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.
They may have been better off when they weren't a real country -- and just a bunch of eccentric princes running around building castles.
Yup. The EU is big on market manipulation, not so good at the business of giving consumers what they want.
Well, now that they've pegged it to a currency acting like a boat anchor, they have an incentive to float.
I agree.
Bookmarked. When the US Navy's Yangtze Patrol has to smash a few warlord heads in 2014, I'm gonna laugh at you.
In some ways Europe still has a fuedal outlook.
Europe still has that old Cold War outlook.
I personally think there is a 50-50 chance that the EU will collapse within 5 years. It took communism 70 years.
you may be on to something...pre bismarck.
they got into trouble when they mimiced the european empires of others.
They will not. The Chinese economy is built on the dollar peg. Since nobody nows what the effect will be if they remove the peg they wont do it.
When the US Navy's Yangtze Patrol has to smash a few warlord heads in 2014, I'm gonna laugh at you.
Uh, there's a good deal more than a billion of them.
...and Ludwig was a hoot!
As there were back in the days of the Yangtze Patrol.
OK -- a few billion heads,,,,I guess
Well, I guess that they will try to salvage something from it. But they've already demonstrated that they have no clue about economics. They will very likely abolish large portions of their economic regulations. They can't compete with those shackles.
I congratulate all of the the undeniably brilliant Senators especially the Foreign Relations Committee Communists.
Everything is going just as planned, isn't it Senators Spector, Lugar, McCain, Daschle and Kennedy? You guys had better authorize a $2000 bill if you don't want to carry a cash bag.
How long are you bastards going to use the Iraqi war as a diversion from the more pressing national interests?
You have reduced America's human dignity to the point where a lady is a trouble maker if she resists being felt up at the airport, where saying the Oath of Allegiance is forbidden in our schools and a prayer that includes the word Christ or God isn't accepted anywhere in the public forum but same sex marriages are promoted.
We are dying what is going to be a long, slow and painful death for the American Patriots.
That's pretty much what I was going to say as I was reading the article. They spend all their time running down the USA but they better start straightening out their own countries!
"When you can use slave wages to compete against regular wages, the regular paying jobs lose."
You clearly have never been to Asia. A person can survive just fine on about US $300 per month; this allows them to lease a small flat, feed their family and exist. If one or two other members of the family also are working, they will save money to better their lives. This is the reason that people from Mexico and Central America sneak into the U.S. for the agricultural and manual labor in the U.S. during the Summer; the money they make (small by our standards) will allow their family to survive very well til the following Summer.
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