Q. 134.7( 3 Votes )

In recent years China has been importing steel from India. Explain how the import of steel by China will affect.

(a) Steel companies in China

(b) Steel companies in India.

(c) Industries buying steel for production of other industrial goods in China.

Answer :

(a) The steel companies in China will face serious competition from the import of steel from India. The competition will increase very rapidly. Chinese producers will have to compete with Indian producers thus improving the quality of their domestically produced steel. This greater competition will result in the improved standards of the products produced at a lower price.


(b) The steel companies in India will be benefitted by the import of steel from the country. This will increase their revenue. Also, they will be compelled to increase the quality of the steel produced in the country to maintain and increase the quantity exported. The production of steel will increase as companies will increase their production. But this excess production will finally result in a reduction in the price of steel.


(c) The Chinese industries buying steel for further production will be the ultimate beneficiaries of this increased imports of steel. With the import of steel Chinese producers because of the increased competition will have to improve the quality of their domestically produced steel. This will result in the improved standards of the products produced at a lower price. The production of steel will increase as the Indian companies will increase their production due to the higher export demand. This will finally enable the companies to procure better quality steel at a lower price.


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