As far as I know, the USA has exploited China’s low-wage economy for decades, sourcing every conceivable consumer product via its mammoth retail businesses like Wal-Mart, to satisfy its people’s insatiable appetite for throw-away possessions.
On the back of this trade, which has allowed Chinese workers to improve their own standard-of-living and save money, Chinese banks have become major lenders to the creaking US economy, with dollars earned quite legitimately, and arguably saved the USA from serious embarrassment during the latest credit crisis.
Now Obama has the nerve to lecture Chinese leaders on their moral obligation to do ‘fair trade’, to allow their currency to float up to its ‘real’ market value! Otherwise the USA can’t export its cars to China.
Excuse me if I find this hard to swallow.
12 thoughts on “That’s rich!”
Hello Janus, I think most governments are guilty of the most brazen hypocrisy. Certainly Britain is no exception. In the case of America, one has to bear in mind that the vast majority of Americans, like citizens in most countries, to be fair, democratic or otherwise, are tremendously parochial and ignorant of the affairs of the wider world. Most Americans genuinely believe that their country and their fellow citizens are fundamentally superior – morally, intellectually, politically – to every other nation. Obama is playing to that weakness. I am sure he is well aware that the Chinese will raise their middle finger towards him. Gone are the days when the US reigned supreme. But he has to be seen by his electorate to be saying things that will make them think that the US wears the white hat.
After many discussions with Chinese friends and, for the most part, finishing a degree in Chinese history I’ve come to a conclusion about dealing with China. To do business with them is a Faustian pact.
They will give companies and consumers what they want, much like Faust’s Devil gives him what he wants.
There is a cost to this, however, and that is the soul. The Devil was always quite upfront about this. In fact, he had the documents written in clear language and it was to have been signed in blood.
The Chinese have their deceptions, of course. Yet even their deceptions were obvious. Things that could be made there could not be sold there. Profits made there could not necessarily be taken out of China. It was always Teng Hsiao-p’ing’s aim to find the easiest, cheapest way for China to modernise. He never had to force anyone in the USA, or, for that matter, elsewhere in the West to do anything. They flocked to China and now many are weeping when the Devil comes to collect his due. Goethe may have been kind to hid Doktor Faustus, but his at least had some virtues at heart. This time there will be no divine intervention.
There are still millions of Chinese living in poverty. Surely that should be their focus, not helping out the US?
All true, we helped them get rich and now they rule the lot.
Having worked for the Japanese for some time their attitude was always long term, they would do a deal that made no sense, then 5 or 6 years later in came the profit.
The other thing in their favour is they do not hold elections every 5 years so their politicians are concerned with getting the country moving, ours are only interested in getting re-elected in 5 years time, so no long term strategy.
Maybe we should take note and install a dictator or give the queen ultimate power.
Pseu: the situation in China is difficult to make sense of, but I’ll try. (Warning: I’m not sure that anyone can really explain this well, least of all myself)
In China what one sees is not always what is there.
The central government is sitting on a mountain of foreign currency reserves, but much of it is debt. China also has vast amounts of hidden provincial debt which actually are likely to vastly exceed their currency reserves.
China also has a rapidly ageing population with a severe gender-imbalance. While the one-child policy has been eased, the ones permitted to have more children are affluent. They are often “little emperors”, anyway, and are often utterly hopeless. I had to teach one how to open a tin. They do not know how to take care of themselves, are often extremely lazy, and are quite arrogant in many ways. Because of this they cannot spend that much money on their own population. It’s simply so vast that if even 2-3pc of the total population turn into Hackneyesque dole cases it could cripple the finances of the state. This is an inevitable result of the social state. Japan, by the way, does not have much of a social state, either.
China is also so inflation-prone that too much government spending in most places would result in economy-breaking bubbles, even if only regional, it would have major ramifications for the national economy as the fallout would result in ever-more uncontrollable migration from the affected province(s) to the already over-stretched cities such as Shanghai, Peking, Tientsin, and Shenchen.
The Japanese are much shrewder than the Chinese, however. The Chinese have basically gone from the grinding poverty of Mao’s revolution to a Las Vegas/ Southern California-style decadence in little more than one generation. The Japanese were also quite wealthy before the bubble burst. China has even bigger bubbles and, outside its showcase cities, is essentially a 3rd world country. The Japanese are also much more pragmatic and, after 1945, have been quite conciliatory in their relations. (Baggage from World War II is an issue, but it’s separate from this) The Chinese are already growing as irritating as the Americans before even reaching solid ground.
Thank you Christopher.
“Because of this they cannot spend that much money on their own population” or will not?
I always thought the Chinese had great reverence or the elderly. .
Pseu: perhaps a mixture of both.
The Chinese don’t care that much for their elderly anymore. They’re increasingly seen as a burden with an increase in the 1-2-4 situation. One working-age person responsible for two parents and four grandparents,
with the cost of living and inflation in China the one could barely support him/herself much less the other 6, especially if they don’t have much in the way of savings. Understand that China today is barely Chinese. The parts of the culture that Mao didn’t destroy in the Cultural Revolution were destroyed by the hyper-commercialism of the post-1979 era. T
I do not usually wade into posts apparently designed with the intent of slagging off on the homeland, but the reporting of the recent meeting between the Heir Apparent and the Lame Duck is, as usual, mostly politics and little else.
Let’s begin with “exploitation” it’s a nice inflammatory word, but who is exploiting who when Walmart sell $0.89/pairs of socks which they purchased from Chinese suppliers for less than 25% of that number? (they are, by far, Walmart’s most profitable line item) Mostly it would seem to be the Chinese government (much of it via ex military involvement) exploiting their own slaves (there’s another nice inflammatory word), I would hazard a guess that there would not be riots in the streets of Chicago if the price of socks from Walmart rose to $1.50 or even $2.00, especially if some or all of the increase went to improve some Chinese family’s standard of living, but that ain’t likely.
Debt? Yes but Chinese banks have no obligation to purchase US bonds or Treasury Notes either, what are they thinking? If they want a return on investment they would be better off purchasing debt from Brazil or Portugal at 12% or even Chinese sovereign debt at 4%, rather that the pitiful 1.8% they earn on 10 year US bonds. They must know something about the “creaking ” economy into which they are pouring their hard earned Dollars that is escaping our pundit. Holding the debt of others does not give the holder any power, quite the reverse, the holder is now dependent on the borrower’s health for the full value of the loan. Ask German banks how much power they could exert over the Greek Government while holding their obligations. If the Chinese want to cease buying debt from the US they can, and should do so, immediately. For the last three years every US Treasury auction has been grossly over subscribed. China holds about 20% of the total and it turns over pretty fast (about three years duration), it also has excellent liquidity and there is an active and competitive secondary market. If the Chinese don’t want it they should sell it, there is a line up of buyers (mostly Americans like me who collectively own about 70%). All that has happened is that their heavy involvement has suppressed the interest rate at which the note is auctioned, thank you China for reducing the return on my investment.
A few facts about Fair Trade practices. In December of 2011 China increased it’s tariff on imported automobiles from 22% to 47% (The US tariff is 2.5%), presumably the heir apparent and his cronies believe, like many other centralized governments, that by such actions they are controlling their economy, perhaps even increasing internal demand (who knows). As usual the US government’s reaction is woolly headed and wrong. Last year GM sold 2.5 million cars in China, by far the largest sales of the “outsider companies”, all but a few percent were made in China by GM. As a result, they and the other companies operating within China see little impact of the tariff increase. BMW, VW and Toyota presumably see it differently, but they should be left to fight their own battles, which are not those of the US.
The currency argument is a non-starter too, inflation in China is already too high to be sustainable without some crash and as Christopher says in his comment above any large internal government spending growth will send it even higher destroying what little social safety net exists in the country.
Thanks, everyone, for these knowledgeable replies. As usual the deeper we dig, the murkier it gets!
Thanks Janus -and everyone else.
They never got too fat on me and mine, Wamlarts and that ilk carry a fatwah in my household, never buy Chinese crap and always complain vociferously about lack of choice, generally end up going without!