U.S. business and labor leaders agree that China ought to adjust the value of its currency and do a better job of protecting intellectual property rights. But while industry leaders favor milder steps, worker advocates want more aggressive action. They argue a sweeping tariff on Chinese goods may be needed to stop job losses and level the playing field.
Critics, though, warn such a move could trigger a trade war that hurts U.S. tech companies, many of which have operations in China.
What's new:
Worker advocates want a tariff on Chinese goods to protect American jobs and even the playing field with the country's manufacturers.
Bottom line:
Critics warn such a move could trigger a trade war that hurts U.S. tech companies, many of which have operations in China.
There's still more at stake, said Richard Suttmeier, a political science professor at the University of Oregon. If the involvement of U.S.-based tech companies in China declines, Beijing's ambitious plans for technological advancement could wind up threatening America economically and on the geopolitical stage, Suttmeier said.
"We're better off if we keep China integrated into this global system whereby their technological progress is co-evolving, if you will, with the technological progress of multinational companies," he said.
China and the United States have been butting heads on trade matters for years. A key flash point is the U.S. goods trade deficit with China, which rose from $29.5 billion in 1994 to $162 billion last year.
The countries have grown more combative in the past week or so. The U.S. has moved to impose quotas on certain Chinese textiles and apparel products, and U.S. Treasury Secretary John Snow chided China publicly over its currency policy.
Many observers claim China effectively subsidizes its exports by pegging its yuan to the dollar, resulting in a currency value that is artificially low. In a report to Congress on Tuesday, Snow did not go as far as to claim that China manipulates the currency exchange rate to gain an unfair trade advantage. Still, he warned the country should change its ways.
"Current Chinese policies are highly distortionary and pose a risk to China's economy, its trading partners and global economic growth," Snow said in the report.
Although China has said it aims to reform its currency policy, this week its stance on the issue seemed to stiffen. According to official news service Xinhua, Chinese Premier Wen Jiabao said China will not yield to outside pressure in exchange rate reform. "The reform of (yuan) exchange rates is of China's own sovereignty," he said, according to Xinhua. "Any pressure or media play-up, or to politicize an economic matter, will not help solve problems."
A stronger yuan could affect the tech industry in a number of ways. Products and services coming from China--which run the gamut from consumer electronics to software coding--would likely increase in price. If the price rises are significant, global companies could decide to locate operations elsewhere and U.S. operations could become more competitive. Consumers, meanwhile, would likely pay more at their local Wal-Marts, Gartner analyst Martin Reynolds said.
Given that such a pocketbook pinch could translate into public displeasure, Reynolds expects the U.S. government to back down on the currency issue. "By and large, it's saber-rattling," he said.
The U.S. technology industry has other concerns about trade with China. One is the still-rampant software piracy in the country. Losses from software piracy in China totaled $3.6 billion in 2004, making it second only to the United States in piracy damages, according to a study from research firm IDC and the Business Software Alliance trade group.
Another issue is market access. Particularly worrisome to some are draft regulations in China on software procurement by government entities. The proposed rules "essentially block international companies
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China, yuan, Martin Reynolds, tariff, U.S.
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, you?re right that US attitudes about China are naïve.
it damn pleases to do,
- coffee -- smell it
- by flattailzip May 22, 2005 7:23 PM PDT
- it's not that they're less expensive it's that they're more innovative, creative and simply better developers. it's good for silicon valley realize they're not at the center of tech anymore and for the U.S. to realize they're not at the center of the world. welcome to the new world order. We've peaked.
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