China Counterattacks With a 'Buy China' Policy

If you ever wondered how trade wars start, pay attention. We are in the early stages of saber-rattling on trade and if some adult supervision does not come along, it could get much worse. Here’s how.

Politicians try to curry favor with unions or the steel industry or the auto industry and they insert a “Buy American” clause into legislation. In this case, it was the American Recovery & Reinvestment Act of 2009, otherwise known as President Obama’s economic stimulus plan. Then, politicians in other countries get the same ‘bright’ idea and they insert protectionist trade policies into legislation over there as China is now doing. Rinse, repeat and escalate and before long you have a serious problem.

By the way, I believe the Great Depression itself should have been just a recession, but that government actions including higher income taxes (Presidents Hoover & Roosevelt), trade restrictions (Smoot Hawley Tariff Act of 1930) and a significant contraction in the money supply (Federal Reserve) all combined to drag the economy down much more than otherwise would have happened (see How to Squelch an Economic Recovery for much more detail on this issue).

Just as we had in the 1930s, we now have real movement towards trade protectionism, which is an enormous policy mistake. The ‘Buy American’ provision has already stirred complaints from our trading partners. Also, Mexico announced that it is putting up tariffs on American goods over another dispute. Though these are relatively minor events, protectionism is hard to stop once it gets going.

Though many believe the Buy American policy was withdrawn, that is incorrect. Canada, Mexico and Brazil have complained about this policy and they are doing so with good reason. This piece from Reuters illustrates Brazil’s issue [emphasis added]:

Brazil may challenge the legality of a “Buy American” clause in the recently approved U.S. economic stimulus package at the World Trade Organization, Brazilian Foreign Minister Celso Amorim said on Monday.

…The U.S. Congress approved a $787 billion plan to jump-start the world’s biggest economy on Friday, stipulating that public works and building projects funded by the stimulus use only U.S.-made goods, including iron and steel.

Major commodities exporter Brazil has been a key player in the Doha round of global trade negotiations, and had hoped the G20 group of leading economies would honor a November pledge in Washington to avoid protectionism.

Amorim said the U.S. move was counterproductive, likening it to a pain-killer that heals the symptoms of disease but not its cause. He said the Doha round was not dead but would be hard to revive.

“It’s a bad sign. … It’s not positive at a moment when the world economy is trying to revive,” Amorim said.

Chinese official media also blasted the Buy American provisions over the weekend, saying they were “poison” to the world economy.

U.S. business groups last week criticized Congress and warned the clause would dilute the bill’s impact and invite other countries to keep American goods out of their stimulus programs…

I believe the quotations from the spokesman for Brazil are accurate. Protectionism is a dangerous proposition and the consequences are likely to be negative. There seems to be a real failure by many of our politicians to understand that protectionist policies in our country will just spur similar policies in other countries.

Now, we are seeing protectionist trade policies in China. This Associated Press piece spells out China’s protectionist retaliation [emphasis added]:

China has imposed a requirement for its stimulus projects to use domestically made goods — a move that could strain ties with trading partners after Beijing criticized Washington’s “Buy American” stimulus provisions.

Projects must obtain official permission to use imported goods, said an order issued by China’s main planning agency and eight other government bodies.

Even before the order, business groups worried that foreign companies might be excluded from construction and other projects financed by Beijing’s 4 trillion yuan ($586 billion) stimulus. Foreign makers of wind turbines complain they have been shut out of bidding on a $5 billion stimulus-financed power project.

“Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China,” says the order, dated June 1 and reported this week by state media. “Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts.”…

The wording on this is similar to various “Buy American” proposals and it must make sense to politicians, even though it makes no economic sense to me. First, the requirements for bureaucratic approval are a sham. The bureaucracies can easily make it next to impossible to get approval on any reasonable basis. Second, it just concentrates even more authority in a given bureaucracy and requires companies to curry favor with the bureaucrats. Third, the local suppliers typically charge more than the products would cost if there was competitive bidding with foreign suppliers. And, fourth, by slowing everything down, it ramps up costs.

This Bloomberg piece aptly illustrates the problems inherent in large scale projects and “Buy American” policies [emphasis added]:

Cisco, Alcatel Chafe at ‘Buy American’ Mandate in Stimulus Plan (Bloomberg, June 10, 2009, Todd Shields and Mark Drajem)

Cisco Systems Inc. and Alcatel- Lucent want “Buy American” provisions waived for a $7.2 billion U.S. program to expand high-speed Internet access, saying the rules are difficult to meet and undermine the economic stimulus program.

Requiring U.S.-made parts would be “grossly inefficient” and a “radical departure” from normal markets, said Cisco, the largest maker of networking equipment. The comments were filed with the U.S. agency running the broadband initiative, part of the $787 billion stimulus package.

The rules may slow projects the stimulus was meant to spur because telecommunications networks contain parts from around the globe, the two equipment makers say. Congress, seeking to boost U.S. jobs, said funds provided under the law passed in February generally can’t be used for iron, steel and factory goods that aren’t U.S.-produced.

“We’re talking about technologies that are no longer made in the United States,” John Marinho, vice president of public affairs for Paris-based Alcatel-Lucent, said in an interview. The company operates in 130 countries, and “you need a global scale,” he said.

One obvious problem to this ‘Buy American ‘ proviso is how do you define U.S. produced? Even cars made in America by domestic car companies have significant foreign-sourced components of between 20% and 30%.

Source: Carpe Diem / Chicago Federal Reserve

This data is compiled by the Chicago Federal Reserve based on 2006 information. So, under the “Buy American” provisions could you buy a GM (GMGMQ.PK) car or truck? What about Toyota (TM)?

As another example, consider a complex broadband computer network that would require thousands of parts, each of which is made up of even more parts. Who is going to track the provenance of all these items? What will that cost? And, what happens when a given part is no longer made here? Do you need a pass from the regulators?

For years, we tried quotas and high tariffs to protect our domestic auto industries and those policies have not helped those companies one bit. In fact, GM and Chrysler are in Washington right now asking for additional billions in government bailouts. Those tariffs and quotas did not help domestic industries, but they did hurt consumers by raising prices.

Comments

[Canadian Re...:]

Protectionism is nothing new in USA. For several years, we tried to supply to government funded projects with no success. "Buy American" was clearly stated in the tender documents. We did not even have a chance to participate.

Other ways to prevent outsiders from participation include local certification. We went through almost two years of testing with DOT (Dept. of Transportation) to try to get certification with no success. Finally, we asked whether DOT put the local manufacturers through the same hoops and were informed "NO". This is after we have obtained acceptance by the US Navy. This is the same soft trade barrier that USA accused other countries of putting up against USA's import into the respective countries.

From the Canadian's point of view, USA has been practicing unfair trade all the time. One case in point is the soft wood lumber issue. USA collected some $5 billion in tarriff and anti dumping taxes. Canadians went to courts and won the case. Even American courts agreed with Canadian that we are not subsidising or dumping. At the end of the day, USA government returned $4 billion. The other billion has been given to our competitors and never to be seen again. I guess we were told to buzz off. Tough luck. Basically, USA behaves like BULLY when it feels like it.

Jun 19 03:57 PM

[hondaicivic:]

Sober Realist, are you really that dumb and naive? Do you really think Japan, South Korea, and Taiwan are democractic? Democracy in those countries/regions are about as fake as Brittney Spear's boobs. You should try living in those places for a couple of years and see if they're really a "democratic" places like you think they are. Look up Chaebol or MITI on wikipedia to see what I'm talking about, or trying to figure out why the LDP party in Japan has been in power for the past 50 years.


On Jun 19 11:13 AM Sober Realist wrote:

> The US was wrong when it thought that capitalist markets would help
> to democratize China as it successfully did in Japan, South Korea,
> and Taiwan. In order to preserve its monopoly of power, the CCP has
> co-opted the urban middle class which has benefited from China's
> rapid economic growth. US businesses sold its soul for profits, cutting
> manufacturing jobs in the US and exporting them to China for cheap
> labor and high profits. And now the West is surprised how business
> conduct is dictated in China. Protectionism in China is nothing new;
> it has a long track record of using unreasonable regulatory and technology
> standards to block foreign access to its markets.
> www.nytimes.com/2009/0...

Jun 19 04:06 PM

[Sober Realist:]

Jesus! You could say the same about the U.S. But relatively speaking, they can no way be compared to China. Are you that stupid?


On Jun 19 04:06 PM hondaicivic wrote:

> Sober Realist, are you really that dumb and naive? Do you really
> think Japan, South Korea, and Taiwan are democractic? Democracy in
> those countries/regions are about as fake as Brittney Spear's boobs.
> You should try living in those places for a couple of years and see
> if they're really a "democratic" places like you think they are.
> Look up Chaebol or MITI on wikipedia to see what I'm talking about,
> or trying to figure out why the LDP party in Japan has been in power
> for the past 50 years.

Jun 19 04:17 PM

[Angry Bear:]

Not mentioning China's mercantilist policies, VAT, and money manipulation makes for a rather one-sided viewpoint on US policy.

WTO rulings are made in secret and bear watching, but are weighted in favor of capital flows only with little protection of other vital areas of production. Each agreement on services by sector, many made in the 90's, need studied and are hardly uniform as to philosphy of trade.

Jun 19 04:28 PM

[Glen L.:]

Whether or not China is dumping or otherwise engaging in unfair trading practices, we in the U.S. should be a little circumspect before complaining about it. The U.S. enjoyed over 50 years of dollar hegemony, and unilaterally abandoned the Breton Woods gold exchange standard when we could no longer honor our promises due to our own reckless inflation, in turn due to Vietnam and the Great Society boondoggles. When other countries got into debt problems we brow-beat them via the IMF and WTO to cut spending, raise taxes, and otherwise act responsibly to repay their debts. Now we want them to fund our wars (which in some ways imperil them) and our consumer debt ad infinitum.

Protectionism is a loser's game. Let's avoid it, clean up our own house, and not worry about what losers in foreign countries do. Sooner or later their mistakes will backfire on them, just as ours are doing to us now.

Jun 19 04:38 PM

[rosey99:]

We like to think we are sooooo much smarter than those people who lived in the 1930s. And apparently, a large number of people still drink the economic fundamentalist kool-aid.

As for "free trade," it is a myth. It exists only in economics text books. Protectionism takes many forms, not just tariffs and quotas, and is virtually always present. It is really just a question of degree.

Sometimes I think my fellow Americans are truly morons, it's typically when I see assertions that a nation of our size can sustain prosperity as a collection of real estate agents, stock speculators, marketing experts, financial analysts, retailers of imported goods, and of course, pundits. We'll all get rich owning shares of the productive corporations, and let the producing be done in the cheapest places we can find. Who cares if they are corrupt, totalitarian, or both.

The current period of globalization resembles the most recent (but by no means the first) period that ended in 1929. This ain't 1929, but IMHO it is fair to say that generally speaking, complex international systems (like the current global economy) are more prone to collapse than relatively simple bilateral arrangements. We might be seeing that now. Time will tell, but it certainly has happened before.

Or perhaps we should just outsource our government and let a consortium put together by the WTO and The US-China Business Alliance run the show. We're part way there already. Think of the upside: no more time wasted voting, no more political campaign commercials. . .And no more politicians or politics.

Milo Minderbinder is alive and well, and running things. We may as well get comfortable with the idea, and sleep soundly knowing we all "have a share."

Jun 19 04:49 PM

[Sober Realist:]

Right on!


On Jun 19 04:49 PM rosey99 wrote:

> We like to think we are sooooo much smarter than those people who
> lived in the 1930s. And apparently, a large number of people still
> drink the economic fundamentalist kool-aid.
>
> As for "free trade," it is a myth. It exists only in economics text
> books. Protectionism takes many forms, not just tariffs and quotas,
> and is virtually always present. It is really just a question of
> degree.
>
> Sometimes I think my fellow Americans are truly morons, it's typically
> when I see assertions that a nation of our size can sustain prosperity
> as a collection of real estate agents, stock speculators, marketing
> experts, financial analysts, retailers of imported goods, and of
> course, pundits. We'll all get rich owning shares of the productive
> corporations, and let the producing be done in the cheapest places
> we can find. Who cares if they are corrupt, totalitarian, or both.
>
>
> The current period of globalization resembles the most recent (but
> by no means the first) period that ended in 1929. This ain't 1929,
> but IMHO it is fair to say that generally speaking, complex international
> systems (like the current global economy) are more prone to collapse
> than relatively simple bilateral arrangements. We might be seeing
> that now. Time will tell, but it certainly has happened before.<br/>
>
> Or perhaps we should just outsource our government and let a consortium
> put together by the WTO and The US-China Business Alliance run the
> show. We're part way there already. Think of the upside: no more
> time wasted voting, no more political campaign commercials. . .And
> no more politicians or politics.
>
> Milo Minderbinder is alive and well, and running things. We may as
> well get comfortable with the idea, and sleep soundly knowing we
> all "have a share."

Jun 19 06:08 PM

[Old Trader:]

Yes, to both points. My response to Ben Gee was to clarify what appears to be some misunderstanding as to how "dumping" works. He seemed (perhaps I'm mistaken) to be saying that China couldn't engage in dumping, since they're selling "below cost". Obviously, a sovereign state has deeper pockets that any corporation, and can "assist" their own firms if its deemed to be in "national interest".


On Jun 19 01:14 PM coreopsis wrote:

> Isn't Boeing still selling and don't US airlines buy Airbus?
>
> Is your point that 'dumping' charges are leveled by local manufacturers,
> are seldom if ever proved, and the commercial success of the product,
> if merited, continues? In view of your age, we would appreciate elucidation.
>

Jun 19 08:43 PM

[Ben Gee:]

Winners do not complain. They do not complain even if the loser cheats. If the winner cheats, you will never hear the end of it. This is true for every human activity including trade.

Jun 20 05:48 AM

[coreopsis:]

Fling all the eggs at the hedge funds but they're still way richer, more powerful, more intelligent than you. They're an American success story.


On Jun 19 07:28 PM CD3s wrote:

> I guess this is the prelude to the real financial crisis that will
> unfold within the next ten years. I guess no one learned their lessons
> the first time around. Let the hedge fund turds bid the market to
> a 52 week high. The day of reckoning is comingfor this bubble/house
> of cards economy.
>
> good articles...short.ie/bcu9gb recommended

Jun 20 11:04 AM

[coreopsis:]

I'm very aware of this case and have been involved in WTO disputes. That's not the point. The WTO is like the UN, and they didn't prevent Afghanistan and, even worse, Iraq. Multinational organizations need support until the great powers agree to cede some of their own trade and economic sovereignty. Until that happens, we need to recognize that each nation attempts to use the WTO or threat of WTO sanctions to its own benefit, and NEWS ALERT to the armchair analysts here, so does the US.


On Jun 19 01:29 PM User 142738 wrote:

> coreopsis: U.S. Steel has won at least one case recently. Companies
> typically go up to the World Trade Organization to press charges
> if the government is not cooperative.

Jun 20 11:10 AM

[coreopsis:]

CRN, please notice how's there absolutely no response to your post which, of course, is well-established in global trade and business circles. No one (including the bumblers SR, etc on this site) dare dispute a Canadian because, well, that would be unfair....you're practically AMERICAN!

But if an Asian entity making the same observations, you would be slammed with whatever mass of trivia that the unempowered periphery such as SR could dredge up.

The institutional barriers to free competition in the US are too subtle for inexperienced, unengaged observers confined to their mental wheelchairs searching for evidence that proves their bias.

Thanks for providing empirical evidence that the facade of American exceptionalism is shallow indeed.


On Jun 19 03:57 PM Canadian Red Neck wrote:

> Protectionism is nothing new in USA. For several years, we tried
> to supply to government funded projects with no success. "Buy American"
> was clearly stated in the tender documents. We did not even have
> a chance to participate.
>
> Other ways to prevent outsiders from participation include local
> certification. We went through almost two years of testing with DOT
> (Dept. of Transportation) to try to get certification with no success.
> Finally, we asked whether DOT put the local manufacturers through
> the same hoops and were informed "NO". This is after we have obtained
> acceptance by the US Navy. This is the same soft trade barrier that
> USA accused other countries of putting up against USA's import into
> the respective countries.
>
> From the Canadian's point of view, USA has been practicing unfair
> trade all the time. One case in point is the soft wood lumber issue.
> USA collected some $5 billion in tarriff and anti dumping taxes.
> Canadians went to courts and won the case. Even American courts agreed
> with Canadian that we are not subsidising or dumping. At the end
> of the day, USA government returned $4 billion. The other billion
> has been given to our competitors and never to be seen again. I guess
> we were told to buzz off. Tough luck. Basically, USA behaves like
> BULLY when it feels like it.

Jun 20 11:16 AM

[backtoreality:]

Sober..

My wife is from Nanning, these people complaining about "buy american" need to go to china and try to buy an american product..

ROTS AH RUCK...Nanning has the biggest walmart store i could ever dream existed..we went there shopping..and I found 3 (that is three).. american products..1. a 1/4 lb block of wisconsin cheese, and only 3 on the shelf 2. a can of heinz pork and beans...6 cans on the shelf.. 3. red delicious apples from washington,,rots and rots of them...you could buy all you could carry. I figured it must mean the chinese apples are out of seasen, and they can't stockpile any kind of food because their entire food delivery system is about where we were in the early 1900's....no cold storage, no frozen food, no food canning industry, no meatpacking industry, no inspection system..primitive from the farm to the market, and the consumer.
I couldn't believe the first time I was in china, going up the elevator to a high rise apartment....and here is a chinese woman with a live chicken in a box...she is coming home from the market to make chicken dinner.


On Jun 19 02:46 PM Sober Realist wrote:

> Yes, but what is news is that the rest of the world is starting to
> complain about it now, except for someone like coreopsis.

Jun 20 04:17 PM

[backtoreality:]

Cannuck..

Tell your sad tale to the wheat farmers in north dakota, where I come from.
The canadian wheat board and the USDA allowed canadien wheat farmers to haul and sell their wheat in north dakota grain elevators.
They got $6.00 US a bushel for their wheat, when the canadian wheat board was selling on the world market for $5.00
Plus..they got paid in US dollars...which were then worth $1.40 in canadian dollars when they got home.
Plus, the grain monopoly run by archer daniels and cargill were overjoyed to buy canadian wheat for $6.00 because without the imports, they would have been paying the north dakota farmer closer to $7.00 a bushel

On Jun 19 03:57 PM Canadian Red Neck wrote:

> Protectionism is nothing new in USA. For several years, we tried
> to supply to government funded projects with no success. "Buy American"
> was clearly stated in the tender documents. We did not even have
> a chance to participate.
>
> Other ways to prevent outsiders from participation include local
> certification. We went through almost two years of testing with DOT
> (Dept. of Transportation) to try to get certification with no success.
> Finally, we asked whether DOT put the local manufacturers through
> the same hoops and were informed "NO". This is after we have obtained
> acceptance by the US Navy. This is the same soft trade barrier that
> USA accused other countries of putting up against USA's import into
> the respective countries.
>
> From the Canadian's point of view, USA has been practicing unfair
> trade all the time. One case in point is the soft wood lumber issue.
> USA collected some $5 billion in tarriff and anti dumping taxes.
> Canadians went to courts and won the case. Even American courts agreed
> with Canadian that we are not subsidising or dumping. At the end
> of the day, USA government returned $4 billion. The other billion
> has been given to our competitors and never to be seen again. I guess
> we were told to buzz off. Tough luck. Basically, USA behaves like
> BULLY when it feels like it.

Jun 20 04:29 PM

[Sober Realist:]

Thanks for the interesting first-hand experiences.

On Jun 20 04:17 PM backtoreality wrote:

> Sober..
>
> My wife is from Nanning, these people complaining about "buy american"
> need to go to china and try to buy an american product..
>
> ROTS AH RUCK...Nanning has the biggest walmart store i could ever
> dream existed..we went there shopping..and I found 3 (that is three)..
> american products..1. a 1/4 lb block of wisconsin cheese, and only
> 3 on the shelf 2. a can of heinz pork and beans...6 cans on the shelf..
> 3. red delicious apples from washington,,rots and rots of them...you
> could buy all you could carry. I figured it must mean the chinese
> apples are out of seasen, and they can't stockpile any kind of food
> because their entire food delivery system is about where we were
> in the early 1900's....no cold storage, no frozen food, no food canning
> industry, no meatpacking industry, no inspection system..primitive
> from the farm to the market, and the consumer.
> I couldn't believe the first time I was in china, going up the elevator
> to a high rise apartment....and here is a chinese woman with a live
> chicken in a box...she is coming home from the market to make chicken
> dinner.

Jun 20 07:51 PM

[LCACM:]

It seems it is better to have trade wars rather than wars that kill people and destroy economies. Currently US is wasting huge resources in Iraq due to a war based on faulty intelligence relating to WMDs.
Each country needs to do what is in it's best interests and not based on the interests of Corporate lobbysts. Currently all Democratic countries are suffering, due to the fact that politicians need cash to get re-elected and this is usually supplied by Corporate lobbysts. As Chinese leaders do not have to worry about re-elections, they are pursuing their national interests rather than listen to lobbysts in return for campaign funds. The Chinese have unseated US from being the largest creditor and subjugated it to become the largest debtor. The Chinese leadership can proudly point to the 2 Trillion Dollar reserves they have amassed. Compare this wih the 10 Trillion debt that the US has amassed. This has happended in a span of barely 25 years or so.
So the US needs to rethink its trade policies. It should be the duty of the US Government representatives to ensure that its citizens can find meaningfull employment, and align its trade policies with this goal.

Jun 20 09:09 PM

[coreopsis:]

A specious article and probably a post of SR under an alias.

First of all, where is Nanning and which WalMart are you talking about?

Second, if you need to buy US food in China, the problem is yours and not theirs.

Third, as youvAmericans are fond of saying, 'why you don't you go back to your own country?'


On Jun 20 04:17 PM backtoreality wrote:

> Sober..
>
> My wife is from Nanning, these people complaining about "buy american"
> need to go to china and try to buy an american product..
>
> ROTS AH RUCK...Nanning has the biggest walmart store i could ever
> dream existed..we went there shopping..and I found 3 (that is three)..
> american products..1. a 1/4 lb block of wisconsin cheese, and only
> 3 on the shelf 2. a can of heinz pork and beans...6 cans on the
> shelf.. 3. red delicious apples from washington,,rots and rots of
> them...you could buy all you could carry. I figured it must mean
> the chinese apples are out of seasen, and they can't stockpile any
> kind of food because their entire food delivery system is about where
> we were in the early 1900's....no cold storage, no frozen food, no
> food canning industry, no meatpacking industry, no inspection system..primitive
> from the farm to the market, and the consumer.
> I couldn't believe the first time I was in china, going up the elevator
> to a high rise apartment....and here is a chinese woman with a live
> chicken in a box...she is coming home from the market to make chicken
> dinner.

Jun 22 10:28 AM

[coreopsis:]

The other great thing about America is it is the home to the biggest [deleted] WHINERS in the world! Of course, also the LOUDEST! People treat Americans with such disrespect. Americans should stand up for their rights!


On Jun 20 04:29 PM backtoreality wrote:

> Cannuck..
>
> Tell your sad tale to the wheat farmers in north dakota, where I
> come from.
> The canadian wheat board and the USDA allowed canadien wheat farmers
> to haul and sell their wheat in north dakota grain elevators.
> They got $6.00 US a bushel for their wheat, when the canadian wheat
> board was selling on the world market for $5.00
> Plus..they got paid in US dollars...which were then worth $1.40 in
> canadian dollars when they got home.
> Plus, the grain monopoly run by archer daniels and cargill were overjoyed
> to buy canadian wheat for $6.00 because without the imports, they
> would have been paying the north dakota farmer closer to $7.00 a
> bushel
>
> On Jun 19 03:57 PM Canadian Red Neck wrote:

Jun 22 10:31 AM

[Canadian Re...:]

Hi, Backtoreality,

I don't know much about farming industry. From what I have read in newspapers, it appears that American farmers are much more subsidized than Canadian farmers. Our Canadian farmers kept telling us that they cannot compete against the American farmers because Canadian government does not subsidize them as much as the American government. Anyway, who knows.

One of the problems faced by the American farmers is the exchange rate between US$ & C$. We can't help it if people think US$ is worth more than C$. There lies the handicap. May be you should convince your government to let US$ fall.

By the way, I worked in China for 3 1/2 years a few years ago. In most cities along the coast, standard is not as low as you have discribed. I have also shopped in Walmart while working in China. I did not look out for things made in USA, but there sure were fair number of American brand products. Of all probability, they were all made in China. Please complain to Walmart for not selling American made products in China.

In many Asian countries, people like to buy live chicken and fish. Frozen stuffs are considered substandard. Please do not be so judgemental because you saw someone carry a live chicken into an apartment. I grew up in a village, we have slaughtered enough chickens in our time for our own consumption.



On Jun 20 04:29 PM backtoreality wrote:

> Cannuck..
>
> Tell your sad tale to the wheat farmers in north dakota, where I
> come from.
> The canadian wheat board and the USDA allowed canadien wheat farmers
> to haul and sell their wheat in north dakota grain elevators.
> They got $6.00 US a bushel for their wheat, when the canadian wheat
> board was selling on the world market for $5.00
> Plus..they got paid in US dollars...which were then worth $1.40 in
> canadian dollars when they got home.
> Plus, the grain monopoly run by archer daniels and cargill were overjoyed
> to buy canadian wheat for $6.00 because without the imports, they
> would have been paying the north dakota farmer closer to $7.00 a
> bushel
>
> On Jun 19 03:57 PM Canadian Red Neck wrote:

Jun 25 06:20 PM

[Phillip Jain:]

To understand the Buy Chinese understand some realities.

REALITY: Americans don't normally haggle or bribe or have strong family & social connections. Exactly the opposite in China.

REALITY: Free trade, laisezz-faire in America specifically is more about corporate profits. Greed is Great and big money lobbyists have BIG influence on politicians. Basically no one is minding the "peoples' store".

REALITY: Communist "cadres" are just another totalitarian regime (witness control of speech, press)

REALITY: Corruption is rampant in China, actually even more than other countries like India. While US investors have "clean room" approvals and perceive it as "captialists". The "rules" pretty much require a strong local partner, so the real dirty laundry is washed under the table by ethnic Chinese "partners".

REALITY: Without significant growth India and China's unemployment rates shoot up and discontent stirs. Incumbents have been thrown out repeatedly in Indian states on under-performance. Recently Indian incumbents' farm & labor massive support giveaways were very effectively managed to minimize corruption and helped reelect the Indian Congress to power.
As exports fell sharply, China has had to stimulate its economy massively. While China is more "stable", it is akin to a pressure cooker bomb without a safety release for the steam, when it blows things will be wiped out.

Given these realities :-

* No one in the US govt gives a damm about BuyXYZ policies in Europe, China or PacRim for soft & hard barriers in access to government money paid projects. US has turned a blind eye to Yuan manipulation, dumping, etc. are they going to do anything about them? ha ha ..

* $600B infrastructure spending is a MUCH higher %age of China's GDP than even Bush/Obama's packages.

* Even within the China's Communists, incumbent elites at federal, province and local levels in power change every so many years. Each elite needs to MAKE MONEY for themselves (& to pay for their kids' US/European education/MBAs) while they are in power.

So bottom line, buy Chinese is simply a way to distribute money via local Chinese contacts and of course with "commissions" to the right people. If they buy from foreigners, not only will the contracts will be likely to be more expensive but less chances for paybacks.

Jun 28 05:11 PM