The concept of reciprocity in trade has a long and storied history, and one that ought to be remembered today. Simply put, if we allow market access for the fruits of the great Chinese industrial machine, creating jobs for 100 million Chinese workers (the number of Chinese employed in manufacturing), they need to allow access to our creative enterprises, such as Google.
But not only is Google being forced out by a series of actions and deliberate inactions of the Chinese government, but Google's affiliate, YouTube, was never even let into China in the first place. It is perennially blocked by their "great firewall". Nor do most other U. S. websites have unfettered access to China. eBay has left China. Many newspaper websites are regularly censored. The Chinese competitive sites that are willing to go along with the censorship and the dictates of the Chinese government, like Baidu and Alibaba, are the dominant players on the Chinese internet. This is not only a question of freedom of speech. It is also a trade barrier and a major economic problem for the United States. Google alone has over 20,000 employees, many in the United States, and they and the company are undercut by these actions, as are the workers at eBay and other website companies.
We are struggling to rebuild our manufacturing sector, but while that occurs, we need to make sure companies like Google have full access to the largest internet market in the world, China. If a company cannot access the largest market in the world for its product it loses enormous revenue opportunities. And as a matter of economies of scale and ability to move down the learning curve, it becomes economically disadvantaged versus its competitors going forward.
There had been an implicit agreement about the internet made between China and the United States. The United States agreed to lower all its tariffs on high technology manufactured goods to zero, and we agreed to let in all that China could send over here, no questions asked. What is the result of that? The result is that substantially all United States computers are now made in China. We even went so far as to allow the first U. S. PC maker, IBM, to sell its PC division to a Chinese company, Lenovo. That sale could have been stopped, under a U. S. law called the Exon-Florio Act, but not only did we not stop it, we did not even question it.
Why? Because we believed that as China industrialized and moved along the economic and knowledge highway they would become a great market for those goods where we continue to have an advantage, things like search engines, and streaming video, and innovative web sites. We believed they would keep their side of the bargain.
But they have not. So we are now in a completely untenable position, as a country and as an economy. The hardware of the internet, computers, disk drives, semiconductors, peripherals, are all made in China, not here. Much of the software of the internet, which is made here, advanced here, and continually reinvented here, is banned from China. So their industries grow, they develop more jobs, their economy avoids the recession. Our economy shrinks, our job base deteriorates, and our creative enterprises suffer because they are denied access to the largest internet market in the world.
And the trend is only getting worse. More and more high-tech producers are moving their factories to China, because of subsidies, cheap labor, low environmental standards, and currency manipulation. Ironically, it was only a short time ago that we thought computers and semiconductors were the kind of creative industries we would always keep in the U. S. But they have now basically left our shores, though the even more creative side of the internet has not (yet). The largest computer manufacturing area in the world is in Guangdong Province, north of Hong Kong, where Foxconn employs 200,000 people as a subcontractor to many U. S. and other worldwide computer brands. While this is occurring, thousands of U. S. engineers and assembly line workers are unemployed.
The Chinese government wants trade to be a completely one-sided affair where China builds up knowledge and industrial might and trade reserves and we get nothing. If there is any area where we clearly have a comparative advantage it is the complex and dynamically creative space that Google occupies.
In 2009, China exported $126 billion of computers and electrical equipment to the United States. We exported a paltry $14 billion to them. Given these favorable terms of trade, one would think they would be careful with our further downstream internet companies, but they are not.
Demanding reciprocity is not protectionist and should not subject us to criticism from China, the WTO, or even the most free of free traders. Reciprocity is what the trade agreements of the world are about. We let you sell in our market the goods you can make more efficiently and more creatively. You let us sell in your market the goods and services we produce. If China shuts out our internet companies, we need to shut out their hardware that the internet runs on.
What do you want to retaliate against ? After all, China never forced Google to leave, and we're talking about a self-imposed exile. It's funny to see how Americans are trying to twist the facts for political reasons, now playing the victim by pretending the China decided that Google can no longer be active on their territory.
"We should respond to a Chinese action that will damage us (them throwing out Google) by introducing a policy that will further damage us (banning imports from China)."
China did not throw out Google, although you can of course try to pretend that this happened. Google no longer wanted to abide by Chinese laws, and made the decision to shut down (a large part of) their operations in China.
"Regarding the "laws" that you say Google is not complying with, these are laws imposing arbitrary and unpredictable censorship requirements which make it impossible for U. S. internet companies to successfully do business in China--very few or none can."
So other countries have to ensure that their legislation complies with US economic interests ?
"Blame it on the Chinese,
blame it on the Chinese.
You'll feel so much better,
blame it on the Chinese."
Punish the poor!
Great campaign slogan . . .
http://www.nytimes.com/2010/03/18/business/global/18research.html
Just some facts here:
1. When Lenove sell PC or laptop to US, it has to obey all the US laws and regulations; When China warn Google not to violate the Chinese laws or face the sequences, Google think it can not accept the Chinese law and threat to leave.
Is that clear?
2. Much of the software of the Internet, is not made in US, but outsourced to India. Even in many US Internet companies in Califonia, there are so many software engineers and managers from India and China.
Do you think they are getting jobs from Americans?
3. Do we American people, want to throw out HP, Dell, Apple computers made in China, and ready to buy a "Made in USA" computer which is 5 times more expensive instead of a much cheaper HP laptop made in Guangdong?
Or we just buy a even cheaper computer made in Indonesia, without any PC manufacturing job returning to US?
4. When China government want to import many high-tech products (chips, components, software, etc) from the US, the US reject their request because of security concerns. And the court even sentensed several guys in jail merely because they bought these high-tech products and brought them to China.
Is the US government ever thinking about the trade deficit when they close the door of high-tech exports?
US manufacturing output was twice as high in 2007 as it was in 1980;
The share of the workforce employed in manufacturing peaked in the mid-1920s (when it was around one quarter, meaning that even then around three-quarters of the workforce were employed in services and agriculture);
Manufacturing peaked as a share of the entire economy in 1953, when it was less than 30% of the conomy, meaning that even then around 70% of the economy was services and agriculture;
The share of US imports that come from East Asia (including China) was smaller in 2007 than it was in 1994 (when China fixed its currency). China has simply partially replaced other East Asian countries as a place of final assembly.
This relative (not absolute) decline of manufacturing reflects the experience of all countries as they become more highly developed;
The US's top exports by value in 2007 (reflecting where the US has a comparative advantage) were (in order) semiconductors, civilian aircraft, vehicle parts and accessories, passenger cars, industrial machines, pharmaceutical preparations, telecommunications equipment, organic chemicals, electric apparatus and computer accessories
It's not like China only exports and never imports, China runs up tens of billions of trading deficit against Korea, Japan, Taiwan, etc. The real reason why China buys less American goods is because American manufacturing is not competitive. People think higher standard of living is a good thing but it's really a double edged sword in a global economy.
Technically, I suppose this statement may be true if IBM trademarked the term "PC" when it introduced its first microcomputer. However, there were many other microcomputers (the original generic name for what later came to be called personal computers) in existence long before IBM built its first PC.
This country had leverage to make demands in the past - not so much now. Indentured servitude is what we can expect from our creditor - we are but a subsidiary. When the monied interests (corporations) bought this country (vastly began to accelerate under Reagan), they had little problem with selling out our Democracy for profit - the 'haves' began lobbying for fewer regulations and our government joyfully took their bribes in return for campaign cash. Well, here we are. We have no leverage with the country underwriting our unsustainable economy, and no industry to fall back upon.
We are rapidly becoming a third world nation - extractive industries.
You're a genius. Take the rest of the year off.
Keep in mind there is a difference between fair trade and free trade.
We need to end the tax breaks that allow companies to move to China and reap their profits there while devastating their former workers and communities here in the U.S.
We should respond to a Chinese action that will damage us (them throwing out Google) by introducing a policy that will further damage us (banning imports from China).
I think that's called masochism.
The Americans have foolishly turned over their technology and manufacturing to the far East. Now we have nothing except desolation and ruin. And our leaders are incapable of doing one thing constructive to turn our nation in a different direction other than destruction.