Thursday, December 10, 2009

China's "Protectionism," Bad for Business? It Makes for Thriving Economy and Higher Wages

First,I admit to not being a professional economist, and not an expert on China. But what I do know is that China has tough import and foreign ownership policies. These factors "protect" their market, like tariffs did for the U.S. and do now in China, stabilizing job growth and wages.

If Republicans are right about regulation and taxes penalizing and discouraging business here in America, why are those same businesses moving to China, with their tariffs and strict corporate regulations (other than slave labor)?

As Americans stop consuming under the pressure of low wages and job cuts, China is doing just the opposite, as explained in this piece from Keith Bradsher in the NY Times:
China — For the first time, Chinese will buy more cars this year than Americans. For an increasing number of consumer goods, China is surpassing the United States as the world's biggest market — from cars and refrigerators to washing machines and desktop computers. For the first time, China, not the United States, is the locomotive helping to pull the global economy out of recession. But China's tiny appetite for American exports means that the main benefit has gone to commodity exporters and to businesses in China.

China has also moved ahead of the United States in sales of desktop computers, buying 7.2 million the third quarter compared with 6.6 million in the United States. Credit card spending rose 40 percent in the first nine months of the year compared with the same period last year, yet China still has just one credit card for every eight people, compared with an average of two credit cards for each American man, woman and child.

When car sales began surging this year, many auto executives attributed the boom to government incentives. To stimulate the economy, the government has offered rebates for rural families to buy cars and household appliances, and has cut sales taxes on cars with small engines.
Nissan produces the car in China for the Chinese market. The company cannot import the Teana manufactured at its factory in Japan because the technical specifications are slightly different for the Japanese market and because China still has steep tariffs on imported cars.

China's consumers have the potential to spend even more in the years ahead. The savings rate is close to 40 percent, and though annual incomes still average just $2,775 a person in cities and $840 in rural areas, Western economists predict the economy will grow almost 12 percent in each of the next two years.
It's not complicated, unless you're listening to the convoluted ranting of conservative ideologues.

The government is like a business with employees, departments and budgets. It has a strategic interest to manage the entire economy. Individual businesses have no such national obligation or interest. They are there to make a profit.

China has a country wide economic plan, admittedly extreme in many ways because it is a Communist nation after all, while America allows businesses to call it's own shots without the national interest as a consideration.

The free market has made the U.S. a beggar for business in the global economy, instead of valuable consumer market corporations should be bending over backwards to serve.

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