China's busy week from a business perspective saw it announcing plans to offer loan specifically in its currency (re: NOT the dollar) exclusively to BRICs members and being hit with a WTO suit emanating from three continents worth of nations unhappy with its trade practice. Perhaps the most interesting matter, however, was China successfully pressur ing India to turn over on a just-introduced product export ban.
Last week, India shocked markets with an announced ban of cotton and like-fiber exports. Despite textile manufacturers’ requests for assistance, as the commodities market activity has caused massive pricing problems for its domestic business, China’s high consumption demand seems to have won out just days later.
In a bit of a show of power last week, China howled at the new ban to the extent that it was overturned in less than seven days. For its part, Indian officials went into damage control mode, saying their decision to acquiesce on the ban was rooted more in complaints from its own domestic growers over pricing damage than of outside criticism. Most market-watchers aren't seeing it that way.
India’s previous ban on cotton exports in April 2010 caused a notable pricing surge, and a new one appeared to be forming again until Chinese interests essentially put the kybosh on the effort. The chain of events comes at an interesting time since representatives from both governments will take part in a BRICs summit to be held in India in late March. Brazil, Russia as well as faux-BRIC member South Africa will also send officials to the meeting.
(Note: More on various business- and credit-related happenings in China in this week's eNews, available late Thursday afternoon at www.nacm.org).
Brian Shappell, NACM staff writer