I’m concerned about the impact of manufacturing employment and investment (and a whole lot else) on human beings. Not important to me what color / nationality they might accidentally happen to be.

* * *

Indonesia (and HK),

I didn’t say that I doubt the ability of Chinese manufacturers to move up the value-added chain; indeed, they have done that quite well.

My point was that as long as such a huge part of China’s export capacity is in foreign-invested hands, there can be no grand strategy of the Chinese leadership to do something or other to the US or European manufacturing structures. Not possible.

* * *

Stormy,

“Between 2000 and 2003, he claims that foreign firms created 60,000 manufacturing plants in just China alone. ”

After subtracting the first 60,000, the subsequent 63,923 foreign investment projects in 2000-03 were in services (OK, a token handful in mining and agriculture).

Oh, and in 2004-06, the total rose from 123,923 to 170,219 projects, +37.4%; value up from US$329.69 bn to $457.61 bn (+38.8%).

* * *

Guest,
RE: Chinese stock market, the house is having a lucky streak. Nothing more.

* * *

Joseph Wang,

China is both xenophobic and clannish.
It is also aggressive, tolerant, demanding, racist, open, closed, friendly, hostile, polluted and pristine.

But, only if one generalizes
.

Also, China isn’t xenophobic or clannish. It went through a nasty period of xenophobia a few decades ago, and pretty much everyone thinks that was a mistake.

Point well taken. With the number of mergers and acquisitions, it does become a problem…but quite solvable, I think. (In this regard, I posted here some time ago, the scope of these M&A’s. Nothing to sneeze at.)

As far as the flag saluting…couldn’t agree more. However, I do throw a couple of things on the table….

1. China’s 4000 year history: Repeated repression of the masses by its leaders, who always seem to have these grand plans that mercilessly squeeze the peasantry until they finally revolt. This last leap forward and refashioning the shape of China is again being done on the backs of the poor. I am not convinced that the tiger has changed its spots.

2. A clannishness and xenophobia that few in the West really understand. I could elaborate…but I will simply leave it at that other than to say: The implications are considerable.

Here we go guys.

The AP is talking about trends in US and Chinese stock markets. Also the durable goods orders fell 7/8%, due mainly to a drop in order for Boeing airliners.

India’s firms are, apparently, outsourcing production work to China - if you can tell us how your tax/tarriff scheme will work.

qingdaoGuest: The problem with economists is sometimes they imagine that there is a lever marked “stimulate demand” when there really isn’t.

Stormy: The trouble is that its becoming more and more difficult to distinguish between an “indigenous” firm and a “foreign” firm. For someone like me with a mixed identity, this is a good thing since you have rich, powerful people in the world that really don’t care want flag you salute as long as you make them money.

Guest: Stock market plunge was a good thing. It means that air is being taken out of the bubble before it gets too big.

An interesting article to read in Foreign Affairs: “The Globally Integrated Enterprise,” by Sam Palisano, CEO of IBM.

In it, he celebrates the rise and development of the MNC’s. Between 2000 and 2003, he claims that foreign firms created 60,000 manufacturing plants in just China alone.

Sixty thousand—in 3 years. And what has happened since 2003? And we haven’t touched other developing countries.

“The most visible signs of this change can be seen in China and India. By one estimate, between 2000 and 2003 alone, foreign firms built 60,000 manufacturing plants in China. Some of these factories target the local Chinese market, but others target the global market. European chemical companies, Japanese carmakers, and U.S. industrial
conglomerates are all building (or have declared their intention to build) factories in China to supply export markets around the world. Similarly, banks, insurance companies, professional-service firms, and it companies are building R & D and service centers in
India to support employees, customers, and production worldwide.”

http://www.ibm.com/ibm/governmentalprograms/samforeignaffairs.pdf

If we do not address head-on these rather remarkable developments, then any discussion of trade is dust in the wind.

Taking Gcs’s suggestion on step further: I would tariff/tax target not indigenous Chinese firms but foreign firms within China. These are our boys, making a killing. China merely wears the golden collar they have fastened to its neck.