2010 December 25 Saturday
US Industry Scared Into Silence By Chinese Mercantilism

If we want to know how much the Chinese government tilts the playing field in favor of its industry you won't hear about it from the cowed Western multi-nationals.

No American company would seem to have more to gain than General Electric from the Obama administration’s decision on Wednesday to accuse China, in a World Trade Organization case, of providing illegal subsidies to Chinese wind turbine makers.


But with so much to potentially gain from the administration’s W.T.O. case, what was G.E.’s reaction? Total silence. The company said it would have no comment on the matter.

G.E.’s silence is part of a broader Western corporate reluctance to criticize Chinese policies, particularly in public. So eager are multinationals for continued access to the world’s fastest-growing market that they are loath to cry foul even amid evidence that China may be flouting international trade laws.

Transfer your technology to your future competitors or you do not get to play.

But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China’s lucrative business means playing by strict house rules that are often stacked in Beijing’s favor.

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

A few months ago a ministry in the Chinese government floated a requirement for foreign car companies to transfer electric car technology to Chinese companies or else be locked out of the Chinese electric car market. Did that regulation take effect too?

The Chinese force technology transfers and then grow up companies that wipe out foreign competitors. China's wind turbine makers have nearly half the global market and now theya re building up their presence in the United States. So US tax credits for wind power, paid by US taxpayers, will subsidize Chinese wind turbine makers.

The United Steelworkers Union fight where multi-nations fear to tred. It is an argument for industrial unions.

The United Steelworkers, which had protested the Chinese wind power fund as part of a larger, 5,800-page trade complaint it filed with the American government on Sept. 9, said the administration’s decision was only a first step in addressing a “vast web of protectionist policies” by Beijing.

Also see my post Rapid Knowledge Spread Lowers Western Growth. The future has arrived. As a nation that thrives off the intellectual property we produce what are we going to do about it?

Share |      By Randall Parker at 2010 December 25 07:36 PM  China Mercantilism

FiguredItOut said at December 25, 2010 11:46 PM:

Wall Street sees overhanging labor in China, and thus sees easy profits. They take our 401K money and fund the wholesale transfer of our business. Managers in the financial sector give themselves bonuses sometimes in the 100’s of millions of dollars per year. As long as the U.S. has the reserve currency of the world, we must accept imports so dollars can be exported. This automatically makes the dollar stronger due to demand. An artificially strong dollar puts American Industry at an automatic disadvantage.

The FED has lost leverage on the money supply due to the rise of other money sectors, like GE capital, and other non bank actors. So, their lever for controlling the economy is reduced to interest rate movements. Also, the banks are borrowing from each other rather than keeping a lot of reserves on hand, so they are intertwined in a Ponzi scheme. In other words, the Fed cannot directly affect the money supply like they could in the 70’s and earlier.
With interest rate movements, that makes the bankers very happy because they can make money on carry trades. Or they can borrow vast sums of money from others and use it to move the market or make money for themselves on small margins. In other words, the bankers are no longer investing for the public, but instead are interested in big bonuses for themselves by using leverage.

Dollars pop into existence in the U.S. mostly in two ways. One is checkbook dollars, which are debt money that entered the supply when you took out a loan. The other is when the Treasury deficit spends into somebody’s bank account, e.g. grandma’s social security. Our dollars come into being with usury on them. China can print Yuan’s debt free from their state banks. When you buy a P.O.S. Chinese good, your usury laden Federal Reserve dollar ends up at a Chinese manufacturer. China’s govt trades their debt free Yuan (similar to Lincoln’s Greenbacks, which were issued debt free) for that Federal Reserve note. China uses your dollars to buy a tbill. Your dollar ends up at the FED locked up as a Treasury, interest payable to China. You were put into debt slavery twice; once for the creation of the dollar, and again for the Tbill. The TBills also serve as a chain to keep the American indebted and subordinate.

The American middle class is carrying a burden of usury dollars, and being put into debt slavery because of monetary schemes. The American is also funding military police actions to insure oil and trade gets through, with China benefiting. Our Navy insures transport of goods on the Seas. Americans are subsidizing their own displacement. Our elites are completely crazy or completely stupid or completely desirous of some outcome not in alignment with mainstreet America’s needs.

It would be easy to fix. Some sort of U.S. State Banking system along with Bancors for international trade. But, there is no way our Elites will give up private creation of money. But, the privateers have come up against China’s State Fascism, and for the first time private money will loose. The Chinese have learned, and they will never allow their currency to fully float. China has huge reserves of dollars, and there is no way a Bear Raid will succeed.
China’s goal is to move up the food chain in one generation. Their demographics demand it. They will need wealth creating industries in order to subsidize all the oldsters that will be around soon. China must be the head and not the fingers. The multinationals days are numbered and they must sense it. The U.S. must fix its money system and put this nonsense to a stop.

Tommy said at December 26, 2010 4:16 AM:

Well I guess this is what a society looks like as it slowly unravels. There is no longer any great loyalty by the citizens (citizenship having been devalued), the institutions, the corporations ... anyone, to the US as a whole. Yes, I've overstated it, but that's the direction we're going in. What is the US anymore? Do the best patriotic citizens even feel loyalty to this President, a man who has contempt for them?

I've always thought the collapse of the US would be rather dramatic, but perhaps not. Maybe the world really does end with a whimper.

bbartlog said at December 26, 2010 7:21 AM:

Corporations have no loyalty to America or its people. Remember, they are legally designed as amoral profit-maximizing machines.

no i don't said at December 30, 2010 3:10 PM:

"The unrestricted pursuit for money always destroys the soul of a nation." That's what the people of the Enlightenment and the Forefathers used to know, but we now know only how to shop.

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