Economics
How will the import of steel from India into the Chinese markets lead to integration of markets for steel in the two countries? Explain.
Answer
The import of steel from India into Chinese markets can lead to integration of markets for steel in both countries in the following ways:
- Increased Trade Relations: When China will import steel from India, it will create a direct economic link between the two countries. Such trade fosters closer economic ties and encourages ongoing business relationships between Indian steel producers and Chinese buyers.
- Market Stability: Both countries benefit from diversifying their sources of steel. If one country faces shortages or price fluctuations, it can rely on imports from the other to stabilize its market.
- Technology and Knowledge Exchange:The exchange of knowledge and technology can lead to improvements in efficiency and product quality.
- Price Competition: Increased competition due to imports can drive down prices or encourage innovation in both markets. Indian as well as chinese steel producers may need to improve their efficiency and cost-effectiveness to compete with each other, benefiting consumers in both countries.
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