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SURGE IN EXPORTS FROM CHINA HITS GLOBAL INDUSTRY (CHINA RUINING WORLD ECONOMY)
The Wall Street Journal | 10/10/2002 | Karby Leggett and Peter Wonacott

Posted on 10/13/2002 11:01:08 AM PDT by MeneMeneTekelUpharsin

Behind It: Foreign Ventures Shifting Focus, and Locals Boosted by WTO Status

Price Pressure on U.S. Griddles

When Philips Electronics NV began prospecting for opportunities in China in the early 1980s, the Dutch company adopted the hot strategy of the time: produce and sell locally. Back then, China was thought to be a land of unlimited demand. But the same low wages that foreign companies loved because they kept production costs down also reduced the purchasing power of Chinese consumers.

What's more, Chinese knockoffs of the foreign companies' goods made competition tougher. So, many foreign-based manufacturers, with plants in place and funds committed, looked for markets abroad. Philips and a swarm of other foreign manufacturers soon learned that using China as an export base proved to be more profitable, and easier, than selling locally. Philips now operates 23 factories in China and exports nearly two-thirds of the roughly $5 billion in goods those plants produce each year.

Today, there are few things in the gobal marketplace that aren't made in China. The export drive of foreign companies' stand-alone plants, their joint ventures and China's thousands of homegrown operations has put China at the center of a broad reordering of how goods are supplied to the global economy. Companies have been forced to scrap old business strategies and come up with new ways to compete.

Many foreign manufacturers find they must either produce in China or expand their purchases from China. The country has become the world's factory floor, with output so massive and wide-ranging that it also exerts deflationary pressure world-wide on everything from textiles to TVs, mobile phones to mushrooms.

Rest on page A1 of Thursday, Oct. 10, 2002 WSJ


TOPICS: Business/Economy; News/Current Events
KEYWORDS: china; globaleconomy; lowwagelabor; manufacturing
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To: Conagher
Careful before you step in it. You are assuming that none of us here remember things like the Chosin Reservoir (we were fighting CHINESE, very few North Koreans), Tibet, the Spratly Islands, etc. I grew up in Asia...and I know the Chinese. I dated a Chinese girl. I know the Chinese. And, who are YOU to be spouting off about the Chinese and their attitude? Hmmmmm?

The Chinese have a methodical plan to dominate at least their part of the world and as much of the rest as they can get away with. More than likely they have been assisting the Muslims in their attacks on us. Funny how nothing Chinese is getting hit by Al-Qaeda. Hmmmmm? Hello, great analyst. Give us YOUR analysis. Come on...let's hear it.

21 posted on 10/13/2002 1:47:32 PM PDT by MeneMeneTekelUpharsin
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To: Vigilanteman
Leave him alone. Let me have him.
22 posted on 10/13/2002 1:48:15 PM PDT by MeneMeneTekelUpharsin
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To: MeneMeneTekelUpharsin
I dated a Chinese girl.

LOL! See my profile.

Hello, great analyst. Give us YOUR analysis. Come on...let's hear it.

Easy. One cannot prove a negative. The whole "hegemonity [sic]" argument is made by stringing together conjecture and half-truths. The Chinese have been known to protect their interests, but the idea that the PRC is able to launch an all-out attack on the US is quite absurd. A general perusal of the papers will tell you that the CCP barely has control over China. Any kind of attack on anyone else will signal the collapse of China from purely interior causes.

Scrape your shoe, pal.

23 posted on 10/13/2002 2:07:30 PM PDT by Conagher
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To: IllegalAliensOUT
A "containment" policy. What does that mean?
24 posted on 10/13/2002 2:31:00 PM PDT by Blake#1
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To: Lessismore
Not likely, the problem is China's population. They have a 700 million strong reserve of cheap labor. The other east asian nations had to switich to higher and higher sophistication of their products because their small population's GDPs quickly rose with the induction of any industry. But the Chinese and maintain the low wages because of their huge population. So any industry they expand into(e.g textiles, cothing, toys, machinery, electronics, shipbuilding, semiconductor) they'll be able to dominate until they run out of people whose per capital GDP is below the industry's profitability margin. Thats not happening until at least the 2040s at current rates.
25 posted on 10/13/2002 5:39:18 PM PDT by ComputationalComplexity
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To: Conagher
Why would China want the US to fall? Isn't it us who buy all of their goods? Aren't we supposedly the source of all of their technology and education?

--------------------------

That's a temporary condition and ploy. The Chinese are on a program of strategic acquisition which will make them completely independent and powerful withing ten years.

26 posted on 10/13/2002 5:53:02 PM PDT by RLK
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To: LaGrone
[Some workers will be displaced during this process, but the marketplace is the place where buyer and seller come together at some agreed price.]

'Some' workers are displaced by the chinese, 'some' by the indonesians, 'some' by the Mexicans, 'some' by the Sri Lankans (sp), 'some' by the Brazilians, 'some' by the - well just read the labels on your products. By the time we have split the 'some' among all the countries of the world, there aren't many 'somes' left with jobs.

Now if there are no jobs, and you have no money, it doesn't matter how cheap the product is.

This is to say nothing of the absolute absurdity of a country having no manufacturing. I do not think we could even manufacture the uniforms if we had a large scale war to say nothing of the hardware needed. This is suicide.

27 posted on 10/13/2002 5:56:28 PM PDT by nanny
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To: RLK
Oh, right, right. The CCP can barely run their own country, but are able to lull the whole world to sleep (everyone except, of course, the tinfoil-beanie types at NewsMax and WorldNetDaily).

Are the Bilderbergers and the CFR in on this too?

28 posted on 10/13/2002 5:57:35 PM PDT by Conagher
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To: RLK
By the way, what's your source?
29 posted on 10/13/2002 5:58:34 PM PDT by Conagher
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To: RLK
We're so helpless we can't survive without Chinese goods, eh.
30 posted on 10/13/2002 6:01:33 PM PDT by meenie
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To: RLK
Another ploy I've noticed in my business is that when they discover a natural resource that's in demand, they oversupply and commoditize it, driving prices down. Soon they control the market, having driven our higher labor competitors out.

In the fullness of time we'll see the same product's prices slowly rise to very high market levels in the absence competition. I agree, they are on the economic Long March and plan to extend their sphere of influence to encompass all of the Pacific, at least. They are patient.

31 posted on 10/13/2002 6:11:32 PM PDT by Bernard Marx
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To: Conagher
Granted, if true, your credentials are impeccable. However, the Chinese can not be discounted as a threat to world stability. To assume they can not create a problem for other nations is a misguided point of view.
32 posted on 10/13/2002 6:39:17 PM PDT by MeneMeneTekelUpharsin
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To: nanny
If the marketplace is not allowed to determine the cost of the product and also what each individual can sell his or her labor for, that tells me some individual, group, or government will have to make that decision. This would appear to me to be the most unfair method of determining each.

Look what happened to the Soviet Union when its government controlled the means of production. Everyone wants to earn more per hour, month, or whatever; but if everyone was paid more, each item we purchase would cost more.

The key has been to open more markets which helps more people of every country. As markets are restricted more workers worldwide are hurt.

33 posted on 10/13/2002 7:00:03 PM PDT by LaGrone
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To: MeneMeneTekelUpharsin
My credentials are hardly impeccable, but sufficient for our purposes here. I thank you for the compliment nonetheless.

The Chinese can be counted as a threat to world stability only as much as Britain, France, Germany or the US can be counted as a threat to world stability. Personally I think that none of the above countries poses any significant threat. Merely possessing a military does not rise to the level of world threat (unless one is a peacenik, then the very thought of a standing military is a threat). I do not assume that they could never be a threat, but I think the likelihood at this point is exceedingly small.

China indeed can create a problem for other nations, but so can we. We created a problem for Iraq by restricting it in the manner that we do. That was a good thing, and I certainly hope to create more problems for Iraq in the very near future. However, you're not saying anything by merely assuming that they can't create a problem.

34 posted on 10/13/2002 7:33:42 PM PDT by Conagher
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To: MeneMeneTekelUpharsin
The article even admits that this practice is exerting "...deflationary pressure world-wide on everything from textiles to TVs, mobile phones and mushrooms."

From Business Week

Prices Just Keep Plunging
Fears of deflation are growing as a profit squeeze prompts more cuts

Of course, some prices have been falling for years. That's especially true for computers, consumer electronics, and industrial goods such as steel. And price wars typically break out during recessions as vendors battle for consumers. But something new and troubling may be happening today. Excess capacity is growing around the world, particularly as products from low-wage China appear in more and more sectors. Meantime, demand in many industries is fizzling. In addition, the recent surge in productivity is encouraging the efficient to slash prices, forcing rivals to match their discounts or lose share.

A glut in goods and services is why many businesses lack the power to nudge prices higher. To be sure, many companies have cut back on capacity, shutting factories and offices and exiting markets. Yet the cuts haven't been enough, given current demand levels. Excess capacity exists in everything from telecom and aluminum smelting to banking and retail stores. And the rise of production in extremely low-cost countries, especially China, is exacerbating price pressures in an array of industries.

35 posted on 10/13/2002 7:38:44 PM PDT by milestogo
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To: meenie
We're so helpless we can't survive without Chinese goods, eh.

------------------------

We can survive without Chinese goods quite well, for the present. We like paying 1/3 price for products comparable to American products. As American companies are diven out of business, we'll be dependent on foreign manufacture. Last year or this year Chinese production of industrial metal machinery equaled ours, a feat that was thought impossible 20 years ago. Our output has gone down while theirs has gone up. Please notice Bessie has closed their plant in Bethlehame. If you want steel you will shortly need to go to foreign sources to by it.

36 posted on 10/13/2002 8:00:21 PM PDT by RLK
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To: Conagher
Oh, right, right. The CCP can barely run their own country, but are able to lull the whole world to sleep (everyone except, of course, the tinfoil-beanie types at NewsMax and WorldNetDaily).

-------------------------

An interesting straw man and parody for clowing around, but not taken seriously in the intelligent adult world.

37 posted on 10/13/2002 8:02:59 PM PDT by RLK
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To: LaGrone
[If the marketplace is not allowed to determine the cost of the product and also what each individual can sell his or her labor for, that tells me some individual, group, or government will have to make that decision. This would appear to me to be the most unfair method of determining each.]

Are you honestly trying to tell me that the marketplace is all that is driving this. Governments, on both sides, ours and theirs are in it up to their necks. Our government made loans to businesses to open in those foreign countries, helped them in every way. That is not staying out of the process.

Our government has allowed our country to be flooded with aliens from all over the world. They have forced us to give our monies to care for them, give them low interest loans to start businesses - loans American citizens could not get. That is not government staying out of the process.

Our government has negotiated trade deals that harms the American worker while allowing other country to put restrictions on our products.

The governments are running this not the marketplace.

38 posted on 10/13/2002 8:05:15 PM PDT by nanny
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To: RLK
If you have a point, I'd love to hear it. Clearly you have no sources, or you'd have posted them by now.
39 posted on 10/13/2002 8:14:45 PM PDT by Conagher
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To: Conagher
If you have a point, I'd love to hear it. Clearly you have no sources, or you'd have posted them by now.

--------------------------------

I have no "sources" to prove the sun will rise in the East tomorrow morning. Some things are so congruent with known reality that sources are not necessary to sane sincere people of good will.

40 posted on 10/13/2002 8:29:33 PM PDT by RLK
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