Obama's 'Buy American' Plan May Meet China's Export-Led Growth in 2009 13 comments
-
Font Size:
-
Print
- TweetThis
Just days before Barack Obama officially takes office, his economic advisers reportedly are considering including a “buy American” provision in the economic-stimulus legislation that the new president and his team have made its first priority.
Jen Psaki, a spokeswoman for Obama’s transition team, is quoted in a Bloomberg report as saying,
We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs, including jobs in manufacturing.
Across the Pacific, manufacturing jobs in China are also taking center stage. As Chinese exports decline and millions of migrants are returning to their hometowns for the holidays, Beijing is implementing a "me-first" trade strategy as well. Russell Leigh Moses, a China-watcher at The Beijing Center for Chinese Studies, said recently:
The leadership here is under enormous pressure from manufacturers and local officials to do whatever it takes to save jobs and maintain stability. There are some voices within the bureaucracy who are concerned about this 'China first' strategy, but they are being overwhelmed by these domestic cries for help.
Just a week before the release of macroeconomic data for 2008, People's Bank of China Governor Zhou Xiaochuan has warned the mainland could miss its target of 8 percent economic growth this year. And it may take a while for the Chinese economy to turn around. Fan Jianping, chief economist of the State Information Center, a top Chinese think-tank, says China’s economy will not recover until 2010, as it needs time for government stimulus policies to take effect. China's export volume might see a fall in 2009 from 2008, which would further slow the economy, he recently told the Shanghai Daily.
The current response from Chinese regulators suggests that there will be a qualified return to the export led growth model. Dan Harris at the always insightful China Law Blog has posted his law firm’s expectations for China’s FDI policies for 2009. They include the following:
- Support for low tech, high employment manufacturing will return.
- Support for pure export manufacturing will return. The resulting high trade deficit is no longer a political concern. (….)
Higher trade deficits in exchange for greater social stability. Time quotes Roderick McFarquar of Harvard, one of the world's most respected China scholars, warning the Obama administration it should have a contingency plan for "what we would do if there's a major collapse of the political order."
With the Lunar New Year coming on January 26, handouts to China’s poorest are on the way. For the Year of the Ox, Beijing has decided to distribute RMB9 billion worth of hongbaos (or red packets) to 74 million of the poorest residents in cities and villages as one-time disbursements meant to help tide them through the hard times. Villagers will receive RMB100 (USD 14.70) each, city dwellers RMB150 (USD 22) each, and those on state pensions/subsidies RMB180 (USD 26) each.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 13 comments:
Obama says he's busy studying FDR's inauguration speeches, to learn how to soothe the masses and assure them he's on the job of restoring the American economy. And he's obviously playing FDR to George Bush's Herbert Hoover with his stated economic policies. The tragic mistakes of 1930-1939 are being repeated, one after another. Great Depression II is assured. And, like a bad dream that repeats itself night after night, I predict that Obama's popularity will soar even as we fall deeper into depression, just as FDR's did. "Buy America First" will be applauded by the vast majority, even as prices at Walmart soar and incomes and jobs decline.
The only consolation is that the Chinese government seems to be as stupid as ours. Stupidity knows no racial or national boundaries.
"
Manufacturing industries which have competitive advantage in the world market will survive by themselves with little support. Industries which require constant government subsidies to survive have no place in the United States except for those essential to national security
"
With all due respect, there can be no competitive advantage when China, and other major exporters deliberately keep their currency depressed to undercut USA manufacturers.
Also, labor in most countries is at the whim of capital, much more so than in the USA, with no or trivial safely nets for the working people to speak of, in most cases. In a more level playing field, your competitive advantage argument might make sense, but, as is apparent just from the few facts I mentioned above, a level playing field is pure fiction and will remain so for the near future, at least.
Up to now, the capitalist elites have gotten away with undercutting labor at every step of the economy, first with shipping high paying mfn jobs overseas, and more recently, shipping service jobs, like high-tech, as well. This has resulted in no increase in real wages, after inflation, for "joe sixpack" and we end up where we are today: the beginning of the collapse of "joe sixpack" consumer and the dismantling of the export oriented economic global model...
Look up the plunges in mfn activily in Japan, China, and Germany, the facts are clear; please spare us the old "competitive advantage" argument first put forth 30 years ago, during the early 1980's, when the great dismantling of labor unions began... Working people in the USA need "protection", since NO other country in the world is, as of yet, willing to be the consuming engine of the planet.
And i'm not talking about Internets and IPod, etc.. I'm talking aviation, aeronautics, advanced materials. If they are willing to sell at the most 5% of what Pentagon has been keeping secret for decades, the US would be out of recession real quick.
Problem is, can they afford to, in the name of "national security"?
Protectionism is a moot point.
The Chinese, Vietnamese, etc. were going to produce at lower prices no matter what we did. Capital will flow to the most efficeint place, the law of large numbers is against U.S. production of simple items.
Who knows? Maybe ten years from now, China will be struggling against goods made in Africa.
Therefore, we will not lose 100% of manufacturing capacity, just the least efficeint.
Lastly, if we did not have 'foreigners' making some money from manufactured products; we would be giving them foreign aid hand-outs and the situation would be worse.
On Jan 14 12:25 PM Jubilee Year wrote:
> I have some interesting question for the free-trader crowd.
>
> At what point does the loss of our manufacturing capacity turn into
> a bad thing? Is there any point, any point at all, at which you would
> say, this is enough? Or would you decry protectionism even to the
> point of losing 100% of our manufacturing capacity? Even the midst
> of a depression?
We want to see COUNTRY OF ORIGIN on meats, prepared foods, goods for the home, clothing, and personal goods.
We will not be fooled by clever marketing phrases like Distributed by, Market by, or Manufactured for, while does not indicate where the goods actually came from.
Many stores have empty shelves due to lack of sales over the past few months, this means that they do not have money for new inventory. So, even US corporations that have goods produced off shore will feel the pinch. I think the consumers have spoken!
We will find alternatives to buying foreign goods. Most homes are stuffed full of unused but usable goods. We just need to start spreading them around. It is likely that we could go for a long period of time without the need to purchase new goods.