking to abuse various government export incentives programmes, such as customs duty and VAT tax drawbacks (rebates), the report said.

Source: Business Standard

Back to top

Piyush Goyal to lead Indian delegation for G20 meet on trade in Japan

Commerce minister Piyush Goyal (https://timesofindia.indiatimes.com/topic/Piyush-Goyal) will discuss the global trade scenario, WTO matters and digital trade (https://timesofindia.indiatimes.com/topic/digital-trade) during a two-day G20 (https://timesofindia.indiatimes.com/topic/G20) ministerial meeting beginning Saturday in Tsukuba city, Japan, an official release said. Goyal, who is leading the Indian delegation on trade and digital economy (https://timesofindia.indiatimes.com/topic/digitalwallets), will also hold dialogue with other participating trade ministers on current international trade and investments, said the release of the commerce ministry. "The G20 Trade Ministers deliberations will form part of the G20 Summit Leaders agenda in the formal discussions and will also be a part of the Summit Declaration," it added. Ever since G20 was formed India has been actively participating in the meetings. Although there are no binding commitments in G20, it sets the agenda for multilateral trade relations. The G20 members represent two-thirds of the world's population and 85 per cent of its economy. G20 is made up of 19 countries and the European Union (http://timesofindia.indiatimes.com/topic/European-Union) (EU). The 19 countries are -- Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States. In his first visit abroad after assuming charge, Goyal will take this opportunity to interact with various trade ministers of participating countries, including host Japan, the release said. The commerce minister will hold bilateral meetings on the sidelines of G20 in order to sensitise India's core interests in trade and investment issues and build coalition with like-minded countries for defending the interests of developing countries. Over 50 trade and digital economy ministers will get together for the first time in G20 history in Tsukuba to discuss how their economies can promote trade and investment and maximise benefits from the development of the digital economy and technologies to ensure sustainable growth of the global economy. Digitalisation is expected to continue to create benefits for our economies and societies as a whole and help achieve the inclusive, innovative and human-centred future society -- 'Society 5.0'. "For the first time Ministers of the Ministry of Electronics and Information Technology (MeitY) and Commerce will participate in a joint session on Digital Economy at the G20 Ministerial Meeting," the statement said. The global economic and social system faces considerable challenges. Rapid globalisation has led some to believe that they are not benefiting sufficiently and are discontent. "It is hoped that the G20 Ministerial Meeting being held in Japan will play a positive role in fostering economic opportunity and addressing challenges in the global landscape. "Trade and investment have been important drivers of the unprecedented global economic growth and poverty reduction enjoyed in recent times," the ministry added.

Source: Business Standard

Back to top

Bengal govt puts emphasis on entreprenuership development

West Bengal government Thursday emphasised on a culture of creating entrepreneurs in the villages saying it will result in creation of jobs at the grass root level. For providing marketing linkage of Self Help Group(SHG) products, state SHG & Self Empowerment Minister Sadhan Pande said the government is opening counters in different towns as one-stop shops allowing entrepreneurs to market their products directly to buyers. "The government is stressing on creating employment opportunities within villages. Schemes such as Muktidhara, Swami Vivekananda Swanirbhar Karmasansthan Prakalpa have been devised to promote entreprenuership," Pande said at an ICC organised event. The objective of Muktidhara scheme is to create and maintain sustainable livelihood of SHG members by training them and help them get bank loans. The Swami Vivekananda Swanirbhar Karmasansthan Prakalpa scheme envisages generation of self-employment through promotion of tiny scale units of production, manufacturing, trade, service or any other sector. The minister said the government is providing subsidy up to 30 per cent on loans provided to SHG members. State Labour Secretary S Suresh Kumar mentioned about the Samajik Surakshaya Yojana Scheme where beneficiaries through a small monthly contribution of Rs 25 can get various social benefits. "The SHGs need to diversify their products from handicrafts towards items of daily consumption such as horticulture, animal husbandry and fishery. The government, can make microfinance a more attractive source of funds if it can subsidise the interest rate on loans provided to MFIs," state Chairman of the Association of Microfinance Institutions A K Maity said.

Source: Business Standard

Back to top

Global Textile Raw Material Price 05-06-2019

Item

Price

Unit

Fluctuation

Date

PSF

1063.62

USD/Ton

-1.47%

6/5/2019

VSF

1667.06

USD/Ton

-0.26%

6/5/2019

ASF

2497.69

USD/Ton

0%

6/5/2019

Polyester    POY

1061.45

USD/Ton

-0.68%

6/5/2019

Nylon    FDY

2416.66

USD/Ton

0%

6/5/2019

40D    Spandex

4413.66

USD/Ton

0%

6/5/2019

Nylon    POY

5470.04

USD/Ton

0%

6/5/2019

Acrylic    Top 3D

1316.86

USD/Ton

-0.55%

6/5/2019

Polyester    FDY

2257.48

USD/Ton

0%

6/5/2019

Nylon    DTY

2677.14

USD/Ton

0%

6/5/2019

Viscose    Long Filament

1230.04

USD/Ton

0%

6/5/2019

Polyester    DTY

2691.61

USD/Ton

0%

6/5/2019

30S    Spun Rayon Yarn

2409.42

USD/Ton

-0.30%

6/5/2019

32S    Polyester Yarn

1772.70

USD/Ton

-0.41%

6/5/2019

45S    T/C Yarn

2691.61

USD/Ton

-0.53%

6/5/2019

40S    Rayon Yarn

2706.08

USD/Ton

0%

6/5/2019

T/R    Yarn 65/35 32S

2206.83

USD/Ton

-0.33%

6/5/2019

45S    Polyester Yarn

1939.11

USD/Ton

0%

6/5/2019

T/C    Yarn 65/35 32S

2315.36

USD/Ton

0%

6/5/2019

10S    Denim Fabric

1.32

USD/Meter

0%

6/5/2019

32S    Twill Fabric

0.77

USD/Meter

0%

6/5/2019

40S    Combed Poplin

1.04

USD/Meter

0%

6/5/2019

30S    Rayon Fabric

0.61

USD/Meter

0%

6/5/2019

45S    T/C Fabric

0.69

USD/Meter

0%

6/5/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14471 USD dtd. 06/05/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Back to top

Vietnam Can’t Be the Next China

The trade war has been good for Hanoi—but the boom has its limits. The good news is in for Vietnam. Last week the Ministry of Planning and Investment announced that foreign direct investment in the country increased by nearly 70 percent year-on-year in the first five months of 2019, the highest such increase since 2015. Much of that is thanks to U.S.-China trade tensions that have left U.S. firms and others much less certain about investing in the mainland. While Vietnam has been steadily poaching investment from its northern neighbor for years, businesspeople themselves have mentioned the discord between Beijing and Washington as a reason for moving south. Optimism for future growth is omnipresent, with one Quartzarticle going so far to describe Vietnam as a “a kind of China in waiting.” But while Vietnam will likely continue to thrive as it attracts a greater share of high-value manufacturing—Foxconn, the Taiwanese manufacturing giant, may even begin producing iPhones in the country—even the most optimistic outcomes come with important caveats. An investment surge comes with numerous short-term impacts, with new factories raising real estate prices while taxing Vietnam’s improving but nonetheless inferior infrastructure. Demand for skilled workers will also outpace supply if growth moves too fast. These problems will not stop Vietnam’s rise. As one of the world’s fastest-developing countries, its infrastructure will catch up and the quality of its labor force will increase. And while rising land prices may turn away some investors, those least likely to be bothered will be the higher-value industries that Vietnam so desperately wants to attract as part of the so-called Industrial Revolution 4.0. But Vietnam, the world’s 15th-largest country at around 95 million people, simply can never fill China’s gigantic boots in the global supply chain. Vietnam is slightly less populous than China’s southern Guangdong province, the birthplace of Chinese special economic zones in 1979 and still a key component in its manufacturing. Foxconn has its flagship campus in Guangdong, while Chinese tech giants Huawei and ZTE are headquartered there. The province, with its easy access to Hong Kong and coastal ports, is the foundation of China’s role in the global economy. If China’s role in the world’s supply chains starts to be questioned, investment in Vietnam or other aspirants will largely be absorbed from Guangdong. But Vietnam, independent country that it is, has none of the benefits that come with being a province of a vast, economically diversified nation with the world’s largest workforceBut Vietnam, independent country that it is, has none of the benefits that come with being a province of a vast, economically diversified nation with the world’s largest workforce. According to Beijing’s most recent national census, conducted in 2010, around one-third of Guangdong’s population of 104 million were migrants from elsewhere in China. While Vietnam’s rural population of around 65 per cent certainly leaves room for urban migration to bolster manufacturing, the country lacks China’s hundreds of millions ready to travel to fill positions. The factories in the Pearl River Delta churning out iPhones and Nike sneakers can rely on a steady stream of migrants from across China to man the assembly lines, while Vietnam has only itself to turn to. And while Guangdong residents can eat pork raised in Sichuan and rice grown in the Yangtze River breadbasket, Vietnam will not let the Mekong Delta, one of the world’s largest rice-producing regions, go the route of the highly urbanized Pearl River Delta. A more developed Vietnam, conscious of its people’s sentimental attachment to their farmland and notions of self-reliance enshrined in state ideology, would likely follow in the footsteps of Japan and opt for robust, mechanized, and compact agriculture. Farming in Guangdong, by contrast, has been rapidly marginalized since the 1980s and is set to be sidelined further by China’s Greater Bay Area plan, which aims to promote urban-based economic integration between mainland Guangdong, Hong Kong, and Macao. Vietnam, the world’s third-largest rice exporter, will at the very least continue to grow enough crops to feed its own people. It certainly will not be abandoning its tried-and-true rice export trade anytime soon. Despite these limits, Vietnam has many trade advantages over China. Labor costs are cheaper, for now, and the country is a signatory to free trade agreements with South Korea and the 10 other remaining members of the Trans-Pacific Partnership, including Japan, Canada, and Australia. The European Union is also in the final stages of ratifying a free trade agreement with Vietnam. And, despite Vietnam’s $39.5 billion trade surplus in 2018 with the United States, U.S. President Donald Trump has thus far seemed to have taken a liking to Vietnam. While the Hanoi summit between Trump and North Korean leader Kim Jong Un ended in failure, things went far better for the host. Trump appeared pleased when he made time during his visit to watch the ceremonial signing of a combined $15.7 billion purchase of Boeing airplanes by two local budget airlines, with one of the Vietnamese carriers also signing a $5.3 billion deal with General Electric for aircraft engines. Multibillion-dollar purchases of American goods have become something of a tradition when Vietnamese leaders meet Trump. When Prime Minister Nguyen Xuan Phuc visited the White House in May 2017, Trump hailed 13 transactions worth some $8 billion announced during the visit. Six months later, during Trump’s state visit to Hanoi following the annual Asia-Pacific Economic Cooperation summit in Danang, other deals were signed in Trump’s presence, much to his delight, worth $12 billion. Hanoi has seemed to have found the right buttons to push with Trump, who, despite mentioning the deficit incidentally during the 2016 election campaign, mostly says only nice things about Vietnam these days. Should Vietnam continue its upward trajectory toward becoming a developed economy, it may well be in part due to absorbing investment away from China along the way. It has certainly presented itself as a worthy alternative to some of the world’s largest firms in the past year. But it has the neither the capacity nor the need to make its fortune as the world’s factory. As Taiwan and South Korea demonstrated in the second half of the 20th century, there are other ways to get rich. Vietnam’s leaders understand this and foreign investors should take note.

Source: Foreign Policy

Back to top

MOC responds to US statement on China white paper

A spokesperson for the Ministry of Commerce (MOC) remarked Tuesday on the US statement on China's newly-issued white paper, according to the MOC website. The Office of the United States Trade Representative and the U.S. Department of the Treasury made a statement Monday on the white paper, "China's Position on the China-U.S. Economic and Trade Consultations." Neglecting multilateral trade rules, the United States has taken unilateralist and protectionist actions frequently in the name of the trade deficit to trigger China-U.S. economic and trade frictions, said the spokesperson, adding that the United States had also tried to coerce China into accepting its demands in the economic and trade consultations. "This was typical trade bullying," said the spokesperson. "The United States is fully accountable for harming both sides and the world." The U.S. trade deficit with China, affected by many factors, is the result of market effect. The United States has reaped a lot of benefits from its trade with China, and its argument of being taken advantage of is completely untenable, the spokesperson said. Since it took office, the new U.S. administration has disregarded global interests, trumpeted "America First," ignored international duties and responsibilities, abused its state power to suppress other countries' enterprises and disrupted the global industrial chains and supply chains, the spokesperson said. "It is self-evident who has disrespected international rules and who has taken 'unfair trade' practices," the spokesperson said. The white paper elaborated on China's efforts to push forward the economic and trade consultations with the greatest patience and sincerity, the spokesperson said, stressing that the U.S. accusations were totally unwarranted. The U.S. accusations of China backpedalling in the consultations is simply nonsense. It is common practice to make revision suggestions on the wording of a text under discussion in trade talks, the spokesperson said. The U.S. administration has frequently adjusted its demands in the previous rounds of consultations but arbitrarily accused China of backpedalling. Its intention is nothing but to sling mud at China, which is not acceptable to China, added the spokesperson. China always believes that the bilateral disagreements and frictions should be solved through dialogue and consultation, the spokesperson said. Consultation, however, needs to be based on mutual respect, equality and mutual benefit, said the spokesperson. A consultation will lead nowhere if one side attempts to achieve a result solely beneficiary to itself by coercing the other to compromise. China hopes that the United States will stop its wrong actions and make joint efforts with China to meet each other halfway to promote the healthy and steady development of the China-U.S. economic and trade relations, the spokesperson said.

Source: Global Times

Back to top

Trump threatens to ramp up trade war

President Donald Trump threatened to hit China with tariffs on “at least” another $300 billion worth of Chinese goods but said he thought both China and Mexico wanted to make deals in their trade disputes. Tensions between the world’s two largest economies have risen sharply since talks aimed at ending a festering trade war broke down in early May. While Mr. Trump said on Thursday that talks with China were ongoing, no face-to-face meetings have been held since May 10, the day he sharply increased tariffs on a $200 billion list of Chinese goods to 25%, prompting Beijing to retaliate. “Our talks with China, a lot of interesting things are happening. We’ll see what happens... I could go up another at least $300 billion and I’ll do that at the right time,” Mr. Trump told reporters. “But I think China wants to make a deal and I think Mexico wants to make a deal badly,” said Mr. Trump before boarding Air Force One at the Irish airport of Shannon on his way to France for D-Day commemorations. Later, he said he would wait until after a G20 meeting in Japan at the end of the month before deciding on the tariffs. “Additional tariffs on China? You mean, when am I going to put the extra $325 billion worth of tariffs?” Mr. Trump said on his trip to northern France in response to a question from a reporter about when the new tariffs were coming. “I will make that decision over the next two weeks, probably right after the G20,” he said, adding that he would hold talks with Chinese counterpart Xi Jinping at the summit in Osaka on June 28-29. “One way or the other I will make that decision after the G20,” Mr. Trump added. “I will be meeting with President Xi (at the summit) and we’ll see what happens.”

Tribute to war veterans

Mr. Trump also sought to reassure allies rattled by his nationalist rhetoric by saying the bonds between them were “unbreakable” on the 75th anniversary of the D-Day landings. He joined other world leaders in northern France where thousands of well-wishers gathered to pay tribute to the ever-dwindling number of veterans of the famed landings which shaped the outcome of Second World War. “To all of our friends and partners, our cherished alliance was forged in the heat of battle, tested in the trials of war and proven in the blessings of peace. Our bond is unbreakable,” Mr. Trump said in Colleville-sur-Mer. French President Emmanuel Macron, in a pointed message targeting Mr. Trump’s “America First” slogan, said: “America is never as big as when it is fighting for the freedom of others.” Responding to Mr. Trump’s threat on tariffs, China’s Commerce Ministry struck a defiant tone. “If the United States wilfully decides to escalate tensions, we’ll fight to the end,” Ministry spokesman Gao Feng told a regular news briefing.  “China does not want to fight a trade war, but also is not afraid of one. If the United States wilfully decides to escalate trade tensions, we’ll adopt necessary countermeasures and resolutely safeguard the interests of China and its people.” The Commerce Ministry also issued a report on how the U.S. has benefited from years of economic and trade cooperation with China, saying U.S. claims that China has taken advantage in bilateral trade were groundless. “Since the new U.S. administration took office, it has disregarded the mutually beneficial and win-win nature of China-U.S. economic and trade cooperation, and has advocated the theory that the United States has ‘lost out’ to China on trade,” the Ministry said in a research report. “It has also taken the trade deficit issue as an excuse to provoke economic and trade frictions.” Adding to concerns China may target U.S. companies in the trade war, the Ministry last week said it was drafting a list of “unreliable entities” that have harmed Chinese firms’ interests. Mr. Gao said the list did not target specific industries, companies or individuals, and details would be disclosed soon. Companies that abide by Chinese laws and market rules had nothing to worry about, he added. The International Monetary Fund warned on Wednesday that escalating tariff threats were sapping business and market confidence and could slow global growth that is currently expected to improve next year. U.S. Treasury Secretary Steven Mnuchin is scheduled to meet People’s Bank of China Governor Yi Gang this weekend at a gathering of G20 finance leaders in Japan, the first face-to-face discussion between key negotiators in nearly a month. Mexican and U.S. officials are also set to resume their talks in Washington on Thursday aimed at averting an imposition of tariffs on Mexican goods. After saying that “not enough” progress on ways to curb migration was made when the two sides met on Wednesday, Mr. Trump said on Thursday that Mexico had made progress in the talks but needed to do more. He reiterated that 5% tariffs on all Mexico's exports to the United States due to start on Monday would go ahead if progress was not made. The tariffs can rise to as much as 25% later in the year. “Mexico was in yesterday. They're coming back this morning... I think a lot of progress was made yesterday, but we need to make a lot of progress,” Trump said. “They have to step up and they have to step up to the plate and perhaps they will.”

Source: The Hindu

Back to top

 

 

Subscribe to SRTEPC mailing list

Exchange Rates