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Trade Issues

Popularity 1Viewed 561 times 2018-4-10 18:57 |System category:Economy| Trade, Dispute

Trade Issues

 

A great deal of rhetoric has been aired over the last few weeks by US the over the trade issues with China.

 

China economy is much more open than Japan & Korea at similar state of development. Foreign automobiles in both countries are negligible. In China foreign automobiles are omnipresent. Both Korea & Japan placed non-tariff protection measures against foreign imports. The case of an agriculture minister in Japan saying that Japanese intestines cannot digest US beef is a classic example. In Korea many years ago, buying a foreign car will subject the buyer to tax audit. The list goes on and on.

 

Requiring joint production is a quid pro quo for sharing its humongous market with foreign companies. A way of sharing profit. Technology transfer is secondary. China has the technology to send rockets/ satellites into space and is capable of developing its own know how. There is no repeat of opium addiction of the past century where foreigners made all the profit at the expense of Chinese consumers.

 

Germany has a more mature approach. Audi/ BMW/ Mercedes are built in China under joint venture for certain models. They are not afraid of technology transfer because they understand branding is the key. A brand takes 50-100 years to establish. There is no concern of a Chinese copy BMW. German cars market is much larger in China than its home country, much more than in Korea or Japan adjusting for economy size.

 

Without China, the Buick brand would have been relegated to the dustbin. GM/ Ford and Cadillac sales are as much in China as in the US.

 

KFC/ McDonald’s/ Starbuck have sizable presence in China. A new Starbuck is opened every few days in China. KFC sales is larger than that of US/ S America combined. US trade posture & rhetoric is damaging its very brand. What if public opinion swing against US brands. No tariff is needed for the public to stop going to KFC/ McDonald’s/ Starbuck. And there is alternative to Apple like Huawei, Vivo, Xiaomei, and others.

 

US needs to take a mature approach to trade. It is not a zero sum game. Trade is multilateral, not bilateral. What one loose on the swing, one gets back on the roundabout. And trade statistics, as aptly pointed out in various articles, is misleading. Only value added should be counted. The US gain on service from thousands of students studying, earning tuition and living expense. Not to mention tourism.

 

Trade dispute should be resolved through bilateral or multilateral discussion. China can perhaps be persuaded to consider voluntarily reduce exports, just like Japan did in the mid-1980s. But first substitutes have to found in other countries for the US voracious appetite for consumer goods. US need to dial down the rhetoric.

(Opinions of the writer in this blog don't represent those of China Daily.)


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Reply Report Swifty55 2018-4-15 18:58
Only thing I can not understand is why Chinese eat at McDonalds, KFC, Starbucks, Pizza Hut, Burger King or Subway. The food in these places all are processed food with chemicals just like in the USA. These places are why Chinese youth are fatter, plus the cost is way to high and eating at these places is one reason Chinese kids are getting fat. Rest of trade and things built by USA companies is good for USA. But USA is not the smartest ran country in the world anymore

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    • Trade Issues 2018-4-15 18:58

      Only thing I can not understand is why Chinese eat at McDonalds, KFC, Starbucks, Pizza Hut, Burger King or Subway. The food in these places all are processed food with chemicals just like in the USA. These places are why Chinese youth are fatter, plus the cost is way to high and eating at these places is one reason Chinese kids are getting fat. Rest of trade and things built by USA companies is good for USA. But USA is not the smartest ran country in the world anymore

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