Why the Surprise Over Chinese Disinterest in Western Exports?

| About: General Electric (GE)

Earlier this month, GE CEO Jeff Immelt expressed disappointment that the Chinese government is not all that interested in buying Western imports. As Gomer Pyle would say, “surprise, surprise, surprise!”

The China Fantasy: How Our Leaders Explain Away Chinese RepressionOne man who’s not surprised is former LA Times China correspondent Jim Mann. Since leaving journalism, Mann seems to have made a career of writing books telling Americans that what they see in China is just their imagination.

Writing in The New Republic, Mann shreds the naïveté represented by Immelt and all the other business moguls that hoped that China would some day import in proportion to their exports:

Over the past two decades, the business community has been more upbeat about China than any other constituency in American society. Business leaders led the charge in loosening trade restrictions with China. …

However, over the past year or two, and to their evident surprise, their earlier assurances were revealed to have gotten things exactly backward. Immelt was merely the latest representative of corporate America to ring the alarm about restrictions on business operations in China, taking his cue from the leaders of Google (NASDAQ:GOOG) and other major companies. …

American and European companies have vied for centuries, through all of China's upheavals, to dominate what used to be called "the China market." Now, increasingly, China wants to keep that market for itself.

The entire blog entry is worth reading in its entirety.

While I agree with Mann, I’m not clear why business leaders are surprised. China’s industrial policy is utterly predictable to anyone who studied US/Japan or US/Korea trade relations over the past 50 years — let alone anyone who understands the brief interruption in China’s role as the dominant Middle Kingdom.
American Multinationals and Japan: The Political Economy of Japanese Capital Controls, 1899-1980 (Harvard East Asian Monographs)

I began my academic career studying the Japanese technology industries. After researching Japanese non-tariff trade barriers — particularly Mark Mason’s account of Texas Instruments (NYSE:TXN) and Marie Anchordoguy’s report of what happened to IBM — more than a decade ago I was completely puzzled as to why American and Western executives thought they would ever establish a large and durable market position in China. My two colleagues, Ken Kramer and Jason Dedrick of UCI, also wrote about this sentiment 9 years ago.
Beijing Jeep: A Case Study Of Western Business In China

Mann himself also captured this in his book Beijing Jeep, chronicling how Jeep transferred technology to Chinese manufacturers to allow them to improve their export capabilities while providing Jeep (at best) temporary access to the Chinese market.

At the risk of mixing my metaphors even more: “When will they ever learn? When will they ever learn?"

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