Thursday, April 22, 2004
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China cuts a trade deal
The Financial Times reports that China has made numerous trade concessions in a deal with the United States:
Chinese central bank officials have also indicated that they plan to shift the renminbi from a fixed rate to a floating rate:
Question to those advocating greater protectionism towards China -- are these concessions sufficient? If not, what else?posted by Dan on 04.22.04 at 11:45 AM
“In addition, China agreed to accelerate plans to make it easier for US companies to export and sell directly into China by eliminating laws that forced foreign firms to work through Chinese state trading enterprises.”
This part excites me the most. The beginning of the end of a dictatorship is when the insiders are no longer getting the best contracts. I am getting more cautiously optimistic all the the time. Yes, Richard Nixon did at least one thing right during his time in the White House. Now when will President Bush do a “Nixon in China” regarding the legalization of mind altering drugs?posted by: David Thomson on 04.22.04 at 11:45 AM [permalink]
Yes, but will the Chinese government simply create ways to get around this legislation? I agree that if this works out its a step in the right direction, but if its not going to be worth the paper its written on, then its not going to matter either way.posted by: sam on 04.22.04 at 11:45 AM [permalink]
More pertinent question: how long before the Democrats accuse the Chinese of handing this deal to Bush six months ahead of the election? My guess is that no Chinese leaders were among the anonymous set who told John Kerry he was their man.posted by: Kelli on 04.22.04 at 11:45 AM [permalink]
China also agreed to renew efforts to crack down on illegal pirating of US movies, software and music, with Beijing pledging to step up criminal actions against companies that produce, import or export counterfeited goods.
Déjà vu, many times, in fact. This item is a good talk, mostly. Reminds me of the periodic "trade concessions" the Japanese gave us on the car trade. I can't speak too much on the other items, though some of the significant items (like currency floating) seem to be postponed to an undisclosed date in the future.posted by: ch2 on 04.22.04 at 11:45 AM [permalink]
Looks and smells like a fig leaf the Bushies want to put out there to cover against Dems/Kerry blame for $120B trade deficit with China. Of course Kerry & Co. conviniently forget that it was $100B under Clinton.
Chicoms say it is good, no timetable.
2. Intellectual Property theft
Promise # 103 that they will crack down.
3. Direct investment
Instead of a formal partner, US companies will be assigned an "informal" partner.
4. Wireless Standards
What is monetary value of that?
The wireless standard deal is actually potentially worth much more than $15 million. The standard in question is the encryption/security component of the WiFi system. The Chinese proposal, requiring the use of an indiginous security standard, could have locked non-chinese companies out of the local market for WiFi gear, potentially worth billions. Though that's still only a small part of overall trade between the US and China, it does mark a small but potentially important precedent. China has been pushing home-brew standards in many areas of the wireless communications space in order to give local equipment manufacturers a significant advantage in the Chinese market (these manufacturers are often involved in developping these standards in the first place). Another example is a chinese developped standard for 3G wireless systems. Any retreat from this approach bodes well for American telecom equipment players.posted by: ramster on 04.22.04 at 11:45 AM [permalink]
Also absent from the discussions is China's labor policies. The A.F.L.-C.I.O. filed an unusual trade complaint last month asking President Bush to punish China for reportedly gaining a commercial advantage in trade through violating workers' rights. The unfair measures, according to the complaint, include suppressing strikes, banning independent trade unions and not enforcing minimum wage laws.
The 103-page AFL-CIO petition runs through an array of statistical analyses to come up with its figure of 727,000 displaced American manufacturing jobs. But its foremost achievement may be to encapsulate the vast literature that describes the part-feudal, part-communist labor system in which Chinese peasants must labor when they go to work in China's export-sector factories. Under China's hukou system of household registration, citizens must live and work in the place where they are permanently registered, normally their place of birth. Every household is designated as rural or urban, a distinction on which a caste system has been erected.
Urban workers are free to apply for and leave jobs; they are entitled to state housing and pensions. Rural workers, however, need state permission to seek work in towns and factories. Once employed, they enter a bonded-labor arrangement in which they cannot quit unless they can pay their employer an amount plainly beyond their means. The hukou system forbids them to compete with urban workers for higher-paying jobs, and migrant workers without jobs are subject to arrest by the state's public security bureau.
By state design, then, these workers have no power to affect their conditions of work. Though productivity in China has skyrocketed, they are routinely paid rural-level subsistence wages -- as little as 15 to 30 cents an hour -- when they are paid at all. Employers tend to recruit childless, young, single women, whom they pack into cement-block dormitories to which the women are commonly restricted when they're not on the factory floor. They cannot leave. They organize at the peril of imprisonment or torture.
China has 160 million workers in manufacturing and mining, nearly 12 times the U.S. total. The Organization for Economic Cooperation and Development estimates that 20 million peasants will enter the urban workforce every year for the next 20 years. This is, make no mistake, the planet's proletariat -- and it in no way resembles the kind of free labor force we take for granted in the United States. Those U.S.-based corporations that invest in Chinese factories -- a long list headed by Wal-Mart -- owe some nice chunk of their profits to a workforce toiling, to resurrect a line from Mao, under "the barrel of a gun."
DD asks "Question to those advocating greater protectionism towards China -- are these concessions sufficient? If not, what else?"
Our protectionist ag subsidies will continue to pummel third world farmers and we won't use our trade partnership with China to pressure them to create free labor markets, but at least our DVD's will be safe for a few weeks. I guess that's all anyone could ask for.posted by: Marc Brazeau on 04.22.04 at 11:45 AM [permalink]
"Our protectionist ag subsidies will continue to pummel third world farmers and we won't use our trade partnership with China to pressure them to create free labor markets, but at least our DVD's will be safe for a few weeks. I guess that's all anyone could ask for."
is the only text that I am responsible for writing.posted by: Marc Brazeau on 04.22.04 at 11:45 AM [permalink]
The lack of protectionist laws against China is what is or will force the US corporations to upgrade, develop new factory equipment that they will then use to compeat with China. ie. go from manual to automated or from automated to computerizes equipment.
So, the question is Do you want to protect the old outdated equipment factories or do you want new technology, competitive, next generation factories? If it is the former, then the 2nd and 3rd world countries will catch up, economicaly, faster with the USA manufactoring sector and our standard of living will decrease faster. Our trade deficet will increase, the national Debt will go up far higher.....posted by: Jim Coomes on 04.22.04 at 11:45 AM [permalink]
According to Stephen Roach, China has not a shred of interest in floating the yuan -- straight from the mouth of Wu Xiaoling, Deputy Governor of the People's Bank of China.
Dan, you need to re-evaluate in light of better evidence.posted by: General Glut on 04.22.04 at 11:45 AM [permalink]
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