[PEN-L:7653] China, WTO & Excess Capacity

[Rob Schaap <carob@xxxxxxxxxxxxxxx>]

G'day Henry and Michael,

Henry has some things to say about China and the WTO.  I put a case here
some time back (I'd pinched it from an article) that a salient cause of the
East Asian crisis was a ten-year process whereby capitalism had to swallow
the introduction of millions of poor workers from the erstwhile Euro-commie
bloc into global markets.  The commie bloc brought little effective demand
into those markets, but lots of poor labour.  Excess capacity and
underconsumption propensities were duly exacerbated, and the finance sector
was obliged to find a patsy.  That patsy was to be East Asia, where 200
million have now had their lives wrecked, and where political fall-out might
yet wreck a lot more (Indonesia is positively frightening right now).

Anyway, it seems to me those propensities have not been alleviated.  Should
China hit global capitalism in all its glory, would we not be doing a whole
lot more of the same?  A few tens of millions of buyers, sure, but a few
more hundreds of millions of producers without realistic chances of becoming
useful consumers.  The US's goldilocks economy still produces below
capacity, South-East Asia is building inventories as I tap away, so is
Australia, Europe doesn't seem to offer short-term hope of increased
consumption, and Latin America has no real buying power either.

In other words, would world capitalism be mad to have China?  And would
China be mad to have world capitalism?

Cheers,
Rob.

>The issue:  the implications of China's entrance to the WTO.
>
>Looking at it from China's perspective, I stand firmly with those who are
>against the idea. Domestic opposition to WTO has increased since the
Embassy
>bombing, which I may add seriously, is no longer just a matter of
>over-reaction for the Chinese. Serious domestic politics have been affected
>and the issue of WTO, which had been settled, was reopened and China trade
>officials will not even renew negotiations until China receives a
>"satisfactory" report on the investigation on the bombing Clinton promised
>as being in progress.  The State Department is frantically trying to put
>together a special envoy team to deliver the finished report to Beijing in
>time for WTO negotiation to conclude to roll the NTR Congressional vote
into
>one single package.  Slim chance that could be done, but Clinton wants to
>give it the best effort try.
>Opening Chinese markets under WTO rules at this moment in time will forever
>foreclose the building of socialism in China.  Even under market economy
>terms, the benefits to China are dubious at best.
>I expect DeLong to be in support of the idea if China is willing to make
all
>the concessions the US demands, particularly in the financial and
>communication sectors.  He may even argue it's good for China.  Of course,
>the prospect of this happening this year is practically nil, given the
>atmospherics.  Clinton has practically thrown in the towel by giving up on
>trying to get permanent NTR (Normal Trading Relations- former Most Favored
>Nation) status and China-WTO membership as a package.  He has announced
that
>he will extend NTR status to China tomorrow (June 3) and Congress has 90
>days to overturn the decision.  The vote traditionally comes in late July
>just before Congress recesses in August.
>The immediate impact is, without NTR, tariff for Chinese imports will jump
>from less than 5% to 40%.  The impact of this on US inflation and interest
>rates is obvious. So th failue of NTR even for one year has more serious
>impact of Wall Street than on trade per se.
>Gephardt normally a skeptic on trade liberalization, has signed on with the
>Administration on the China-WTO deal.
>
>Henry C.k. Liu
>
>Michael Perelman wrote:
>
>> This whole debate is pointless.  Who is worse, Jeffrey Daumer or Jack
>> the Ripper?  Nonsense.
>>
>> JIm D. made an important point that seems to have passed unnoticed.  You
>> cannot evaluate politics without the context.  Mao murdered people
>> because of mass starvation.  Do we apply the same standard to homeless
>> people who freeze on the street?
>>
>> No one here has come out to proclaim themself as a Stalinist.  We went
>> through the same nonsense a few weeks ago when people opposing the
>> bombing felt obliged to declare that they were not disciples of
>> Milosovic.
>>
>> Can't we drop this nonsense?  Stalin did some hard things because Russia
>> was under attack.  Stalin did some cruel things because he was
>> paranoid.  Addressing such matters takes serious work.  Not the
>> journalism of R. Conquest.  Not a simple e-mail post.
>>
>> What do we say of the sanatized cruelty of Clinton with regard to Ricky
>> Ray Rector, the victims of welfare deform, or his serial bombing?  He
>> never had the courage to face his victims eye to eye.  Instead, he makes
>> a "hearfelt" speech about the deep morality of his position.
>>
>> Anyway, let's move on to something else?
>>
>> --
>> Michael Perelman
>> Economics Department
>> California State University
>> Chico, CA 95929
>>
>> Tel. 530-898-5321
>> E-Mail michael@xxxxxxxxxxxxxxxxx
>