2010 March 20 Saturday
China Squeezing Out Foreign Wind Turbine Makers

In the future your job might be lost when the Chinese government decides to dominate the industry you work in.

WASHINGTON U.S. companies are getting squeezed out of the big Chinese wind-power market even as Dallas investors are bringing Chinese firms here via a big wind farm in Texas, according to a new industry report.

"They've used every measure you could possibly think of to enhance production of renewable energy equipment in China," said report author Alan Wolff of the trade law firm Dewey & LeBoeuf LLP.

I want to know for which industries will the Chinese government allow foreign companies to compete in the long run? Which industries will suddenly get targeted for Chinese domination the way wind turbines have been?

Chinese wind turbine developers will build up expertise in their protected domestic market that they can use to penetrate other markets.

Six years ago, foreign wind turbine manufacturers held 82 percent of the Chinese market, but they now have a 10 percent share, according to the Dewey & LeBoeuf study.

The Chinese government is strongly mercantilist. They have a large and growing market of 1.3 billion people. Enforcement of the "One Child" policy is weakening and might even be phased out. So they change achieve very high economies of scale while flaunting world trade rules. How will the Western nations respond as China's mercantilist policies cost more Western corporations their leading positions in a growing variety of industries?

Share |      By Randall Parker at 2010 March 20 12:17 PM  China

kurt9 said at March 20, 2010 1:32 PM:

American corporations are more hurt by the self-dealings of the zillion dollar CEO's and other managerial parasites as well as "diversity training" and other bogus mandates than they are by any foreign competition. It is true that any bureaucracy or other establishment system cannot be reformed from within. It can only be knocked off by external competition. In this, I am on the side of the Chinese. I view them as the external competition that will help rid our society of the parasitical dead weight, both on the top as well as the bottom of the economic ladder. I do not consider the Chinese to be my enemy. I consider all of the parasites that exist within this country to be my enemy.

James Bowery said at March 20, 2010 2:40 PM:

The problem with Kurt's view, which I shared with him during the 70s Japanese car invasion, is that the real problem is the Asians are simply better at playing the con-game that the western elites set up for the capture of economic rents from western inventors. So, those rents, instead of being collected by Western elites, are now being collected by Asian elites. The Western elites fought back -- sort of -- with companies like Saturn, but their heart wasn't in it. Where was it? It was in mining the last of the human capital of the West for any further value before discarding it. Asian competition may be helpful in the long run but only because it lays waste the the structures of the West to the point that the elites are facing, not just the loss of position on the Fortune's list of world's richest, but actual threat of not making rent. By that time, the folks at the bottom will long ago have been turned to hamburger by the collapsing structures. It is this sort of scenario that makes me a little more "supportive" of the current "elites" than Kurt might be.

Browntown said at March 20, 2010 4:54 PM:

-How will the Western nations respond as China's mercantilist policies cost more Western corporations their leading positions in a growing variety of industries?-

The US won't do shit. The PRC owns us. They're gonna get whatever they want or else the asshole communists that run the gov't in DC won't get any more loans to keep this hulk steaming and NAMs fed. The End.

miles said at March 20, 2010 5:29 PM:

China has a government that is pro-Chinese. The US has a government that is anti-"old-stock"-American. The US government panders to its most unproductive groups and its elite, ignoring and excoriating the great middle of its populace. China also is employing good common sense. Why should they import wind turbines when they are perfectly capable of building them themselves, and not having to pay to ship the things over the Pacific Ocean, pick them up at a port, put them in trucks, and re-assemble them at a site.

Im not so crazy about wind energy unless the turbines are only put in places that have reliable winds. Unfortunately this means many will have to be on mountains or near the oceans which eco-greens in the United States apparently don't like. China will put them wherever there is reliable wind and will make them an economic winner. I think solar w/mirrors could be a real plus in the United States, allowing much less production from coal-fired plants during the daylight hours when we know we will be getting plenty of sunlight. I think we have a lot of wind potential, but I also think that implementing it would be lawsuit city as the NIMBY-forces congealed against it.

If I were a betting man................I'd take China over the US in about 50 more years. Diversity is not a strength. I worry the US will become dangerous as its nation fades because it will still have all those nukes. Poor and desperate, with a gun, usually equals violence.

JJ said at March 20, 2010 6:46 PM:

If they won't let us in their market and harass American companies (wind turbine makers, Google, etc.), then I say
we keep their goods out of America through high tarrifs. Let's outsource the cheap manufacturing to Mexico to keep
illegal immigration down also.

This is not going to happen unforunantely, since the Chinese buy too much of our debt and, in addition to this, the corporate
lobbies are against this.

J said at March 20, 2010 7:54 PM:

The point is that if China wishes to keep foreign goods out of their country, they hurt their consumers, who now have to pay more, have less buying options, and get lower quality because a lack of foreign competition fails to keep quality up - this has happened with the Japanese. All those wonderfully cheap and efficient Japanese products are much more expensive and unaffordable to the Japanese, who have a lower quality of life than the average person in the West as a direct result of mercantilist policies.

If we in the West retaliated by restriction Chinese goods, we would merely be hurting ourselves as all that cheap Chinese stuff that we love so much wouldn`t be available anymore.

The west and China, and Asia in general, are really pursuing different objectives - in the West we want to get the best quality of life for ourselves, through cheap products, China and Japan and others are more concerned with 1) Autarcy - i.e, as much independence as possible even if this means a lower quality of life, although it must be noted that this economic self-sufficiency is illusory and 2) Prestige. The Japanese sacrificed quality of life for their citizens in order to obtain prestige in the form of dominating foreign markets. Didn`t matter that this didn`t translate into actually benefit to their society, they worked like dogs to get it.

Prestige matters more to Asians, and they are willing to sacrifice tangible benefits to obtain the illusion of it, for obvious historical as well as more fundamental cultural reasons - they simply have a different mindset than us.

If we were to play their game and retaliate, it would benefit one sector of our economy - retailers and exporters - at the expense of the mass of consumers, as prices would rise. Would it be worth it? Perhaps, although most analysts say no. But people need to understand that it is a case of sacrificing one sector of our economy for another one - the consumer or the producer has to suffer. Which is better for our economy as a whole, which would likely yield a higher quality of life as a whole, has so far been thought to be if we do not pursue mercantilist policies.

Finally, the idea that the US is mroe beholden to China than vice versa is something that really needs to be laid to rest already as it is such an obvious myth that a few moments of thought should easily dispel. The two countries are economically interdependent. China holds its assets in dollars to keep the price of the yen down to make its exports cheap. China can hurt the US by selling its dollars - but guess what happens then? After hurting the US, China cripples itself with the resultant rise of the yen triggered by the dollar sell off because Chinese exports suddenly become too expensive for the US to afford, and the Cinese economy collapses.

The US would suffer in such a scenario, but China would be absolutely crippled by the loss of its largest market.

not anon or anonymous said at March 21, 2010 9:03 AM:

The point is that if China wishes to keep foreign goods out of their country, they hurt their consumers

It's more than that: China has adopted a broad policy of subsidizing their exports at the expense of their workers and consumers. Apparently, they're doing this in order to ensure low levels of unemployment in their migrant populations and maintain social stability. We benefit by being able to import Chinese stuff at very low prices, even though some industries (such as windmill producers) are hurt by subsidized Chinese competition--overall, it's a very good deal for us.

Rohan Swee said at March 21, 2010 4:04 PM:

J: If we in the West retaliated by restriction Chinese goods, we would merely be hurting ourselves as all that cheap Chinese stuff that we love so much wouldn`t be available anymore.

Damn yeah I remember the consumer hell we all lived in before China came on line. Man, we were all wearing burlap sacks and using cigarette cartons for shoes. We had nothin', man, nothin'.

And we can go on consuming more than we produce, forever. And we can concede every productive industry and job, and go right on getting those low, low prices. Forever. Because we can print the world's reserve currency to infinity. Yeah, that's the ticket.

"Cheap" Chinese goods will be unaffordable soon enough. They already are, actually, but most Americans are apparently unable to figure out that the sticker price doesn't represent the real cost to them and their children.

And yeah, kurt9, it's cool if my grandchildren live in a gutted, Third World country that's totally dependent on saner nations for even its most basic needs, like antibiotics, because at least we'll be stickin' it the Man, baby.

not anon or anonymous said at March 21, 2010 7:40 PM:

Damn yeah I remember the consumer hell we all lived in before China came on line.

As a matter of fact, yes we do. It wasn't hell on earth to be sure, but it was definitely uncomfortable especially for low-income consumers.

And no, we can't go on expanding our trade deficit indefinitely. But you should blame low private savings and high levels of private and government indebtedness for that, not Chinese industry.

NotProgressive said at March 24, 2010 8:58 PM:


I politely disagree about China shooting themselves in the foot. China has sovereign (Government banking). That means they can spend debt free money directly into their economy. If employment rises at the same rate as the money injection, there is no inflation. In the U.S., virtually all new money originates as debt money (loans you take out at the bank). That means that the U.S. is at an inherent disadvantage to China. The U.S. worker has to service debt, as it is built into our system, thus we enrich the banking class. Witness China using their money to leverage investments around the world. These investments will create real wealth for them, and real wealth is not defined as how much "money" you have, but instead is things like roads, bridges, industry, educated people, etc.

China buys U.S. treasuries in order to take dollars out of circulation. This does two things: 1) It keeps the dollar high relative to the Yuan. 2) It makes the U.S. a debtor to China. The money lender is always above the borrower. China now has leverage, and they can keep their export machine running. The long term objective is to suck technology and jobs out of the U.S. With the U.S. as a debtor, then China need not have a high cost military. An ancient people, comprised of mostly one tribe (Han), can work in lockstep toward a goal. That goal is to rise in one generation in order to afford their coming demographic inversion. If there is any relaxation in the one child rule, it will be to produce girls.

If we ever get into a trade war with China, then China can simply take their excess industrial capacity and funnel it into domestic consumption. The U.S. did that after WW2 because our factories had become very productive. China has 1.3B potential consumers that their factories can supply if needed. With Sovereign Money you can build fantastic wealth in a short time. Germany proved that using Sovereign banking principles from their collapse (Versaille Treaty) to 1940. Lincoln funded the Civil War with Sovereign Money.

Our problem is not China, our problem is our banking system has been co-opted by Private Bankers. This is contrary to the intent of our Founders. In fact, we have a British designed private banking system now, while China has a banking system more intune with the "original" banking system as envisioned by Benjamin Franklin. China is playing a mercantilist game against hostile private banking elites. The private banking elites are being stopped in their tracks as they are being outsmarted.

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