Hi Ron, Please know that I am definitely not engaging you in an argument. I answer because you post to me.
<<Yes, but political risk is the overriding issue here>>
What political risk? You mean the risk of messing with comparative advantages and natural trade flows, or you mean making CNN make folks not happy, or do you mean messing with the natural trade flow so as to make folks poorer all around while shopping at CostCo, even while making them happier via CNN?
The specific example of industrial cutting blades was chosen for a reason, but is one of many similar examples ... China is THE largest producer of such blades, ex-factory price China as finished goods is significantly cheaper than wholesale/retail price in industrialized countries. The China exports are treated as semi-finished only due to fineness of polish and markings. The blades are used for the wood, paper and plastics industries. The Chinese manufacturing capacity were mostly bought up and consolidated by a German company controlling much of the world's distributions. The German company's subsidiary in the US is substantial, largest US player in the industry, in employment and in gross revenue. Stopping this trade flow will simply mean no blades for a while, and expensive blades there after.
<<There is no reason that all of these components need to be built in China>>
The blades are built in China because China is both (by far) the cheapest supplier, as well as a major user.
For all things GE source from China and also source from elsewhere, China is the equal (GE) quality and lowest cost supplier. GE's operations in China is limited only by GE's willingness to finance working capital of its suppliers. Should GE stop, ABB will gladly take over. Now you know why China is not really worried. America has no effective allies in its interference in China.
<<make use of cheap labor, and open our access to their potentially huge market>>
Yes, and thus comparative advantage, as opposed to producing in India or Brazil.
<<But if the risk grows too high, then US businesses may find it conducive to move elsewhere, such as Latin America>>
Business Week, and Economist trots Latin America and Eastern Europe, and India out on a regular basis as viable alternatives to China, and have done so for the past 20 years.
In this and many similar cases, US businesses have little if any leverage. What the US must understand, eventually, is that no industrialized country is as bent on containing China as the US is, and so the embargoing of China by the US has never ever worked. Total absolute waste of time and effort.
<<Bottom line is that China is still governed by a totalitarian system of communist party aristocrats, who claim to be implementing capitalist reforms>>
Yes, all true, but not only claim, even reality. I live it, and so does Motorola. What many folks in US fail to realize is that the Chinese government has the support of the majority of its people. Watching CNN and following development of the Falun and such gives a false message, and provides a false comfort to some.
<<If you're not a member of the party, you have little influence, except with the money and favors you can direct their way>>
And thus the middle class born, everywhere in the world, bar none, even in the US. Like I said, in many ways China is at where the US was in the 1920s. Not bad for a country embroiled in a messy transition for 200 years.
<<I've yet to see a totalitarian system make the peaceful transition to democracy>>
Oh, start with Hungary, stop with Taiwan, making sure not to skip over Korea, and do not step on United Kingdom.
<<playing the nationism card will only go so far when the system is inherently inefficent, corrupt, and considered politically risky>>
This card has so far not been played except by CNN reporting.
<<I think China is trying to escalate this far beyond is required>>
This is simply an extension of the same game that the US started by snooping. The game continues because it will never end, as long as the big picture I described earlier is in place.
<<I just saw that the pilot of the second plane ... tapes will provide irrefutable proof that the Chinese pilot was acting recklessly and crowding the slower, lumbering US plane...This will put the Chinese government in a position of either claiming the tapes to be an outright fabrication, or losing even more face by admitting what logic suggests is obvious>>
You are jumping into a series of deductions, and even if true, is not relevant to the game at hand. I said there is no right, wrong, but just is.
<<chinese party bosses need to back off and just let this thing cool down or they are going to create a situations where it will spiral out of control>>
I think both sides are doing their best under the circumstances, and the situation has a solution, and a relatively easy one at that, as I state in earlier post. Getting there takes time, else the leadership on both sides are not doing their jobs.
<<the US will not apologize for flying in international waters and being harassed>>
The lawyers and diplomats will work on this puzzle for a bit. While I see ways out, I frankly do not see an obviously easy way out, but I lack imagination.
<<It would be tantamount to the victim of a rape admitting that she was "asking for it" by walking down a dark alley, and being charged with murder because the mugger accidently shot himself while trying to harass her.>>
A dramatic but false analogy. Because here the 'rape victim' killed some guy, got hurt in the process, and ended up in the dead man's home requiring help, and has been and continues to plan on delivering sacks of deadly arms to the man's neighbor who holds a grudge against the man and his family. The nature of the grudge predates any high principal justification, has little to do with the 'rapee' and the help rendered is only to act as a nusance to the development of the guy's family.
Again, no rights, no wrongs, just is.
<<I think the analogy is pertinent>>
and therefore I think not.
Chugs, Jay |
