Wednesday, June 24, 2009

Short-Term Benefits

The United States and European Union jointly filed a complaint with the World Trade Organization, claiming China's export restrictions amount to protectionism.
They claim China is limiting the amount of exports of bauxite and zinc, of which China is one of the world's largest producers, and giving an unfair advantage to domestic manufacturers who use these raw materials to produce goods.
"China is not only continuing but accelerating many of the protectionist approaches they've taken in the past to promote economic development," said Michael R. Wessel, who was appointed by Nancy Pelosi, the speaker of the House, to the United States-China Economic and Security Review Commission.
As a response, China has denied breaking WTO rules, but more importantly it will suffer backlash in its hypocrisy in its promises not to be protectionist and yet accusing others like the United States of doing the same.
On June 4, the National Development and Reform Commission ordered government agencies to buy only Chinese goods of all types with money from the government's $586 billion stimulus package.
Some Chinese experts say there's still room to buy foreign-made goods as many purchasing officials tend to favour international brands, or when no domestic alternatives are available.
While it is a good exercise in cost cutting and boosting domestic spending, it is not really getting to the core of the issue which is investing more in China's welfare and education system and tackling the issue of health care in order to give people more consumption confidence.
Many people are still scraping up whatever savings they have for any possible rainy day that may come their way.
Why such short-term thinking? China has a policy of long-term thinking when it comes to diplomatic relations, so why not the same when it comes to its own people? Or are officials so obsessed with good numbers on their records for promotions later?
But another interesting problem that may crop up because of this "Buy China" policy is the materials or goods officials purchase may be substandard and create more problems in the future.
There was a recent report that several dams along the Yellow River are close to collapse only a few years after being built. This means almost 40 percent of China's reservoirs are unsafe.
Shoddy construction, unqualified workers and embezzlement of funds are threatening dams' safety in Gansu Province, according to Chinese media.
This is just one example, but since much of the $586 billion stimulus is geared towards infrastructure like highways, roads and bridges, it might be possible that a few years after these things are built that they may fall apart...
Just a thought.

1 comment:

gung said...

Typical Americanism-double standard. They can practice buy American while the Chinese cannot buy Chinese.