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Scape Goat

Given the world is on the brink of a serious collapse?the situation in the US isn?t much better than Europe?the last thing it needs is a trade war.

Given the world is on the brink of a serious collapse?the situation in the US isn?t much better than Europe?the last thing it needs is a trade war. Yet that?s precisely what?s in danger of happening. With the US desperate to find a scapegoat for its reckless lifestyle, the US Senate has voted to push a bill that would impose tariffs on Chinese imports, if China doesn?t revalue the yuan to acceptable levels. Whether the US will actually do this is a big question, considering how costs to US consumers will go up as the yuan appreciates, but US politicians are desperate right now. The timing, of course, is ironic, since China?s yuan is appreciating while most other currencies are depreciating against the dollar. In any case, there is no guarantee that US jobs will go up if the yuan appreciates, since Chinese exports may simply be substituted by those from other countries.

As far as India is concerned, this is a great opportunity for it to edge into the space China has occupied. But the question is, will it, or will it get outplayed by its Southeast Asian neighbours, as happened in the case of textiles?

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First published on: 05-10-2011 at 02:11 IST
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