Thursday, January 11, 2007

China Key to GM's Future?

"As the world’s top auto executives gather in Detroit for the annual auto show, one of the biggest questions is how General Motors will fare this year when Toyota may pass it to become the world’s largest automaker. The answer will depend to a considerable extent on how G.M. performs in China, its second-largest market after the United States."

From today's
NY Times Business Section, an article about how the vehicle market in China might be the key to GM's future success. Trade works both ways.


At 1/11/2007 10:56 AM, Anonymous Walt G. said...

From the article:

"For one, G.M. in China isn’t exactly G.M. Limited by Beijing to no more than 50 percent ownership of any auto assembly operation, it relies on two rival joint ventures to manufacture Chevrolets in China."

This isn't reciprocal trade: Is it? It is difficult to ignore a market with over 1 billion people, but rules should be the same for both sides! Why should US companies have to compete on an unlevel playing field?

At 1/11/2007 12:54 PM, Blogger Mark J. Perry said...

The unlevel playing field is tilted AGAINST the consumers of China, to their DISADVANTAGE, making Chinese consumers WORSE OFF because of Chinese trade policy, which reduces their consumers' choices.

To "level the playing field" would require us to make U.S. consumers WORSE OFF as well, by placing restrictions on the options available to our consumers by imposing our own protectionist trade policy.

That's a level playing field that make us WORSE off, not BETTER off.

At 1/12/2007 7:49 AM, Anonymous Walt G. said...

I agree that consumers win in a free market and that any large corporation that does not think globally probably will not survive. The more that I learn, the more that I realize the post WWII United States' economic model is dead and has to change. I'm working at understanding this complicated world that constantly evolves. However, I have a lot of questions.

What kind of pressure should we use against protectionist governments such as China? Is any country more open to foreign trade than the US? Should we just ignore other countries' trade policies while opening our markets for consumers? Surely GM isn't better off in China with these constraints; a lot of people depend on GM for their livelihood. Is the WTO afraid of China or are they just salivating at the prospect of selling to a billion plus people regardless of China's economic and human rights' abuses?

Anyone have any answers to my questions?

At 1/12/2007 2:15 PM, Anonymous bob wright said...

walt g:

China's political system is incompatible with their evolving economic system. Communism vs. free markets and capitalism.

I contend that the politician's increasing acceptance of free markets and capitalism is evidence that China is moving in our direction - maybe not as fast as we'd like, but moving none the less.

Giving ordinary Chinese [not just the politically connected] a taste of the creature comforts Westerners take for granted will probably be all the pressure needed to foment a desire for political change. The movement towards capitalism is evidence this pressure is working. It wasn't too long ago that China's economy was completely command and control. There was no foreign investment - not even 50%.

I find it hard to believe the Chinese politicians will be able to put the tooth paste back in the tube now that they are slowly unscrewing the cap.

The Chinese people are gaining more and more economic freedom. One can only hope that political freedom will follow.

In the mean time, I believe our trade with China [unfair as it may be] only fans the fire.

what say you?

At 1/12/2007 2:27 PM, Anonymous bob wright said...

As an example of creature comforts, China Mobile has more subscribers (around 300 million) than the entire population of the United States (.296 billion)

At 1/13/2007 11:12 PM, Anonymous Anonymous said...

One day the communist countries like China & Russia will get tired of the Americans operating in their world and they order GM, to get out. Then what will happen when the communists take over the plants GM set up in their world.


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