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1, Why subsidy and dumping is closedly linked ?

What are the economic case for the use of


dumping in international trade? Do you think Nations use this with strategic purpose ? Give your
arguments with case study in China:
+ Why subsidy and dumping is closedly linked?
Dumping and subsidies will help balance the economy.
For example:
when international enterprises import goods into Vietnam but devalue, offering prices lower than 
the general price of the domestic market, it makes domestic businesses will be
 un-profitable or very difficult to consume goods without subsidies
Or:
 the business/is devalued by the supplier of raw materials to push up the price of products to the 
highest. then the enterprise can be in stock, unable to consume the product, causing
losses and bankruptcy.
So the state   must introduce subsidies to reduce costs and reduce the risk to manufacturers when 
bringing goods to market. .
Inshort, anti-dumping and anti - subsidy are two instruments act against unfair trade practices .
Safeguards aremeasures designed to give an industry time to adjust to a significant increase in
imports.
(In the case of anti-dumping and anti-subsidy, duties are applied to neutralise the effect of unfair
competition. In the case of safeguards, it is an unforeseen, sharp and sudden increase in imports
which calls for the use of this instrument. Safeguards are used in order to give industry a
temporary breathing space to reduce the pressure of imports, in order for it to be able to affect
restructuring. When applied, safeguards affect imports originating in all countries.)
+ What are the economic case for the use of dumping in international trade?
Some studies have shown that dumping within the definition is the sale of goods at a price lower
than the normal price, which may stem from the purpose of solving difficulties in trading and
dumping in order to implement a market strategy to explain the economic basis of dumping,
Researchers often divide dumping into the following groups:
i) Dumping to solve difficulties in trading
- sporadic/over-capacity dumping is
a case of the manufacturer selling the product at a low price in order to aim to release 
excess capacity
- Dumping to compete is the cause of the nature of the market economy due to the price
having to change according to the supply and demand relationship. In many cases, in
order to be able to compete in a market, exporters are forced to make discounts to the
same extent as other suppliers to maintain the market.
ii) Dumping to implement a market strategy
- Dumping to gain market share Some companies export goods at low prices in order to
gain a higher market share in the import market.

- Predatory dumping is a concept of a price-segregation strategy aimed at removing


competitors from the market.
+ So I think China use this with strategic purpose. Because:
- Chinese manufacturers produce different qualities of a product for different markets
including poor quality cheap goods for low-income countries.
- Fox example: It is well-known that a large number of low-priced shoddy and
spurious products from China are flooding Indian markets. The deluge of imports
from China has adversely affected India’s manufacturing sector, particularly micro
and small industries. Dumping by China has forced many industrial units to operate
at below capacity levels and in some cases to shut down. This has negatively affected
local employment.  China is not recognized by WTO as a market economy mainly
because of the lack of transparency in its trade policy.

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