Ornery.org
  Front Page   |   About Ornery.org   |   World Watch   |   Guest Essays   |   Contact Us

The Ornery American Forum Post New Topic  Post A Reply
my profile login | register | search | faq | forum home

  next oldest topic   next newest topic
» The Ornery American Forum » General Comments » Why all the China-Bashing?

 - UBBFriend: Email this page to someone!    
Author Topic: Why all the China-Bashing?
David Ricardo
Member
Member # 1678

 - posted      Profile for David Ricardo     Send New Private Message       Edit/Delete Post   Reply With Quote 
First, the Chinese make a surprising bid for U.S. oil company Unocal:

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8888433

quote:
WASHINGTON, June 24 (Reuters) - Deep misgivings about China's rising economic and political clout have helped fuel political resistance to a major Chinese oil company's bid to buy U.S. producer Unocal, experts said on Friday.

State-owned CNOOC Ltd.'s (0883.HK: Quote, Profile, Research) $18.5 billion bid for Unocal Corp. (UCL.N: Quote, Profile, Research) on Wednesday, topping Chevron Corp.'s (CVX.N: Quote, Profile, Research) roughly $16.4 billion offer, came under swift fire from U.S. lawmakers, who are calling for stringent investigations into the transaction even before a deal is reached.

The Unocal issue arises at a time of record oil prices, unease over China's $160 billion trade surplus with the United States and an appetite in Congress to punish China with tariffs unless it revalues its currency.

U.S. defense officials are embroiled in a debate over how to evaluate China's military. The Pentagon's annual report on China's military modernization has been delayed for weeks in an apparent dispute over how stark a picture to present.

Mikkal Herberg, an analyst at the National Bureau of Asian Research in Seattle, said there were solid reasons to examine the financing of the Chinese firm's bid and ask whether it was a commercial transaction or an effort to corner oil supplies.

Unocal is the ninth largest U.S. oil and gas production company.

"But this combines with all these other concerns about China -- currency, trade deficit and other things -- to make another reason for China-bashing, which I'm worried about."

REJECTION 'HORRENDOUS'

"If CNOOC wins the bidding war, then the government steps in and ultimately turns it down, that's going to be just a horrendous episode in U.S.-China relations," Herberg said.

Top U.S. officials assert that U.S.-China ties have rarely been better, with cooperation on anti-terrorism and in diplomatic efforts to end North Korea's nuclear arms programs. China is host of six-party talks on North Korea, which also include the United States, South Korea, Japan and Russia.

The administration of President George W.Bush, who will meet Chinese President Hu Jintao several times this year, has repeatedly staved off protectionism aimed at China.

Zheng Bijian, a Chinese Communist Party opinion leader, toured the United States last week and met senior government officials with the message that China was seeking a "peaceful rise" in its international position that would not challenge U.S. interests.

Brookings Institution scholar Kenneth Lieberthal, who handled China policy in the Clinton White House, said the political calm with China Bush enjoyed from the Sept. 11 attacks through his re-election was giving way to tension.

"The top leaders of both counties continue to want the relationship to work well, but the politics of the relations below the highest level are becoming tougher," he said.

"We are fully engaged and yet there is a question as to how much we can trust each other's intentions, so when politics become tougher in one capital, that underlying distrust on the other side gets more horsepower behind it," Lieberthal said.

LONG-TERM FLASHPOINT

China's dramatic emergence has added to long-term troubles, such as the status of Taiwan, over which Beijing claims sovereignty but which Washington supplies with defensive arms.

China's intensifying quest for oil to fuel its surging economy has led Beijing to embrace energy-rich countries the United States shuns, such as Iran and Sudan. If CNOOC does succeed, it would be the biggest overseas acquisition by a Chinese firm.

"They are paying a price for access to (oil) markets which may not be in anybody's interest, like providing the Sudanese and the Libyans with advanced weaponry," said Richard D'Amato, chairman of the U.S.-China Commission, which advises Congress.

Lieberthal said the Unocal bid marked a potentially good way for China to secure "non-rogue" oil supplies, and a rejection could drive the Chinese closer to the pariahs.

Some observers see hypocrisy in U.S. officials complaining about investment barriers in China but crying foul when Chinese firms want to buy U.S. businesses.

But Gal Luft, executive director of Institute for the Analysis of Global Security, said it would be "suicidal" at a time of $60-a-barrel oil for the United States to let a Chinese state-run firm control oil sources by buying Unocal.

"It's not the government of Japan or France," he said. "We want to think about the fact that an American company falls in the hands of the Communist government of China."

Meanwhile, Congress is going crazy with anti-China hysteria:

http://www.washingtonpost.com/wp-dyn/content/article/2005/06/23/AR2005062302065.html

quote:
Political fears of China's economic might intensified yesterday following China's unsolicited bid to take over a U.S. oil company, with lawmakers from both political parties warning that Congress will take retaliatory action against Chinese trade practices if the Bush administration fails to respond.

Under a barrage of questions, Federal Reserve Chairman Alan Greenspan and Treasury Secretary John W. Snow warned the Senate Finance Committee against punitive legislation that could trigger a trade war and ultimately harm the U.S. economy.


A trader leaves the floor of the Hong Kong Stock Exchange. Hong Kong's stocks rose, led by CNOOC Ltd., after the Chinese energy company said it offered to buy Unocal Corp. for $18.5 billion, topping a rival bid by Chevron Corp.
A trader leaves the floor of the Hong Kong Stock Exchange. Hong Kong's stocks rose, led by CNOOC Ltd., after the Chinese energy company said it offered to buy Unocal Corp. for $18.5 billion, topping a rival bid by Chevron Corp.

"Resorting to isolationist trade policies would be ineffective, disruptive to markets and damaging to America's special role as the world's leading advocate for open markets," Snow said.

But the $18.5 billion bid Wednesday by China's third-largest oil producer to buy California-based Unocal Corp. put such sentiments on weaker ground. Already, lawmakers from both parties had stockpiled bills to punish China, and President Bush's ongoing effort to ratify the Central American Free Trade Agreement had stirred up political forces against further trade liberalization. Lingering discontents about the economy had poli-

ticians looking for a new outlet to voice their concerns. The bid by a state-run Chinese oil company to swallow a U.S. competitor "threw gas on the fire," said Sen. Lindsey O. Graham (R-S.C.), who has coauthored legislation that would impose a 27.5 percent tariff on Chinese imports unless China allows its currency to rise in value.

"Fighting back is not protectionism," Graham told Greenspan and Snow. "No more saber-rattling. We want results."

The takeover bid by China's state-controlled CNOOC Ltd. may have been the clearest sign yet of an emerging economic power's global ambitions, but it came at an inopportune time.

The Senate is set to vote July 27 on the currency tariff bill, coauthored by Graham and Sen. Charles E. Schumer (D-N.Y.). Momentum is building on legislation, written by Sens. Susan Collins (R-Maine) and Evan Bayh (D-Ind.), to allow the Commerce Department to respond to allegedly illegal Chinese export subsidies. And new legislation is being drafted to penalize China for intellectual property violations.

China maintains it is being used in Washington as a scapegoat for the inevitable decline of U.S. manufacturing as jobs continue to slip to lower-cost countries. Nevertheless, anti-China sentiment has infected virtually every trade issue in Washington, leaving Bush with an uphill battle to secure passage even of the relatively minor CAFTA.

Meanwhile, thankfully, common sense stills seems to be alive in some corners:

http://sg.biz.yahoo.com/050623/15/3t4s9.html

quote:
Buffett said he doesn't subscribe to the view that China is engaging in a trade war with the U.S. He said Chinese corporate takeovers, such as CNOOC Ltd's (CEO) recent bid for Unocal Corp. (UCL) were an "inevitable" consequence of the U.S. trade deficit. He noted that the U.S. imported far more goods from China than it sold to the nation.

quote:
"If we're going to consume more than we produce, we have to expect to give away a little bit of the country," said the "Oracle of Omaha."

So, why all this China-bashing? It seems to make little sense to me.
Posts: 1429 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
Adjudicator
Member
Member # 724

 - posted      Profile for Adjudicator   Email Adjudicator   Send New Private Message       Edit/Delete Post   Reply With Quote 
China, for various reasons, is a scary country. They are imperialistic and authoritarian, and now they are starting to feel their economic oats. It is completely justified for the US to fear them. It is also justified to threaten tariffs if they don't unpeg their currency. Their currency pegging threatens the world's financial stability. Why this particular issue should be the trigger is most likely just because the bid makes everyone realize exactly how much economic clout china has gained.
Posts: 1172 | Registered: Jul 2002  |  IP: Logged | Report this post to a Moderator
hywer
Member
Member # 2046

 - posted      Profile for hywer   Email hywer   Send New Private Message       Edit/Delete Post   Reply With Quote 
China is the rising world player, or will be soon. We have plenty of reason to be at least catious. At the same time, the current government of China is in flux and we can't tell if it will become more progressive or if it will raise China up with a nationalistic fervor. If the latter (which is probably more likely, looking at the history of China for centuries) even more reason for concern.

In short: China's powerful and we don't understand it. That's the blueprint for all fear.

Edit: Maybe that's over-reacting--I mean, look at Western Civ two hundred and fifty years ago, and you might wet your pants just as much--but it's usually safer to be overprepared than underprepared.

[ June 25, 2005, 04:34 PM: Message edited by: hywer ]

Posts: 205 | Registered: Sep 2004  |  IP: Logged | Report this post to a Moderator
erik the awful
Member
Member # 2347

 - posted      Profile for erik the awful     Send New Private Message       Edit/Delete Post   Reply With Quote 
Its trouble for a democracy to depend on a Communist govt for trade and economic help.

I'm pro tarrif, pro regulations. Yes I know I'll pay more at the dept store. So be it. Allowing China to buy Unocal strikes me as flat out nuts.

Posts: 236 | Registered: Mar 2005  |  IP: Logged | Report this post to a Moderator
David Ricardo
Member
Member # 1678

 - posted      Profile for David Ricardo     Send New Private Message       Edit/Delete Post   Reply With Quote 
Kash puts the China-Unocal tempest in a teapot situation in the right perspective:

http://angrybear.blogspot.com/2005/06/us-vulnerability-to-china.html

quote:
This week's bid by a Chinese oil company (CNOOC) to buy an American oil company (Unocal) has provoked some interesting reactions in Washington. Despite the fact that 70% of Unocal's oil reserves are in Asia, that it supplies just 1% of US oil needs, and that oil is highly fungible (meaning that oil from one source can and will be replaced by oil from another source at virtually the same price if necessary), it seems rather silly to worry about the US becoming more economically dependent on China if the deal goes through. Which means, I suppose, that I find many on Capitol Hill to be rather silly right now...

The Washington Post: "House and Senate members demanded an administration review of the bid, required under the Defense Production Act, to determine potential economic and security risks."

The New York Times: "Two Republican congressmen, Richard W. Pombo, chairman of the House Committee on Resources, and Duncan Hunter, chairman of the House Armed Services Committee, wrote to President Bush last week, saying that 'such an acquisition raises many concerns about U.S. jobs, energy production and energy security.'"

A.P.: "'It's not a business transaction at all,' said C. Richard D'Amato, chairman of the U.S.-China Economic and Security Review Commission, a congressional advisory panel. 'This is not a free market deal. This is the Chinese government acquiring energy resources.'"

I suppose that most of the reason that this deal is provoking such reactions among US politicians (compared to what would be the case if it was, say, a Brazilian company offering to buy a US company) is the idea that this deal would make the US more economically dependent on a country that may someday be an 'enemy' of the US in some sense.

Whether it is indeed likely that China will someday be an 'enemy' of the US is a subject for another day (personally, I'm skeptical). But even if you take that assumption as true, the fact is that this deal has virtually no macroeconomic relevance, and that this revelation about US economic dependence on China is coming very, very late.

Given that China's government already controls hundreds of billions of dollars of US Treasury bonds - easily enough to wreak substantial havoc in US financial markets whenever they want to - the US economy is already extremely vulnerable to decisions made by the Chinese government. China's acquisition of one billion barrels of oil reserves in Asia is nothing compared to the economic influence over the US that they already wield.

That's why what really worries me about the sentiments coming out of Capitol Hill right now is simply the astonishing economic naivety that they display... and that these misconceptions have a good chance of leading to bad policy-making.



[ June 26, 2005, 02:07 AM: Message edited by: David Ricardo ]

Posts: 1429 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
Danzig
Member
Member # 1358

 - posted      Profile for Danzig         Edit/Delete Post   Reply With Quote 
Tiananmen Square what?
Posts: 495 | Registered: Nov 2003  |  IP: Logged | Report this post to a Moderator
javelin
Member
Member # 1284

 - posted      Profile for javelin   Email javelin   Send New Private Message       Edit/Delete Post   Reply With Quote 
Isn't that supposed to read "Tiananmen Square says what?"
Posts: 8614 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
erik the awful
Member
Member # 2347

 - posted      Profile for erik the awful     Send New Private Message       Edit/Delete Post   Reply With Quote 
http://www.washtimes.com/specialreport/20050626-122138-1088r.htm

Part I

China is building its military forces faster than U.S. intelligence and military analysts expected, prompting fears that Beijing will attack Taiwan in the next two years, according to Pentagon officials.
U.S. defense and intelligence officials say all the signs point in one troubling direction: Beijing then will be forced to go to war with the United States, which has vowed to defend Taiwan against a Chinese attack.
China's military buildup includes an array of new high-technology weapons, such as warships, submarines, missiles and a maneuverable warhead designed to defeat U.S. missile defenses. Recent intelligence reports also show that China has stepped up military exercises involving amphibious assaults, viewed as another sign that it is preparing for an attack on Taiwan.
"There's a growing consensus that at some point in the mid-to-late '90s, there was a fundamental shift in the sophistication, breadth and re-sorting of Chinese defense planning," said Richard Lawless, a senior China-policy maker in the Pentagon. "And what we're seeing now is a manifestation of that change in the number of new systems that are being deployed, the sophistication of those systems and the interoperability of the systems."
China's economy has been growing at a rate of at least 10 percent for each of the past 10 years, providing the country's military with the needed funds for modernization.
The combination of a vibrant centralized economy, growing military and increasingly fervent nationalism has transformed China into what many defense officials view as a fascist state.
"We may be seeing in China the first true fascist society on the model of Nazi Germany, where you have this incredible resource base in a commercial economy with strong nationalism, which the military was able to reach into and ramp up incredible production," a senior defense official said.
For Pentagon officials, alarm bells have been going off for the past two years as China's military began rapidly building and buying new troop- and weapon-carrying ships and submarines.
The release of an official Chinese government report in December called the situation on the Taiwan Strait "grim" and said the country's military could "crush" Taiwan.
Earlier this year, Beijing passed an anti-secession law, a unilateral measure that upset the fragile political status quo across the Taiwan Strait. The law gives Chinese leaders a legal basis they previously did not have to conduct a military attack on Taiwan, U.S. officials said.

The war fears come despite the fact that China is hosting the Olympic Games in 2008 and, therefore, some officials say, would be reluctant to invoke the international condemnation that a military attack on Taiwan would cause.
Army of the future
In the past, some defense specialists insisted a Chinese attack on Taiwan would be a "million-man swim" across the Taiwan Strait because of the country's lack of troop-carrying ships.
"We left the million-man swim behind in about 1998, 1999," the senior Pentagon official said. "And in fact, what people are saying now, whether or not that construct was ever useful, is that it's a moot point, because in just amphibious lift alone, the Chinese are doubling or even quadrupling their capability on an annual basis."
Asked about a possible Chinese attack on Taiwan, the official put it bluntly: "In the '07-'08 time frame, a capability will be there that a year ago we would have said was very, very unlikely. We now assess that as being very likely to be there."
Air Force Gen. Paul V. Hester, head of the Pacific Air Forces, said the U.S. military has been watching China's military buildup but has found it difficult to penetrate Beijing's "veil" of secrecy over it.
While military modernization itself is not a major worry, "what does provide you a pause for interest and concern is the amount of modernization, the kind of modernization and the size of the modernization," he said during a recent breakfast meeting with reporters.
China is building capabilities such as aerial refueling and airborne warning and control aircraft that can be used for regional defense and long-range power projection, Gen. Hester said.
It also is developing a maneuverable re-entry vehicle, or MARV, for its nuclear warheads. The weapon is designed to counter U.S. strategic-missile defenses, according to officials who spoke on the condition of anonymity. The warhead would be used on China's new DF-31 long-range missiles and its new submarine missile, the JL-2.
Work being done on China's weapons and reconnaissance systems will give its military the capability to reach 1,000 miles into the sea, "which gives them the visibility on the movement of not only our airplanes in the air, but also our forces at sea," Gen. Hester said.
Beijing also has built a new tank for its large armed forces. It is known as the Type 99 and appears similar in design to Germany's Leopard 2 main battle tank. The tank is outfitted with new artillery, anti-aircraft and machine guns, advanced fire-control systems and improved engines.
The country's air power is growing through the purchase of new fighters from Russia, such as Su-30 fighter-bombers, as well as the development of its own fighter jets, such as the J-10.
Gen. Hester compared Chinese warplanes with those of the former Soviet Union, which were less capable than their U.S. counterparts, but still very deadly.
"They have great equipment. The fighters are very technologically advanced, and what we know about them gives us pause for concern against ours," he said.
Missiles also are a worry.
"It is their surface-to-air missiles, their [advanced] SAMs and their surface-to-surface missiles, and the precision, more importantly, of those surface-to-surface missiles that provide, obviously, the ability to pinpoint targets that we might have out in the region, or our friends and allies might have," Gen. Hester said.
The advances give the Chinese military "the ability ... to reach out and touch parts of the United States -- Guam, Hawaii and the mainland of the United States," he said.
To better deal with possible future conflicts in Asia, the Pentagon is modernizing U.S. military facilities on the Western Pacific island of Guam and planning to move more forces there.
The Air Force will regularly rotate Air Expeditionary Force units to Guam and also will station the new long-range unmanned aerial vehicle known as Global Hawk on the island, he said.
It also has stationed B-2 stealth bombers on Guam temporarily and is expected to deploy B-1 bombers there, in addition to the B-52s now deployed there, Gen. Hester said.

Projecting power
China's rulers have adopted what is known as the "two-island chain" strategy of extending control over large areas of the Pacific, covering inner and outer chains of islands stretching from Japan to Indonesia.
"Clearly, they are still influenced by this first and second island chain," the intelligence official said.
The official said China's buildup goes beyond what would be needed to fight a war against Taiwan.
The conclusion of this official is that China wants a "blue-water" navy capable of projecting power far beyond the two island chains.
"If you look at the technical capabilities of the weapons platforms that they're fielding, the sea-keeping capabilities, the size, sensors and weapons fit, this capability transcends the baseline that is required to deal with a Taiwan situation militarily," the intelligence official said.
"So they are positioned then, if [Taiwan is] resolved one way or the other, to really become a regional military power as well."
The dispatch of a Han-class submarine late last year to waters near Guam, Taiwan and Japan was an indication of the Chinese military's drive to expand its oceangoing capabilities, the officials said. The submarine surfaced in Japanese waters, triggering an emergency deployment of Japan's naval forces.
Beijing later issued an apology for the incursion, but the political damage was done. Within months, Japan began adopting a tougher political posture toward China in its defense policies and public statements. A recent Japanese government defense report called China a strategic national security concern. It was the first time China was named specifically in a Japanese defense report.

Energy supply a factor
For China, Taiwan is not the only issue behind the buildup of military forces. Beijing also is facing a major energy shortage that, according to one Pentagon study, could lead it to use military force to seize territory with oil and gas resources.
The report produced for the Office of Net Assessment, which conducts assessments of future threats, was made public in January and warned that China's need for oil, gas and other energy resources is driving the country toward becoming an expansionist power.
China "is looking not only to build a blue-water navy to control the sea lanes [from the Middle East], but also to develop undersea mines and missile capabilities to deter the potential disruption of its energy supplies from potential threats, including the U.S. Navy, especially in the case of a conflict with Taiwan," the report said.
The report said China believes the United States already controls the sea routes from the oil-rich Persian Gulf through the Malacca Strait. Chinese President Hu Jintao has called this strategic vulnerability to disrupted energy supplies Beijing's "Malacca Dilemma."
To prevent any disruption, China has adopted a "string of pearls" strategy that calls for both offensive and defensive measures stretching along the oil-shipment sea lanes from China's coast to the Middle East.
The "pearls" include the Chinese-financed seaport being built at Gwadar, on the coast of western Pakistan, and commercial and military efforts to establish bases or diplomatic ties in Bangladesh, Burma, Cambodia, Thailand and disputed islands in the South China Sea.
The report stated that China's ability to use these pearls for a "credible" military action is not certain.
Pentagon intelligence officials, however, say the rapid Chinese naval buildup includes the capability to project power to these sea lanes in the future.
"They are not doing a lot of surface patrols or any other kind of security evolutions that far afield," the intelligence official said. "There's no evidence of [Chinese military basing there] yet, but we do need to keep an eye toward that expansion."
The report also highlighted the vulnerability of China's oil and gas infrastructure to a crippling U.S. attack.
"The U.S. military could severely cripple Chinese resistance [during a conflict over Taiwan] by blocking its energy supply, whereas the [People's Liberation Army navy] poses little threat to United States' energy security," it said.
China views the United States as "a potential threat because of its military superiority, its willingness to disrupt China's energy imports, its perceived encirclement of China and its disposition toward manipulating international politics," the report said.

'Mercantilist measures'
The report stated that China will resort "to extreme, offensive and mercantilist measures when other strategies fail, to mitigate its vulnerabilities, such as seizing control of energy resources in neighboring states."
U.S. officials have said two likely targets for China are the Russian Far East, which has vast oil and gas deposits, and Southeast Asia, which also has oil and gas resources.
Michael Pillsbury, a former Pentagon official and specialist on China's military, said the internal U.S. government debate on the issue and excessive Chinese secrecy about its military buildup "has cost us 10 years to figure out what to do"
"Everybody is starting to acknowledge the hard facts," Mr. Pillsbury said. "The China military buildup has been accelerating since 1999. As the buildup has gotten worse, China is trying hard to mask it."
Richard Fisher, vice president of the International Assessment and Strategy Center, said that in 10 years, the Chinese army has shifted from a defensive force to an advanced military soon capable of operations ranging from space warfare to global non-nuclear cruise-missile strikes.
"Let's all wake up. The post-Cold War peace is over," Mr. Fisher said. "We are now in an arms race with a new superpower whose goal is to contain and overtake the United States."

Posts: 236 | Registered: Mar 2005  |  IP: Logged | Report this post to a Moderator
Pete at Home
Member
Member # 429

 - posted      Profile for Pete at Home   Email Pete at Home   Send New Private Message       Edit/Delete Post   Reply With Quote 
David, China disputes almost every border they have, and are openly planning to invade the South China sea islands, justifying themselves based on the pattern of aggression that the US followed during the mid-19th century.
Posts: 44193 | Registered: Jun 2001  |  IP: Logged | Report this post to a Moderator
David Ricardo
Member
Member # 1678

 - posted      Profile for David Ricardo     Send New Private Message       Edit/Delete Post   Reply With Quote 
Even if you assume that China is on a collision course with American interests in the future, the China-Unocal issue is irrelevant.

The economic short-sightedness of our Congressional leadership of precipitating a trade war with China based on such an irrelevant issue is what concerns me the most.

Whether or not China becomes a threat to American interests in Asia, the United States cannot really afford to engage in naive protectionism at this time -- at least not without a significant backlash against our own economic recovery.

Posts: 1429 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
Slander Monkey
Member
Member # 1999

 - posted      Profile for Slander Monkey   Email Slander Monkey   Send New Private Message       Edit/Delete Post   Reply With Quote 
Pete,

Which borders are they still disputing? I thought they recently cleared up the one that was still hanging with India. And to be fair, they do have the unenviable position of bordering 14-15 countries (do any other countries have as many neighbors? Maybe Russia?).

Posts: 258 | Registered: Aug 2004  |  IP: Logged | Report this post to a Moderator
FiredrakeRAGE
Member
Member # 1224

 - posted      Profile for FiredrakeRAGE   Email FiredrakeRAGE   Send New Private Message       Edit/Delete Post   Reply With Quote 
David Ricardo -

We should engage in economic protectionism while it is still possible to do so without provoking immediate war.

The longer we wait to recognize that tariffs are required, the worse the backlash will be. Eventually war will not be an issue. Once the United States is dependent on China, but the reverse is not true, we will be in no position to bargain.

--Firedrake

[ June 26, 2005, 06:18 PM: Message edited by: FiredrakeRAGE ]

Posts: 3538 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
Politius
Member
Member # 1756

 - posted      Profile for Politius   Email Politius   Send New Private Message       Edit/Delete Post   Reply With Quote 
Firedrake,
Wouldn't imposing economic tariffs on chinese products hurt US more than THEM? I mean considering that a good portion of our economy is based on Chinese Products, wouldn't raising tariffs on Chinese Products lead to a MORE aggrivated situation with them as opposed to continuing the status quo and instead, focus more on trying to build up our economy (instead of focusing efforts in trying to wage wars with small "terrorist-harboring" countries and allowing the DOW to drop 160 points in one day and 120 the next?).

[ June 26, 2005, 11:10 PM: Message edited by: Politius ]

Posts: 168 | Registered: May 2004  |  IP: Logged | Report this post to a Moderator
FiredrakeRAGE
Member
Member # 1224

 - posted      Profile for FiredrakeRAGE   Email FiredrakeRAGE   Send New Private Message       Edit/Delete Post   Reply With Quote 
Politius -

Yes, tarriffs would hurt us. Specifically, they would increase prices and strain relations with China. In my view, it is significantly better to do so now, with an eye to keeping brain-power and industry in the United States.

If we wait until we are reliant on Chinese goods, but they are not as reliant on us (as a consumer of their goods), then a tariff would do no good. The question is one of goals - if our short term goal of keeping relations with the Chinese is is worth less than our long term goal of maintaining US supremacy in many fields and industries, then we should consider implementing a tariff.

One of the major issues with tariffs is simply that special interest groups are able to use tariffs to their advantage. For example, the US auto industry would prosper (with plants in the United States) if there were increased tariffs on automotive imports. The consumer could end up with a worse/different product because of that. None the less, in the interest of keeping Chinese government-backed corporations from buying up US interest companies, I believe we should do the following: We should implement a tariff on all imports – a very low tariff. We should then drop (as much as is possible) taxes, and remove regulation in the United States. A consumption tax should be considered in place of an income tax – pending a senate evaluation. After that is in place, depending on the short term success of the plan, we should consider allowing more immigration.

We want to bring work into the United States. We also want to bring intelligent, hard working people into the United States. If we want a booming economy, we need to do more than manage – we need to build, invent, and innovate. Outsourcing any task but management will not lead to innovation - it will lead to the eventual shutdown of US industry.

--Firedrake

Posts: 3538 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
FiredrakeRAGE
Member
Member # 1224

 - posted      Profile for FiredrakeRAGE   Email FiredrakeRAGE   Send New Private Message       Edit/Delete Post   Reply With Quote 
I would add that any Chinese seizure or taxation of US goods and companies would be a good thing for the United States. While we would suffer a sharp increase in prices in the short term, in the long term it would drive business to the protection of US soil - not just US companies.

--Firedrake

Posts: 3538 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
David Ricardo
Member
Member # 1678

 - posted      Profile for David Ricardo     Send New Private Message       Edit/Delete Post   Reply With Quote 
Firedrake, do you consider yourself a fiscal conservative?

When you raise tariffs across the board on all imports, you are just raising taxes on the American citizen. Not only are you raising taxes on the American citizen, you are also encouraging our domestic industries to remain uncompetitive (the recent fiascos at companies like General Motors show what can happen when we "baby" certain industires too much).

Trying to argue that a "raise tariffs and cut taxes" approach to our Chinese relations will make us economically strong against China is foolish.

Why will adopting protectionist tariffs and therefore babying uncompetitive domestic industries magically attract brainpower to stay here in the United States? Has the repeated protectionist tariffs for textiles led to a retention of talent and brainpower in our textile industry? No. (Textiles in South Carolina are still facing extinction by the onslaught of cheap Chinese underwear). Has the repeated protectionist steel tariffs led to a retenation of talent and brainpower in our steel and automotive industires? No. (Japanese and German cars vastly outperform American cars now, decades after unsuccessfully protectionist tariffs). More than likely, brainpower will flee increasingly uncompetitive American domestic industires as special interest groups refuse to make the necessary competitive changes because the American government is "protecting" them from foreign competition.

At the same time, cutting domestic taxation at the same time will do nothing to keep up safe from Chinese influence if such tax cuts result in even larger deficits. As we already know, the Chinese are our principal buyers of U.S. Treasury Bonds, and giving them even more American debt to control would be a recipe for disaster down the line if Beijing ever decided to dump its U.S. Treasury assets (or even just threaten to dump its U.S. Treasury assets) in order to precipitate an economic crisis in the United States.

If you are worried about the Chinese buying up American companies, then you should focus instead on promoting higher domestic savings in the United States and concentrating on reducing the budget deficit at the same time. Otherwise, you will realize that the Chinese purchase of American assets is a natural outgrowth of the Chinese accumulating so much of our paper currency as we consume far more in cheap Chinese goods than we produce ourselves.

[ June 27, 2005, 02:59 AM: Message edited by: David Ricardo ]

Posts: 1429 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
FiredrakeRAGE
Member
Member # 1224

 - posted      Profile for FiredrakeRAGE   Email FiredrakeRAGE   Send New Private Message       Edit/Delete Post   Reply With Quote 
David Ricardo -

Yes, I do consider myself a fiscal conservative. I am aware that a tariff will increase the cost of goods - and that the increase will go to the United States government. Babying industries (like farming, auto industry, and airlines) generally leads to a lack of innovation and a dependence on the government for corporate stability. This could, in turn, lead to corruption within the government.

The reason for a flat-rate tariff is simply that it would make no exceptions. If every American industry is favored over every foreign industry, there will be an interest on the part of American corporations in maintaining the tariff. However, domestic competitors will not face heightened barriers to entry.

I do not particularly mind the increase in government consumption in this manner, as long as domestic taxes are decreased to a significant extend at the same time. If we presume that the tax cut employed at the same time as the tariff exactly balances the tariff, the tax payer is the winner. In the short term, the prices on goods will increase. As international imports decrease, it is likely the tax gained from the tariff will correspondingly decrease. In the long term, domestic industry will expand to fill the gap. Prices will drop to normal, especially if labor is plentiful – which increased immigration would allow for. The number of jobs and industries in the United States will increase because competition is tipped in their favor, and a lower tax bracket will encourage growth and spending.

To summarize: The American dependence on foreign industry would be decreased. Total government income would be decreased – especially after the amount of imports is dropped. Taxes would be dropped, both on business and industry. Some services would be cut, but frankly, I can live with that.

Although the US debt to the Chinese is an issue, it is a minor issue as long as our economy keeps expanding, and we continue to innovate. I do not see our economy expanding without sharp action on the part of individuals, corporations and the United States government.

--Firedrake

Posts: 3538 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
thegreatgrundle
Member
Member # 1921

 - posted      Profile for thegreatgrundle   Email thegreatgrundle   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
Although the US debt to the Chinese is an issue, it is a minor issue as long as our economy keeps expanding, and we continue to innovate. I do not see our economy expanding without sharp action on the part of individuals, corporations and the United States government.
Where is the incentive for US corporations and entrepreneurs to innovate if they know the government will simply bail them out with tariffs when they can't compete with foreigners? Removing barriers to trade will do more in promoting the US economy than tying everything up with protectionist policies. All tariffs and subsidies do are keep dying industries alive that in all rights should go under. As a result, capital and labor get tied up when they could be put to a much more efficient use. Not to mention the strain put on American consumers by these additional taxes.
Posts: 622 | Registered: Jul 2004  |  IP: Logged | Report this post to a Moderator
rhymes with tequila
Member
Member # 1621

 - posted      Profile for rhymes with tequila   Email rhymes with tequila   Send New Private Message       Edit/Delete Post   Reply With Quote 
Snippets...

China's been clearing up border disputes right and left lately - both India and Russia in the last couple of months.

There was just a big brouhaha about the increase in Chinese military spending, but a big big chunk of that was an increased food allowance for Chinese soldiers.

The Chinese economy has been growing pretty fast in the last several years. China is starting to drink oil like there's no tomorrow. Of course they're trying to get their hands on any source of oil that they can. What's the big deal?

The RMB has been pegged to the dollar for how long? The US wants them to float the RMB with the idea that Chinese goods will become more expensive in the US and American goods will become cheaper in China. Of course, Americans buy an awful lot of Chinese goods already, so floating the RMB drives the inflation rate up (don't worry, top estimates are only like 2%), and that's really really good for the American economy.

Does the argument for protectionism still stand if you replace "American companies" with "multinationals?"

Posts: 79 | Registered: Mar 2004  |  IP: Logged | Report this post to a Moderator
David Ricardo
Member
Member # 1678

 - posted      Profile for David Ricardo     Send New Private Message       Edit/Delete Post   Reply With Quote 
Firedrake, it is also interesting to note that the Smoot-Hawley Tariff was one of the key factors that caused the Great Depression. Perhaps you should re-read your history a little bit before you encourage us to go back to adopting an across-the-board import tariff as we did have right before the Great Depression (much to our own dismay).

You also have to realize the sheer economic inefficiencies that you cause when you promote import tariffs. Suppose there are Chinese T-Shirts which sell for $2 apiece in the United States right now. For some consumers, that $2 per T-Shirt is a great deal because some consumers value that T-Shirt at $2.10 or $2.35 or perhaps even $2.50 per T-Shirt (this is what we call consumer surplus in economics). Meanwhile, other consumers who value those same T-Shirts at $1.90 or $1.85 simply do not buy those T-Shirts. That's called the beauty of free-market capitalism -- it enables people to make economic trades that are all beneficial to everyone (otherwise, those people would not willingly enter into the trade in the first place).

Now let's say that we impose your import tariff on Chinese T-shirts, and for the sake of discussion, let's make the tariff $.60. Now, the new cost of a Chinese T-Shirt to American consumers is $2.60 per T-Shirt. Consequently, many American consumers who would have bought Chinese T-Shirts at significantly less than they themselves valued the T-Shirts (thereby creating consumer surpluses that benefit the American economy)...now they do not buy Chinese T-shirts at all.

Thus, our economy has a deadweight loss from the loss of those consumer surpluses (which always outweigh the tariff revenues that the government generates).

In truth, if you favor import tariffs, you might as well support paying farmers not to farm at 100% productivity because it has pretty much the same destructive effect on the U.S. economy in the form of inefficient deadweight losses.

[ June 27, 2005, 10:57 AM: Message edited by: David Ricardo ]

Posts: 1429 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
Richard Dey
Member
Member # 1727

 - posted      Profile for Richard Dey   Email Richard Dey   Send New Private Message       Edit/Delete Post   Reply With Quote 
Tequila:

Too late, huh? That's what happens when the nation doesn't have strategies -- and flies by the seat of its pants. It's only the 2nd-rate nations that can afford to have free economies. The leader is (or was) supposed to know where we're going. In the end, the US will choose to be a 2nd-rate nation. It will have more freedom -- until, of course, the 1st-rate nation tells us we're grounded [Wink] .

Posts: 7866 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator
Adjudicator
Member
Member # 724

 - posted      Profile for Adjudicator   Email Adjudicator   Send New Private Message       Edit/Delete Post   Reply With Quote 
Free trade is definitely the way to go along with open borders to allow the movement of labor (CAFTA, anyone?). However, we definitely need to tie some strings to the trade as well. For example, it is absurd to burden american companies with the huge amount of regulation we require (OSHA, Sarbanes-Oxley etc) and expect them to be competitive with foreign companies who have no such moral compunctions. We need to tie favored nation trading status and free trade to a minimum level of human rights and regulation compliance or we will just end up shooting ourselves in the foot.
Posts: 1172 | Registered: Jul 2002  |  IP: Logged | Report this post to a Moderator
WarrsawPact
Member
Member # 1275

 - posted      Profile for WarrsawPact   Email WarrsawPact   Send New Private Message       Edit/Delete Post   Reply With Quote 
And when we actually have to enforce our strings on free trade with giants like China and Saudi Arabia?

Free markets free people.

Keep pushing China to open up trade all the way, slowly but surely, through the many organs they answer to (like the WTO). Enjoy the benefits of continued, uninterrupted trade, and watch China develop a middle class. See how long their government stays the way it is.

Posts: 7500 | Registered: Sep 2003  |  IP: Logged | Report this post to a Moderator
Adjudicator
Member
Member # 724

 - posted      Profile for Adjudicator   Email Adjudicator   Send New Private Message       Edit/Delete Post   Reply With Quote 
quote:
And when we actually have to enforce our strings on free trade with giants like China and Saudi Arabia?
It will be painful. But possibly quite a bit less painful now than later. There are no guarantees that a sizeable middle class will develop in the wake of all of this economic activity. It seems to me that a more likely scenario to emerge includes a lot of rich party leaders who have even more means at their disposal to oppress their people.
Posts: 1172 | Registered: Jul 2002  |  IP: Logged | Report this post to a Moderator
   

Quick Reply
Message:

HTML is not enabled.
UBB Code™ is enabled.
UBB Code™ Images not permitted.
Instant Graemlins
   


Post New Topic  Post A Reply Close Topic   Feature Topic   Move Topic   Delete Topic next oldest topic   next newest topic
 - Printer-friendly view of this topic
Hop To:


Contact Us | Ornery.org Front Page

Powered by Infopop Corporation
UBB.classic™ 6.7.1