August 27, 2007
Weapon Banker of Choice

Those in the peanut gallery prone to imitating Chicken Little any time someone says "China" and "debt" in the same sentence (you know who you are) would do well to read and ruminate over this Skeptical Optimist essay. I came up with a very similar line of reasoning over dinner last week, but didn't write about it because we all know it's the continuing resolutions that are killing the budget. Right?

Posted by scott at August 27, 2007 03:11 PM

eMail this entry!

However, the SO isn't taking into account that ultimate ruiner of all financial predictions: human nature. Chinese goods have a very bad rap right now, and it's getting worse, as we discover that a lot of our cheap China-made products turn out to be outright dangerous. People are carefully testing the products we're getting from China now, and I'm guessing they're only going to find more and more hazards, as the mysteries of China's amazing productivity are revealed.

The "protectionist" US politicians SO rails against are a symptom, not the problem. The problem is we get what we pay for, and the product recalls, along with the booming economy that gives us the freedom to pay extra for better quality goods, are turning into a growing wave of protectionism that no amount of well-intentioned fiscal advice can turn back.

Posted by: Tatterdemalian on August 27, 2007 05:31 PM

But, as I understand it, a lack of capital for China wouldn't be too much of a problem right now. They keep banking everything they receive as they're getting an overabundance right now.

As for the goods themselves, their industry does have a lot to learn. However, I believe they are actually learning it, albeit slowly. Our booming economy is actually a good thing for problems like this - it will force the Chinese competition to actually push for quality rather than quantity, but do so at a lower level of operating expenses, thus making the entire market more efficient.

Good times all around.

Posted by: ron on August 28, 2007 08:32 AM

China has a lot banked, but that doesn't mean they are going to be reasonable about trade issues. They are still an authoritarian state built on propaganda, and that puts pressure on them as well, in a lot of ways that seem strange to us. They responded to the product recalls as if it was a mortal attack on their government, because it actually was; people in China's quality assurance bureau died over it.

I don't think they're going to be as nice about US protectionism as we hope.

Posted by: Tatterdemalian on August 28, 2007 10:15 AM

Probably not - depends on how protectionist we get. My guess is that it won't get bad enough to actually cause an major problems. Why? Because WalMart's (and other mass-market retailers) too damn big and everything they sell is cheap Chinese crap. While the economy's booming, there's still a large segment of the population that shops there and doesn't want to spend more. For the most part, I think this ensures their revenue stream.

Posted by: Ron on August 28, 2007 10:36 AM
Post a comment

Email Address:



Remember info?