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May 20, 2005 4:00 AM PDT
Getting tough with China?
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from competing for (Chinese) government procurement contracts," the head of the U.S.-China Business Council, a group that includes Microsoft, IBM and Hewlett-Packard, said in Congressional testimony this month.
China's efforts to develop its own technology standards also have been a cause for concern to U.S. companies. In a challenge to Microsoft in particular, China has worked with South Korea and Japan to develop an open-source alternative to Windows software. And last year, China planned to force equipment makers to include its Wireless Authentication and Privacy Infrastructure, or WAPI, standard in products sold in China. China later agreed to indefinitely postpone enforcement of the WAPI directive.
There may be problems in China, but Gartner's Reynolds is wary of the U.S. government getting involved. To him, a more promising way to bring about Chinese reforms is for U.S. companies to make their suppliers in China abide by codes of conduct, such as banning child labor. Some tech companies already follow this approach, he said, which encourages Chinese businesses to move to global standards.
Relying on such self-regulation is too tepid for some tech industry leaders. The U.S.-China Business Council, for example, recommended that the Bush administration intervene with Beijing on the proposed software procurement rules.
Harris Miller, president of the Information Technology Association of America trade group, also thinks U.S. officials should be making more noise on China. Miller cites piracy and the proposed procurement rules as particular concerns, and argues that behind-the-scenes efforts by U.S. officials to bring about change in China have not proven effective.
He applauded action taken by the administration on textiles and Snow's recent scolding of China on currency policy. "The U.S. needs to step up the pressure," he said.
At the same time, Miller warned against pressing Beijing too much. "No one wants a situation where you have a trade war," he said.
Thea Lee, the chief international economist at the AFL-CIO, has a different view: "The war started--and the newsflash is, 'We're losing.'"
According to Lee, China is guilty of intellectual property rights violations, currency manipulation and worker rights violations. "We're hemorrhaging jobs to China because they aren't playing by the rules," she said.
The Chinese embassy in the United States did not respond to a request for comment for this story.
A January report from the Economic Policy Institute concluded that the U.S. trade deficit with China increased twentyfold between 1989 and 2003, displacing 1.5 million jobs. Among those were nearly 53,350 jobs in computer and office equipment manufacturing and more than 46,200 positions in semiconductor manufacturing.
Stinging response?
The AFL-CIO backs a bill introduced earlier this year by New York Democratic Sen. Charles Schumer that threatens to slap a 27.5 percent tariff on Chinese products, if negotiations regarding the value of the yuan "are not successful."
Such a tariff could sting many tech companies with operations in China. Microsoft, IBM and Intel are among the businesses with facilities in the country. A tariff "would be costly to American companies, I assume," Suttmeier said. He also argued the Chinese government would probably retaliate against a U.S. tariff. "There are a variety of ways China could make things less comfortable for American firms," he said.
Among the companies that could be caught in trade-war crossfire is San Francisco-based Freeborders. The company, which provides software development services, has about 400 employees in Shenzhen, China, and roughly 100 in the United States. Ramsey Walker, Freeborders' co-chief executive officer, is hopeful tariffs won't interfere with his growing business and the global trade he views as beneficial, on the whole. "We're not concerned that America is going to become isolationist," he said.
The AFL-CIO's Lee counters that a tariff would not prevent trade, but rather put the countries on an equal footing. She also dismisses the concern that playing hardball with China risks dividing the countries with grim long-term economic and political consequences. "I don't think there's any guarantee that if we let China walk all over us on the trade front, they'll be our friend," she said.
34 comments
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Don't confuse the populace (of any country) with its government.
exploit cheap labor for own profits and when it turns around and bites you in the hand, you wine and complain about 'fair trade'
;-)
Now...where are those American manufactures again?
Ohhh..yeah..they're in; China, India, Mexico...etc...(thank you NAFTA)
Close to extinction; the American factory worker.
Who has the power here? We do. We are the consumers. One Dollar = One Vote.
The US at this point in time has a greater amount of money flowing out than it does flowing in. The well isn't dry, but that's the way it's going to end up if China is allowed to continue their current trade practices, which is EXTREMELY harmful to the US economy.
People need to stop looking for the bargain and start shopping American. Sure, you save $0.10 today by buying Chinese, but you're screwing our country's financial future for your children while financing China's rise to dominance.
At the rate we are going we will be like Britain and France . 2nd world regional powers .
If we listen to the Ivory tower boys , they'll own every bit of uimportand real estate also .
They're eating our lunch now !
So if you think its tough now , you wait , a depression is brewing unless we wait up .
They manufacture just about everything for us - from greeting cards to auto parts to just about everything Walmart sells.
Think what it will do to our economy if we are unable to purchase stuff we use daily for several months.
If this keeps up for a generation, then we'll have lost the knowledge and will have to rediscover it. We are already seeing it in the university students. None want to be engineers, they all want to be lawyers. Well Lawyers are overhead while engineers add value.
While a small minority in this country has been hurt, the most people have benefited from the situation, both directly from cheaper products and indirectly from lower interest rate. Conversely, a small group of people in China--namely those who run the factories--have benefited while the working folks are screwed over. The artificial weakness of the yuan makes them all poorer.
A revaluation would benefit the Chinese people first and foremost. It's simply ridiculous than a country with a billion mouths to feed is a net exporter of food. America already export a lot of agricultural goods to the country. Strengthening the yuan vis-a-vis the dollar would increase that and drive down prices--or at least, keep them under control. And since oil and natural are traded on the world market using the dollar, energy prices could drop as well.
What kind of effect would a stronger yuan have on America? Most Americans would feel it at the gas pump as oil prices almost certainly is going to go up. Since Chinese manufacturers get paper thin profit margin, there is no way they can absorb the change in the exchange rate, so prices will go up in stores. Would it be enough to save American manufacturing jobs? Probably not. It matters little whether a Chinese-made toaster costs $10 or $12 when it cannot be made for less than $20 here. Of course when you're paying that extra two dollars, it matters.
This imbalance is the seed of future global disaster....
It may be an outdated attitude left over from the days of Mao Zedong&
Or it may be that American executives still think of India as essentially a colony, where the profit from Indian operations flows back to the US.
Either way, youre right that US attitudes about China are naïve.
it damn pleases to do,