The beginning of the end of free trade

[Big]

WASHINGTON, March 30 — The Bush administration, in a major escalation of trade pressure on China, said Friday that it would reverse more than 20 years of American policy and impose potentially steep tariffs on Chinese manufactured goods on the ground that China is illegally subsidizing some of its exports.

www.nytimes.com/2007/03/31/business/31trade.html?_r=1&hp&oref=slogin

[redviking]

For once, a good move by the Bushmaster.

[matclone]

How does China "illegally subsidize" its exports? The author of the article doesn't bother to explain--unless I missed it.

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matclone said:

How does China "illegally subsidize" its exports? The author of the article doesn't bother to explain--unless I missed it.

Basically the same way American companies "illegally" subsidize their profits by paying and offering conditions to workers in China that amount only to a fraction of what their counterparts get in America.

See, America can do that but when China keeps exchange rates low enough to sell even more goods in America than American government wants, that is called "illegal".

[matclone]

Such is the nature of propaganda. It's like how the concept of "terrorism" is bandied about. If x kills y, without justification*, it's terrorism, but if y kills x, it's not.

*generally, the only justifiable killing is self-defense (unless you live in Texas, where you can also shoot your wife's lover).

[Big]

If you use a modern Army and a modern bomb to kill, you are to be praised. If you take a knife and slice the same person's head off, you are a terrorist.

[ground3pound]

Say it costs a US manufacturer $100 to make 1 ton of a product.

Say it costs a Chinese manufacturer $100 to make the same 1 ton of product, but the Chinese government kicks in enough money to reduce their cost to $.50 per ton.

Guess who can sell their product cheaper?

This is one of the reasons the US steel industry almost went extinct.

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It's not a level playing field for free trade if one of the players is getting financial help from their government.

Tariffs are one way to even things out.

[Big]

Where does Chinese government get the money?

It has nothing to do with government paying anyone. It has to do with the government not raising the value of native currency despite growing economy. This way they can sell their product cheaper, the same way American companies look for outsourcing to try to make things cheaper abroad.

[Big]

Ifr America looks for poor standards in countries like China to make a profit, then why does it expect a high standard in other areas?