Newsgroups: soc.culture.china
Subject: Re: GATT&MFN and puzzling American policy
From: <SXS30@psuvm.psu.edu>
Date: Tue, 10 Nov 1992 14:46:10 EST
Organization: Penn State University

In article <BxIE5n.HAC@cs.psu.edu>, jyw@phys.psu.edu (Jin-Yuan Wu) says:
>
>In article <1992Nov10.100646.90555@vaxc.cc.monash.edu.au>
>mte152s@vaxc.cc.monash.edu.au writes:
>> ....
>>China can find our markets rather than US then US will not withdraw that MFN
>

 The key issue of MFN&CMFN is rather trade balance related than political
 based, at least for Am. politicians concern.


>This is a very key suggestion. Not only China, but also many other the 3rd
>world countries focus on the markets of several rich countries. This causes
>many negative effects. To compete in the limited markets, they have to set
>their currency rate to a very low value so they can sell their goods at low
>price to the rich countries. These 3rd world countries do the same thing
>round and round. The result is that the wealth flows from the 3rd world to
>the rich countries. I asked a boss of a small clothing store how much Chinese
>clothing is cheaper than US one when the goods arrive at his hands. He told
>me it is about 30% cheaper with better quality than US clothing.

 A naive assumption!

1)The currency exchange ratio is not "decided" by someone, it has to stand
   the market adjustment, People major in economics can answer this better.

2) Do you know Japaness made goodies sell cheap here in US compare they are
   in Japan?

3) Most fast-pace economic developed (or developing)countries benefited from
   trading with advance country.

4) The main reason of cheap garment is beacuse of low quality., of cause
   compitition is high, but goverment usully has quato for each different
   country. don't just shop your cloth in W-mart, go to other  place such
   as JC Penny or better shop, you will find out why even if you are willing
   to lower your price, they may not willing to put your merchandise in
   stock.
>
>We used to hear that the labor force in the 3rd world is cheaper.
>The treading-based-currency-rate is one of the reason.

Maybe, but major reason are quality and efficiency.

>
>The treading of a country should have three goals: (1) sell the goods,
>(2) sell at good price and (3) buy goods at acceptable price.
>With limited markets, one can only sell the goods at very low price.
>When the poor countries buy hi-tech products, they have to pay very high
>price due to currency rate.

 Oh? great theory.

>
>Another reason why the 3rd world countries have to orientate their market
>to the rich countries is the demand of hi-tech products. They have to sell
>their goods at whatever a price to gain US$ or other "hard" currencies so
>that they can buy computer, airplane etc. In the hi-tech area, China can
>do a lot. China now has ability to export satellite launching servise,
>small airplane, low temperature nuclear reactors, ships,
>railroad engines and cars, B-type ultrasonic imaging instruments etc.
>China sells these products at a fair price which attracts the 3rd world
>a lot. Thus reduces the demand toward US$ and therefor, eventurally will

  Eventually you has to sell at a low price no matter who is the buyer,
  Unless you want to rip the 3rd world off, which is joke since many country
  are too poor to buy or they have to protect their own market.

>make the prices of the 3rd world goods (such as clothing, shoes etc) to a
>better level. US call our satellite lauching price as dumping price. This
>reflects that the Chinese currency rate v.s. US$ is too low.

  It is a dumping price for USA, but not related to exchange ratio.
>
>So the solution: (I) treading between the poor countries, (II)
>developing hi-tech and its export and (III) raise RMB rate when
>it is possible.
>
>By opening markets between the poor countries, they can all be pleased
>by the prices of import and export.

  You mean the price higher than what it is in US market? _0)

>Recently, the tread between China and former USSR countries has been very
>successful. The only problem is that they have to tread by directly
>exchanging goods since both Chinese and their currenies do not have a
>proper rate with the other currencies in the world.

  For your info.: The trade between China & Russia is currency based, at least
  for company trading. Vendors can't reflect trading between two countries.
  BTW, don't think Russia is a poor country. It is in a stage of restruction.

>
>China has many hi-tech which definitely can find the market in the 3rd
>world. But make them ready-to-sell is not a trivial job. More works to
>be done here.
    What you mean? do the job here in a physics lab? -)

  I don't know too much about other you named Hi-tech business. From my
  career of import/export in ship&engine, japaness product certainly
  has better attraction compare "made in China", in both quality & price.
  you can't beat them even in india and thailand.
>
>Low RMB rate helps export in some sense, but it hurts import of hi-tech,
>human resource exchange etc. The RMB rate has to be raised back to
>reflect the purchasing ability some time, but not necessarily now.

 People may made mistake in politics but I trust everyone's judgement
 in runing his own business. No more nonsense.

>
>Comments are welcome.
>
Xref: sparky soc.culture.china:29787 talk.politics.china:2536