The problem that Yellen and America are having is that Chinese manufacturing is constantly moving up the value chain. What does this mean? Simply that China is gaining the ability to make more technologically advanced and sophisticated goods as years go by.
For centuries, the West has had a monopoly on high technology. China is beginning to challenge it and the West has been dealing with it in bunch of ways for a while now. For example, they could largely ignore Chinese phones because they do not directly compete against iPhones for example because of the target market since Chinese phones target a lower price segment. Chinese software like Baidu is useless for English speaking countries. With Huawei’s 5G telecom hardware, they could just ban it. It is not a consumer good so most people wouldn’t care about missing out on it especially if you drape it with the garb of “national security threat” which is what the west did.
But Chinese made commodities like electric cars and solar panels present a new problem. They are high tech and are goods that are both in high demand and short supply in the West. It is a market that is ripe for picking but Western companies, lacking manufacturing capacity of their own, have not been able to produce to meet this demand. Chinese EVs and solar panels are going to be infinitely cheaper than anything the West can produce because of efficiency (but the press will tell you it is only because of state subsidy). China can produce these things without the West but the West cannot produce these things without China. The West does not like this. The West does not want China to independently provide high tech goods to the West because Western companies cannot compete with that and they will be drown.
(but the press will tell you it is only because of cheap subsidy).
And that’s before we get to how state run healthcare & higher education, affordable housing, public transportation, and on & on lower the cost of labor.
The problem that Yellen and America are having is that Chinese manufacturing is constantly moving up the value chain. What does this mean? Simply that China is gaining the ability to make more technologically advanced and sophisticated goods as years go by.
For centuries, the West has had a monopoly on high technology. China is beginning to challenge it and the West has been dealing with it in bunch of ways for a while now. For example, they could largely ignore Chinese phones because they do not directly compete against iPhones for example because of the target market since Chinese phones target a lower price segment. Chinese software like Baidu is useless for English speaking countries. With Huawei’s 5G telecom hardware, they could just ban it. It is not a consumer good so most people wouldn’t care about missing out on it especially if you drape it with the garb of “national security threat” which is what the west did.
But Chinese made commodities like electric cars and solar panels present a new problem. They are high tech and are goods that are both in high demand and short supply in the West. It is a market that is ripe for picking but Western companies, lacking manufacturing capacity of their own, have not been able to produce to meet this demand. Chinese EVs and solar panels are going to be infinitely cheaper than anything the West can produce because of efficiency (but the press will tell you it is only because of state subsidy). China can produce these things without the West but the West cannot produce these things without China. The West does not like this. The West does not want China to independently provide high tech goods to the West because Western companies cannot compete with that and they will be drown.
And that’s before we get to how state run healthcare & higher education, affordable housing, public transportation, and on & on lower the cost of labor.