Dean Baker argues that what the president considers a winning deal with China is a good deal for US transnational corporations but a bad deal for American workers. Moreover, it only s good deal short term for corporations and likely a bad deal longer term.
What Baker doesn't mention is that the hardline approach to China that the Trump administration is taking on all levels is looked upon in China as must more Western humiliation of the oldest continuous civilization on the planet. The Chinese are particularly incensed that they are being humiliated by upstarts.
The Chinese press is playing this hard, and the Chinese people are very nationalistic. Moreover, humiliation has a very different cultural significance in China than it does in the West, which the Chinese regard as being shameless.
As China transits from an export-led economy to a consumption-driven one, the preferences of Chinese consumers will be crucial in the global economy. Rapid growth is taking place in emerging economies while developed economies are either plateauing or stagnating, with financialization taking over, inequality rising, and workers share declining.
The perception of Chinese workers will make a difference going forward. Until recently, America was an ideal to be emulated and American products were considered highly preferential by a rising middle class. That is about to change for several reasons.
The first reason is, like Japan, when China entered the market, it's products were inferior. And, like Japan, over time that changed so that now Japanese products are considered top grade. The same is happening within China and it will spread into the global economy. This is just the natural course of events and to be expected.
The second reason reason is that cultural perception counts in markets. Since imposition of sanctions, Russia has practiced import substitution. At first, the substitutes were inferior to imported goods, but that changed rather quickly with innovation and leapfrogging. Now Russia has a largely self-sufficient economy and is becoming a major exporter as well.
Sanctions are likely to have a similar effect in China, and even more so than in Russia, since the Chinese market is unique. For example, Western companies have difficulty anticipating what Chinese consumers prefer because "utility" is partially cultural. Chinese and Western culture and values are far removed from each other.
In Russia, the major factor in the shift of cultural perception away from the U occurred when the Clinton administration bombed Serbia and NATO put troops on the ground in the former Yugoslavia, a Soviet ally. At that moment, everything changed, from President Yeltsin down to the street. Yeltsin
s choice of Putin as a successor can be traced to this, for example. Of course, the rest is history as the US-led NATO began its advance toward Russian borders and projected Russia as an enemy, with Putin reacting as Yeltsin expected.
Something similar is happening with China, beginning in earnest with the Obama-Clinton pivot of US the US military to contain perceived Chinese expansion. China has been designed publicly as one of America's chief adversaries along with Russia.
These factors are bound to have an effect on cultural perception in China and also affect the preferences of Chinese consumers for American goods. This is a shortsighted approach that is likely to affect world trade in the coming years, long after the departure of the Trump administration. When trust and respect are lost, they are difficult to recover.
This is not heading in a good direction.
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Chinese Imports From The US Plummet 25% As Trade War Takes Toll
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Beat the Press
Trump and China: Going with Patent Holders Against Workers
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C
Trump and China: Going with Patent Holders Against Workers
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C
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Barry Eichengreen | Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund
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econintersect
Trump-Xi Truce: Will It Have An Affect On The Global Economy?
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Reuters
China calls on Canada to free Huawei CFO or face consequences
You can see why I'm getting more into quantum physics, mysticism and spiritually recently, this place is just too evil. I'm trying to balance the dark with the light.
ReplyDeleteI’m no fan of Trump, but I think he has a point, at least to a certain degree. If you want to sell American products in China, the tariffs are extreme. Tariffs in China are far higher than tariffs charged by other countries for Chinese goods. Chinese shipping is state-subsidized. Trump’s point is that there is unfairness or inequality between the way China is treated, and the way China treats others.
ReplyDeleteOf course, the West has only itself to blame for this. The West created China’s power by moving its factories to China.
More to the point, China is looking out for China, whereas the money powers in the West care only for themselves at the expense of their nations. As Tom indicates, the money powers are shameless. This is one reason why China is gradually eclipsing the West. Dean Baker says the Chinese economy is already close to 25 percent larger than the U.S. economy, and will be almost twice as large as the U.S. economy in a decade. (Baker is talking about the real economy, not the financial economy.) Baker also says that China invests a considerably larger share of its GDP in research and development than does the USA, where the mania is for executives to get rich via stock buybacks (which were illegal in the USA until 1982).
China wages economic warfare by improving quality and production. The West wages economic warfare by creating monopolies, rigging legal systems, indebting and impoverishing competitors, arbitrary enforcing and ignoring treaties, and abducting Chinese executives abroad.
Western hypocrisy is infinite. Where there is no shame, there is no honor.
The West is doomed by its own shameless corruption, and all it can do is lash out and throw tantrums.