Taking sides, seeing consequences

We have placed ourselves on one side of a crevasse.

A result: New Zealand exporters can expect more difficulty when they trade with China.

I wrote this article at Christmas but didn’t post it immediately. Now it seems even more timely.

New Zealand, a member of the 5 Eyes defence & security partnership, has joined the US & Australia in banning Chinese technology giant Huawei from tendering for new G5 network business, supposedly because Huawei spies for the Chinese Government via its equipment.

I read the primary source document where these allegations are compiled,  theNovember update of the US Trade Representative, and found plenty of allegations & surmising, but no substance.

It seemed to me as I read it that the US had been open to enter details of specific committed crimes, but had not done so. Have crimes been committed? On my reading, no. At most, hearsay, opinion derived from hearsay & rumour, which have turned into general but unsubstantiated allegations.

What more does New Zealand’s government rely on to decide to ban Huawei? I don’t know, except that it seems to have been orchestrated by 5 Eyes. Australia’s compliance with US Government requests/insistence seems unchanged from the days of “All the way with LBJ”, while the US Government, and its president in particular, is obsessed with Chinese acquisition of US businesses’ trade secrets.

By opting to support the 5 Eyes policy, New Zealand thereby commits to an anti-China stance.

The business model

One of the things wrong with Chinese business is the model of state capitalism – according to the rules decreed by the US.

Under the US model, socialism equates to communism, communism is evil, businesses run by a government compete unfairly because of subsidies, although they operate in the corporate world these businesses stand accused of cheating courtesy of those state subsidies.

Wind the clock back to the early days of China entering world markets with cheap products. As tariff walls were lowered and then removed, nobody could compete with Chinese prices. The fact that these Chinese products generally had short lifespans was discounted. Also discounted was the labour input in China – for some products, unpaid prison labour, and for most products factory workers paid well below minimum wages in the West.

Western consumer growth burgeoned on this Chinese production.

On Monday I bought a shovel & a rake – the shovel a Stanley (US) product, priced above the bottom range of flimsier products and below the considerably more expensive products that looked sturdier than I needed. The tools were both made in China. On Christmas Day I received a gift, a SwissTech utili-key. SwissTech is part of InterDesign Inc, based in Ohio. The tool was made in China.

Both the US manufacturing company and the customer have benefited from the Chinese production, but the crevasse being opened between the US & China threatens the co-operation which has raised China from poverty.

26 November 2018, Office of the US Trade Representative, Executive Office of the President: Update concerning China’s acts, policies & practices related to technology transfer, intellectual property & innovation

Attribution: Bob Dey, opinion.

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