In a bid to allay growing concerns over cheap exports undercutting domestic producers, China’s ambassador to India, Xu Feihong, has emphatically assured New Delhi that Beijing will not resort to market dumping as a tactic of its ongoing trade dispute with the United States. Writing in a prominent Indian newspaper, Xu framed China’s strategy as one driven by expanding domestic consumption rather than by diverting goods to overseas markets at artificially low prices.

Xu’s statement comes amid a tit-for-tat escalation of tariffs between Washington and Beijing that has seen duties on some U.S. and Chinese products exceed 100 percent. International observers have warned that, as Chinese exporters face higher costs in the U.S., they could seek to offload surplus inventory in third-country markets such as India, Turkey or Southeast Asian nations—threatening local industries already grappling with thin margins and uneven demand.

India, the world’s second-largest producer of crude steel, has already moved to protect its domestic mills. Last week, New Delhi imposed a 12 percent safeguard duty on certain steel imports, primarily targeting shipments from China, which account for a significant share of India’s total steel imports. The measure is part of a broader package of trade-defense actions New Delhi has adopted in recent years, including anti-dumping duties on solar panels, chemicals and pharmaceuticals sourced from China.

In his editorial, titled “Stand Up to Punitive Trade Tactics,” Xu argued that China’s immediate priority is to rebalance its own economy by boosting household spending and strengthening internal supply chains. He noted that over the past decade, China has implemented policies to raise wages, expand social safety nets and open up its services sector—efforts that have steadily eroded the surplus capacity that once fueled aggressive export growth.

“China strictly adheres to World Trade Organization disciplines and market rules,” Xu wrote. “We will not engage in dumping practices or predatory pricing, nor will we seek to disrupt the industrial development or economic stability of any nation, including India.” He added that Chinese firms have been instructed to pursue fair competition, innovate higher-value products and avoid contributing to global oversupply.

India’s commerce ministry, which did not immediately comment on Xu’s assurances, has for years maintained a watch list of products for which Chinese imports must be monitored for price distortions. In addition to steel, New Delhi has slapped provisional anti-dumping duties on alkaline chemicals, bicycle parts and certain rubber products—moves that reflect consistent complaints from Indian producers about pressure on domestic prices.

Trade analysts in New Delhi welcomed Xu’s commitment as a positive signal but cautioned that words must be matched by verifiable action. “India needs transparent data on Chinese export volumes and pricing,” said a senior economist at a leading think tank. “A formal mechanism for sharing monthly shipments, unit values and production capacity would help regulators detect any covert dumping before it inflicts damage.”

Bilateral trade between India and China has surged over the past decade, swelling to nearly $150 billion in 2023, making China India’s largest trading partner. However, India runs a substantial goods deficit, importing everything from electrical machinery and organic chemicals to finished steel products. Indian industry groups say this trade imbalance has been aggravated by a flood of low-priced Chinese goods, especially after companies expanded capacity to offset lost U.S. sales under higher American tariffs.

In response, New Delhi has tightened scrutiny over Chinese investments in strategically sensitive sectors such as telecommunications, power generation and port operations. A 2020 border clash along the Himalayan frontier prompted India to curtail approvals for Chinese acquisitions and to require additional security clearances—a move that has slowed some greenfield projects but leaves stock-flow of manufactured imports largely unchecked.

Against this backdrop, Xu’s pledge represents part of a broader diplomatic thaw between the two Asian neighbors. Earlier this month, President Xi Jinping and India’s President Droupadi Murmu exchanged congratulatory messages commemorating 75 years of diplomatic ties, with Xi emphasizing the importance of “mutual respect, win-win cooperation and stability in the region.” Both sides have signaled interest in reviving stalled negotiations on a bilateral trade agreement that could include enhanced market-access commitments and tariff liberalization over time.

Chinese trade envoys have also proposed expanding purchases of key Indian commodities—such as cotton, sugar, pulses and wine—to help narrow the bilateral deficit. In official talks, Beijing has floated the idea of duty-free quotas for selected Indian goods, conditional on New Delhi’s continued restrictions on items deemed security-sensitive. Indian exporters, particularly in the agriculture and processed-food sectors, have warmly received this overture, noting that it could open new markets and reduce reliance on volatile Western demand.

For Indian manufacturers, Xu’s assurances will be tested by real-world import flows in the coming months. Steel mills in Jharkhand and Odisha are watching closely to see whether Chinese rebar prices soften or steady. Producers of solar cells in Rajasthan expect New Delhi’s trade investigators to keep a vigilant eye on module costs, ensuring that any Chinese price advantage reflects genuine efficiency improvements rather than dumping.

Consultants say that the best way to enforce China’s commitment is through enhanced data-sharing protocols between customs authorities. Under such an arrangement, Chinese export statistics—customs-cleared quantities and declared values—would be made available to Indian regulators in near real time, allowing price comparisons and volume trend analysis. A pilot program along these lines has already been tested between South Korea and India, yielding a 15 percent faster response time in anti-dumping investigations.

Industry associations on both sides have floated the idea of an annual India-China Trade Forum, where government officials, business leaders and trade experts convene to review market developments, address grievances and propose joint solutions. Proposed topics range from compliance with WTO subsidy rules to cooperation on standards certification and digital-trade facilitation, reflecting a shared interest in keeping commerce flowing even as broader geopolitical tensions simmer.

Beyond steel and solar, other sectors under the radar include electronics, where Indian assemblers have faced stiff competition from Chinese mobile-phone imports, and pharmaceuticals, where generic producers in India have argued that Chinese suppliers of active pharmaceutical ingredients sometimes undercut global norms. Xu’s promise of fair play is likely intended to calm nerves in these industries, many of which were caught off guard in 2023 when Chinese exports rose despite tariff hikes abroad.

On the diplomatic front, the two governments are exploring a mechanism for “zero-duty” corridors on a select list of goods, to be reviewed biannually. This list might include specialty chemicals, precision machinery and medical devices—areas where India boasts competitive strengths and China has complementary manufacturing capabilities. Such corridors could serve as a confidence-building measure, demonstrating that neither side will weaponize trade policy indiscriminately.

As talks progress, observers note that the credibility of China’s assurance will depend on consistent odorless enforcement rather than periodic public statements. Regular dialogue between customs chiefs and joint working groups on anti-dumping, they argue, can provide a forum to resolve disputes before they escalate. India may also consider inviting the WTO’s anti-dumping unit to provide technical assistance, further underscoring both countries’ commitment to rule-based trade.

For now, Xu Feihong’s editorial stands as Beijing’s most explicit public guarantee yet that Chinese exporters will not flood markets abroad with underpriced goods. With India’s economy aiming for rapid growth and infrastructure expansion, the stakes are high: unfair competition could derail capacity investments and erode producer margins. But if China follows through—with robust data-sharing, transparent pricing and a verifiable mechanism for handling disputes—both nations stand to gain from a stable trading partnership grounded in mutual trust and shared prosperity.

(Adapted from BusinessToday.in)

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