Jul

3

China and Textile Again

Filed Under News | Leave a Comment

Remember this? I just read here:

China plans to increase tax rebates on textile exports in a bid to support the textile industry, the Beijing Morning Post reported, citing sources.

In May, China’s clothing exports grew 1.1 pct from a year earlier, the slowest rise so far this year, the report said.

Export tax rebates may be raised to 13 pct from 11 pct, while rebates on exported clothing will rise to 15 pct from 11 pct, the report said.

A final decision on the rebates is pending, the report added.

Starting in July 2007, the government cut the industry’s rebate to help contain the trade surplus. Since that time, however, Chinese textile firms’ profits have been falling because of weaker global demand and intense competition, the report said.

And I say, Oh those Chinese.


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May

18

Myanmar and the Responsibility to Protect

Filed Under Opinion | 7 Comments

If there was ever any humanitarian reason to overrun a country, the Burmese ruling elite have certainly provided it. How else does one deal with a government that has allowed only a trickle of aid into a disaster-struck area? There are even reports that say that the government might not even know the scale of the disaster. China used to be the one to refuse help from any other country, but reactions to the recent earthquake - the openness in the rescue operations, and in the willingness to accept international help - has really impressed every analyst who has written about the case. This is such that even The Economist did one of their leaders on the issue.

China has had her mistakes too, no doubts. Ready examples are the cases of the 1975 earthquake in Tangshan, where over 250,000 people died because the magnitude of the incidence was kept under wraps, and the cover-up of the SARS outbreak. China seems to have indeed learnt from her mistakes.

What now?
The Economist has suggested it, just like I had thought about it, that countries that have ships close to the country could force aid on the country. Even Bernard Kouchner, France’s foreign minister, has hinted at it. I didn’t even realise that there was an international principle of ‘responsibility to protect’ until I read the story. The principle was agreed upon in a United Nations summit in 2005, and it says ‘that the international community has a responsibility to act when these governments fail to protect the most vulnerable among us’. Now may be the time to test the resolve of global leaders. If the Burmese government continues to be obstinate, and to sacrifice the lives of Burmese citizens, that option should be taken up.

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Nov

18

Help Needed… What is the Comparative Advantage of Africa?

Filed Under Idea | 14 Comments

Over the weekend I met a Jamaican guy with whom I struck an almost instant friendship. We had long and intense discussions about matters relating to the economies of developing countries. Of course, there is hardly any discussion about developing countries that would not touch on China and India, and the advantages the countries have.

Size and cost
The Economist did a special report on technology in India and China in their November 10th - 16th edition. Part of the report says that China’s biggest advantage - while discussing technological innovations - is the shere size of its market. That statement was made in relation to the role of “venturesome and resourceful customers” in steering technological innovation. The principle is simple: a company does not need to wait till it has perfected its products before presenting it to the public. Because China has a huge population that is gradually becoming more and more economically empowered, you can throw what is not yet perfect to the market, and then let the feedback determine areas that need attention. It is best captured by this statement, “You can afford to waste some customers with imperfect product, because there are always another 100m out there to whom you can sell version 2.0.” If we translate that to other parts of the economy, one would realise that shere population is strength for both China and India. There is a large chance for a country that is growing to expand inside itself as more and more citizens gain economic strength. In other words, simply empowering the citizens provides a space for economic growth. Also, there is a tendency for the country to attract FDI, based simply on the size of its market.

Another advantage that one keeps hearing about is the price of labour in China. With an increasing population of members of the middle class, and a large army of cheap labour to boot, China seems not only to be ready for growth based on the strength of an increasing middle class, but also because of its large army of cheap labour. With this large army, it can produce at a very cheap rate for exportation. And it has been doing this. One major point that is sometimes missing in the moral debate on China’s business in Africa is that there is a large amount of made-in-China products in African markets, and these goods are so cheap that they sell more cheaply than locally produced ones. The price of labour is also an important attraction for FDI.

Please, help!
What exactly do I need help with? The problem is this: what is the comparative advantage that African countries have? Why would African countries be attractive for production and not just servicing? I think of shere size of population in the case of China and India, and I think of cheap labour, especially in the case of China. Are African countries doomed to simply supplying developed and emerging economies with raw materials to which value is added and then brought back to be sold in African countries? I am asking for help because it seems that my rudimentary knowledge of economics cannot fully appreciate the situation.

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