The Fault Line in U.S-China Trade Policy

The  real question, in U.S.-China trade policy, is which side  U.S.-based multinationals choose.  From a very interesting story in the NYT:

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.

That reticence has long characterized foreign companies’ dealings with the ascendant China. But last winter and spring, there were signs of a new willingness by American and European multinationals to speak out.

Google said in March that it would shut down its China-based Internet search engine, rather than continue allowing Chinese censorship. The leaders of big companies like G.E., as well as the German giants Siemens and BASF, voiced concerns in early summer about access to the Chinese market.

It briefly seemed that Western companies might take a more coordinated and more assertive position.

But that season of outspokenness seems to have passed, and virtually no companies are now willing to discuss the Chinese trade barriers publicly, executives and lobbyists in Beijing, Hong Kong and Washington said.

I’m going to give a try at estimating the knowledge capital flow from the U.S. to China. It should be illuminating.

Comments

  1. China’s undervalued currency and its large and growing market is impelling US based multinationals to make substantial net fixed capital investments in China, thereby fostering capital and technology intensive industries in China. This will have long term negative implications for US economy and geopolitical power.

  2. Hugh Campbell says:

    The United States’ trade gap is the proverbial “leak-in the-dike” with its de-simulative effect on our recovery. In November 2003, Warren Buffett recommended that America adopt a balance trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Media coverage that China has kept it currency undervalued is a gross understatement, it has actually been keeping the U.S. dollar over-valued; which adversely affects all our trade with all our trading partners, not just trade with China. Until action is taken on Buffett’s balanced trade model, by the powers that be, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.

  3. Excellent. I’ll be glad to see it.

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