IMF urges China to halve industrial subsidies
(www.semafor.com)
from return2ozma@lemmy.world to world@lemmy.world on 20 Feb 04:05
https://lemmy.world/post/43356014
from return2ozma@lemmy.world to world@lemmy.world on 20 Feb 04:05
https://lemmy.world/post/43356014
#world
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en.wikipedia.org/wiki/Dumping_(pricing_policy)
In case you wanted a thorough explanation on why what China is doing here is bad for everyone except China.
It’s only bad for other countries if they let it be, any country can subsidize their own manufacturing if they want. Why would China have any obligation to run their economic policy to benefit the USA? Insane level of entitlement.
Why would USA have any obligation to not tariff subsidised Chinese goods in return?
Sure, of course they can, it’s just a self-own.
It’s really not, at least for any country with industries that can’t stand up to goods that have been produced at what is essentially a major loss… in a country with already nearly non-existent labor costs.
Labour costs in China are not that low these days, that’s kind of the point of the subsidies. It’s also much more competitive to subsidise domestic production than to tariff imports. Without that, it just means that Americans pay more for the Chinese goods they’re going to buy anyway because they don’t have a domestic alternative. If the revenue from tariffs in America were actually used to improve manufacturing capacity it wouldn’t be such a problem.
Since when does the US not have an auto industry? That’s the biggest one being protected with tariffs, same story in EU.
the auto industry relies on Chinese imports for much of its materials, without extra investment only applying tariffs will hurt it too
How are historically oppressed countries supposed to afford that?
Yeah, the IMF, defender of historically oppressed countries. Lmao.
How does this make what he said wrong?
Not directly, it’s just a prod to think about the subject a bit more. The IMF wouldn’t push for this if it was of benefit to anyone but the USA and maybe Europe.
The real answer is that, if by “historically oppressed” they mean “poor”, labour costs and purchasing power there are both lower and so it will be within their means to subsidise the manufacturing that they themselves are able to consume, probably even at a lower price than China. If they’re historically oppressed but actually have money now then obviously they can just use that.
To be clear I’m mainly referring to African countries, though there are others too. Any country that isn’t presently industrialised will be prevented from developing their own industrial capacity by their Chinese competition (assuming the prices are correctly fixed). In general I think it’s bad because the lack of internationally dispersed manufacturing ownership contributes to unequal power relations between nations (i.e. imperialism and neocolonialism). A highly protected world-factory in China seems to present a viable model for world hegemony that could replace the financialist model of the United States. Both are bad.
I think they will also have to subsidise or otherwise incentivise manufacturing in their own countries to develop it but like I said their labour costs are lower than in China so they have some competitive advantage there already. I agree it’s bad that the capacity is not more distributed but I don’t believe that China’s internal subsidies will prevent any country from doing this, only post industrial countries which already have the money to buy large amounts of Chinese exports.
I think you underestimate just how effective economy of scale is. Labour is also a relatively small portion of manufacturing costs.
I do understand that, but that’s just life. If countries don’t take a long term view and build up their own capacity, but instead just buy the cheapest stuff right now, that won’t be ideal for them. But the solution isn’t to try to dictate other countries’ domestic economic policy, that can’t possibly work. Even if China changes its policy on this matter those countries would still have to spend the exact same amount of money to build their own manufacturing base. Tariff imports a little bit if you have to, but most importantly put that money into actually building domestic capacity for the most important things. This is just the USA trying to put off doing that because the neoliberals are addicted to sucking everyone else dry through finance capitalism and manufacturing isn’t as profitable as tech-IP rent seeking.
The IMF says whatever random shit benefits their consituents. Sometimes that’s also morally right, but usually not. If you’re gonna take a braindead position against them for signalling reasons then fair enough, but the fact that you can’t even come up with a basic reason why they’re wrong should clue you in.
This is a pretty standard orphan-crushing manuever and I think both sides are kinda cringe. It is what it is.
I replied with several specific arguments elsewhere in this thread, including a further on this comment chain.
This statement makes no sense. China’s mercantilism - pushing for trade surpluses in practically all industries - wouldn’t even work if pursued by all countries (a trade surplus for everyone is logically impossible, and the attempt doesn’t end well as we have seen in Europe 300 or so years ago).
Beijing is subsidizing some sort of a zombie economy as many companies would long be shut down without massive state subsidies that go well beyond what can be considered reasonable. In the EV industry, for example, only 15 of 129 Chinese EV brands are expected to be profitable by 2030, according to a report from last year.
The US and China are artificially creating economic imbalances, it’s just that one is doing it mainly by tariffs and the other by deliberately producing oversupply.
[Edit for clarity.]
Why would the goal be for “everyone to have a trade surplus”? More like, everyone retains manufacturing capability for at least the most critical things, and speculation which is not even grounded in at least some kind of industrial base is somewhat disincentivised.