Posted on 11/29/2004 6:56:37 PM PST by Happy2BMe
EU spells out trade threat from China
By Ambrose Evans-Pritchard in Brussels (Filed: 30/11/2004)
China's lightning advance into the production of cars, computers and high-tech industry poses a serious threat to Europe's economic base, according to a report by the European Commission.
Guenther Verheugen, the new enterprise and industry commissioner, said the EU must improve to avoid quick relegation down the world's economic league as Asia storms ahead on every front.
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Once despised as low-cost producer of shoddy textiles and toys, China is now starting to match western technology, but at a far lower cost.
"China's active industrial policy is turning the country into a low-cost competitor in high-skill industries," said the EU's Competitiveness Report 2004.
"The growth of Chinese brand-name producers exploiting these advantages will become a major challenge to established multinationals and brand owners affecting to a large extent well-positioned EU-15 companies," the report said.
One of the most vulnerable targets is the German car industry, which is already in dire straits.
Illustrating the sharp deterioration, the EU's trade surplus with China has gone from surplus in 1995 to a €10,373billion deficit in 2002. China is now Europe's second biggest trade partner after the US.
The deficit is expected to be much higher in 2004 as the euro reaches historic highs against the Chinese yuan. The yuan is pegged artifically to the dollar. The effect is to give Chinese exporters a massive competitive boost against European firms, a situation that is unlikely to be tolerated much longer as economic growth stalls in the Germany and Italy.
The Commission blamed much of Europe's sluggish performance on suffocating red tape. It said the EU could raise overall GDP by 12pc through adopting an American-style "regulatory burden". So far, the East Europeans have also been hit hardest by China, as they tend to compete in the same sectors. The Hungarian electronics industry has lost market share steadily to Asian importers.
The 354-page report, mostly devoted to warning about the growing Asian threat, contends that China has harnessed all its energies on conquering high-tech markets, creating "national champions" - with protected home markets and cheap labour - designed to punch at global level.
"China's industrial policy has selectively attracted foreign direct investment in technology intensive industries in order to benefit from foreign technology and organisational know-how," said the report. Mr Verheugen said Europe needed to respond by spending far more money on research and development.
In a chapter on public sector employees, the report said Britain is acquiring a top-heavy structure with 18.8pc of the workforce now employed by the Government, compared with 11.1pc for Germany and 11pc for Holland. Only part of this is accounted for by the National Health Service.
Britain took 36pc of GDP in tax in 2002, compared with 40pc for Germany and 42pc for Italy.
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China's lightning advance into the production of cars, computers and high-tech industry poses a serious threat to Europe's economic base, according to a report by the European Commission.
Europe has no clue how economics works. They think they can solve their economic problems by imposing trade barriers. They don't understand that there are benefits to be obtained from foreign trade. They don't realize that there are other ways to keep their people employed besides blocking foreign trade which might benefit them. All they have to do is stimulate their economy with a little monetary growth and/or tax relief.
Says it all.
When you can use slave wages to compete against regular wages, the regular paying jobs lose.
However, on the subject of outsourcing jobs overseas and bringing in millions of migrants who are 'taking jobs most Americans just won't do,' well . .
I don't think outsourcing is as big a deal as it's made out to be. On immigrant labor, though, I agree. Immigrants were fine when this nation had a dire shortage of labor and vast untapped natural resources. That was more than a hundred years ago, though.
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Says the rest of it.
FACT: China will dominate the high-tech industry in less than ten years at the current pace - far surpassing even Japan and the United States.
ping
Tax relief in Europe? That's not going to happen any sooner than John Kerry getting in the WH. Socialism does not believe in tax relief.
However, the EU folks are not too stupid to realize that much of China's success is a result of erecting its own trade barriers!
How does that jibe with simplistic (and inaccurate) representations of free market capitalism?
german labor has been over-priced + german products over-rated for decades.
not to mention their penchant for long vacations.
not to mention their penchant for long vacations (and invading Poland).
The final chapter in China's "success" has not yet been written. It would be much better off if it did not effectively subsidize exports to the US. There is no benefit from accumulating dollars in exchange for goods, particularly at a time when the dollar is declining on exchange markets. In the end, they will have to change their policies, and when they do, they will not have nearly the market penetration that they now have.
this is just an execuse so more power can be given to the EU to set a european wide industrial policy (which never work).
+ as a result they lost their eastern properties.
didn't emmanuel kant live in konisberg? the russkies control that now.
stalin moved the borders west after ww2.
this is the move we are looking for. the dollar decline is designed to get the euros and Japan on board to forcing china to remove their dollar currency peg.
1. Europe has an economic base? Quit joshing me!
2. Long before China becomes the economic superpower, Europe's going to be sliding into a new Dark Age of Islamism.
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