“Over the last year or so, Mark Zuckerberg of Facebook and other American tech leaders have issued a stark warning to those who want to see more competition in the industry. It goes something like this: “We understand that we’ve made mistakes. But don’t you realize that if you damage us, you’ll just be handing over the future to China? Unlike America, the Chinese government is standing behind its tech firms, because it knows that the competition is global, and it wants to win.”
This — Big Tech’s version of the “too big to fail” argument — has a superficial nationalistic appeal. It’s certainly true that the Chinese technology sector is growing and aggressively competitive, and that many of its companies are embraced and promoted by the Chinese state. By one count, eight of the world’s 20 largest tech firms are Chinese. That would seem to suggest a contest for global dominance, one in which the United States ought not be considering breakups or regulation, but instead be doing everything it can to protect and subsidize the home team.
But to accept this argument would be a mistake, for it betrays and ignores hard-won lessons about the folly of an industrial policy centered on “national champions,” especially in the tech sector. What Facebook is really asking for is to be embraced and protected as America’s very own social media monopolist, bravely doing battle overseas. But both history and basic economics suggest we do much better trusting that fierce competition at home yields stronger industries overall.
That’s the lesson from the history of Japanese-American tech competition. During the 1970s and into the ’80s, it was widely believed that Japan was threatening the United States for supremacy in technology markets. The Japanese giant NEC was a serious challenger to IBM in the mainframe market; Sony was running over consumer electronics, joined by powerful firms like Panasonic and Toshiba. These companies enjoyed the support of the Japanese state, through the Ministry of International Trade and Industry, which pursued a nationalistic industrial policy thought to be infallible.”
Archive for Business and Finance
Vandana Shiva: There Is No Reason Why India Should Face Hunger and Farmers Should Commit Suicide – EcoWatch
“It’s not just about powering growth. It’s also about national security and self-sufficiency.
China wants to build homegrown champions in cutting-edge industries that rival Western giants like Apple and Qualcomm. While China has a long way to go, the Communist Party is bringing the full financial weight of the state and forcing other countries to play defense.
In doing so, China is staking out a new manufacturing model.
Economic textbooks lay out a common trajectory for developing nations. First they make shoes, then steel. Next they move into cars, computers and cellphones. Eventually the most advanced economies tackle semiconductors and automation. As they climb up the manufacturing ladder, they abandon some cheaper goods along the way.
That’s what the United States, Japan and South Korea did. But China is defying the economic odds by trying to do all of them.
Look at the evolution of what China sells to the rest of the world. As it ramped up its manufacturing engine in 2000, China was pretty good at making basic products like toys and umbrellas.”
“HONG KONG — I’ve been in Tokyo and Hong Kong this week, and if I were to distill what echoed in all my conversations, it would sound something like this:
From Chinese business and government types, some real anxiety — “Can you please tell me what is President Trump’s bottom line in this trade war? Is this about rebalancing trade or containing China’s rise?” — combined with some real bravado — “You realize that you Americans are too late? We’re too big to be pushed around anymore. You should have done this a decade ago.”
From the Japanese it was gratitude — “Thank God for Donald Trump. Finally we have a U.S. president who understands what a threat China is!” — combined with real anxiety — “Please, please be careful. Don’t go too far with Beijing and break the global trading system.”
And from a smart European consultant it was bewilderment — “Boy did the Chinese have a failure of intelligence. They had no clue just how much both Democrats and Republicans, and Europeans, all want to see Trump hammer China in these trade talks. But please, please don’t start a cold war with China that will force us to choose sides.”
And from me to both my Chinese and Japanese interlocutors: I’m glad Trump is confronting China on its market access barriers. Those are the real issue — not the bilateral trade imbalance. This is long overdue. But trade is not a zero-sum game. China can thrive and rise, and we can, too, at the same time. That’s what’s been happening for the past 40 years. But we’d be even better off if China offered the kind of easy access to its market for U.S. manufacturers that it enjoys in America. It’s time to recalibrate U.S.-China economic ties before it really is too late.”
Thank you Thomas Friedman. Here is a comment I support.
XIAOWUSILI, China — For all its economic might, China hasn’t been able to solve a crucial problem.
Soybeans. It just can’t grow enough of them.
That could blunt the impact of one of the biggest weapons the country wields in a trade fight with the United States.
Beijing placed a 25 percent tariff on American soybeans last week in retaliation for the Trump administration’s levies on Chinese-made goods. Last year, soy growers in the United States sold nearly one-third of their harvest to China. In dollar terms, only airplanes are a more significant American export to China, the world’s second-largest economy.
David Lindsay: Maybe. Here are the three most recommended comments, that doubt some of what this article says:
“Supporters of the Chicago Stock Exchange proposal said it could help bring more Chinese companies to United States financial markets. And it would also have helped revive a marketplace where activity was dwindling. The Chicago Stock Exchange handles only a small fraction of the stock trades that take place every day.”
DL: This deal was approved by the SEC under Barak Obama. It was approved by the staff of the SEC. The new Trump head of the SEC has terminated against the advice of the SEC staff. Make America Great Again continues to hold us back. These are the same idiots who cancelled the US participation in the TPP, the Trans Pacific Partnership.
By Erin Ailworth Jan. 6, 2018 7:00 a.m. ET 21 COMMENTS
“A dispute over the alleged theft of wind-turbine technology is slated to go to trial in Wisconsin on Monday in a test case for intellectual-property battles between the U.S. and China. Federal prosecutors accuse Chinese wind-turbine maker Sinovel Wind Group Co. Ltd. of stealing the source code for software that controls wind turbines from American Superconductor Corp. AMSC 6.64% , a Massachusetts-based engineering company that once counted Sinovel as its biggest customer.
The trial in U.S. District Court for the Western District of Wisconsin could result in billions of dollars in fines for Sinovel, which has previously denied wrongdoing.
Prosecutors in 2013 indicted the company, along with two of its executives and an American Superconductor employee, on criminal charges of stealing trade secrets.
John W. Vaudreuil, then U.S. Attorney for the Western District of Wisconsin, called it “nothing short of attempted corporate homicide.” ”
Ouch. Here is the top WSJ comment, which I endorsed, even though its tone is harsh.