Tuesday, July 27, 2010

When Mercantilists Feud

I'm sort of wondering how long the China-Germany lovefest goes on. Maybe not too much longer:

Via the Financial Times (7/18):

Two of Germany’s most prominent industrialists have attacked the business and investment climate in China during a meeting with Wen Jiabao, the Chinese premier.

The criticism from the businessmen, the chief executives of Siemens and BASF, came against a backdrop of rising discontent among foreign businesses operating in China...

J├╝rgen Hambrecht, chief executive of BASF, the chemical producer, hit out at restrictions on foreign business and complained of foreign companies being forced to transfer business and technological know-how to Chinese companies in exchange for market access...

Addressing government procurement practices, a recent area of complaint by foreign executives and governments, Peter Loescher, chief executive of Siemens, the industrial conglomerate, said foreign companies operating in China “expect to find equal conditions in the fields of public tenders”

Again, China fully expects to field their own internationally competitive companies and wants to grow them initially via the domestic market. While the capitalist world system can incorporate a South Korea or a Taiwan into the second tier of world powers, in terms of per capita GDP, it's not likely that it can with a China unless someone else on top of the pyramid falls off or collapses. Capitalism has a shown a reliance on large pools of cheap labor from its inception.

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