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Naive question here: why China is able to close its market to foreign companies? Same thing for trade sanctions on Iran which impacted European companies but n

Naive question here: why China is able to close its market to foreign companies? Same thing for trade sanctions on Iran which impacted European companies but not China (if I'm not wrong). Seems they don't play by the same rules as anybody else.

JumpCrisscross 5y ago
> why China is able to close its market to foreign companies? Because we assumed that prosperity would lead to liberal democracy. That underwrote complacency while profit motivations took root.
- SkyMarshal 5y ago
  Or that capitalism was an inextricable part of democracy, and bringing the former would inevitably lead to the latter. A quite foolish assumption given the 20th century counterexamples of capitalism + authoritarianism - Nazi Germany, Fascist Italy, Imperial Japan. In the 90s, Wall St. and corporate America bankrolled the largest ever lobbying campaign to open US markets and the WTO to China, and got it by 2000. Just two decades later and the result is massive inequality, a decimated middle class, vulnerable supply supply chains, and rising authoritarianism again. The US has stupidly snatched defeat from the jaws of victory in the Cold War.
  - JumpCrisscross 5y ago
    > that capitalism was an inextricable part of democracy, and bringing the former would inevitably lead to the latter This was never argued by anyone of prominence in the debates on China's WTO accession. Raising living standards through trade was the pitch. The faulty assumption was wealthier Chinese would demand more freedom. That didn't happen.
    - SkyMarshal 5y ago
      The implication at the time - the "End of History" era - was that free trade capitalism had prevailed and was the way to raise living standards, and that political liberalization would follow. However you slice it, it was a poor assumption.
  - pjlegato 5y ago
    Fascism is not a capitalist economic model. It is a "third way" socioeconomic system that proposes an alternative to both capitalism and socialism where both capital and labor are regulated by an all-powerful stern father figure Leader, who mediates and subordinates their petty squabbling to nationalistic interests.
    - cbnotfromthere 5y ago
      By definition fascism is non-Marxist socialism.
  - TomAbel 5y ago
    Nazi Germany, Fascist Italy, Imperial Japan practiced corporatism[1] rather than capitalism [1]https://www.sjsu.edu/faculty/watkins/corporatism.htm https://www.sjsu.edu/faculty/watkins/corporatism.htm
    - masswerk 5y ago
      Regarding Nazi Germany, let's say, it's complicated. While it's true that Hitler apparently envisioned a corporate society in "Mein Kampf", in actuality, the industry was much more structured capitalist than anything else, even in WWII. Thus, corporatist tendencies merely controlled the labor force and bound the intellectual class and educational system to the state, rather than actually defining the economic system. (This is also true for Austria, which was an explicitly corporate state in the 1930s before the Anschluss.) Edit: As far as economic theories of the "Third Reich" are concerned, there was (quite naturally) a fascination with Fordism.
- gandalfian 5y ago
  It's not over yet.
- pstuart 5y ago
  But was that the driver or was it cheap labor for immediate quarterly profits?
- nyolfen 5y ago
  > Because we assumed that prosperity would lead to liberal democracy. That underwrote complacency while profit motivations took root. this might be a formal narrative, but the simple truth is that we did it because it made powerful people rich and entrenched specific factions in both parties
  - Alupis 5y ago
    > this might be a formal narrative, but the simple truth is that we did it because it made powerful people rich and entrenched specific factions in both parties I don't think this is true. When these policies were first enacted upon, the revolution had just ended in China and Mao had just taken over. The population of China was large, but nothing like today, and cheap labor was plentiful all around the world. In short, there was nothing in particular that made doing business in China more lucrative than any other developing nation at the time. The belief was that doing trade and business with the new Chinese government would encourage the developing nation to embrace western ideals... which it clearly did not. Today, doing business in China is lucrative only because they have well over a billion people to buy products and use services... it's clearly short-term profit-driven thinking that has the likes of Apple bending over backwards to stay in the CCP's good graces, all the while the CCP steals Apple's IP, forces Apple to bend their morality, aid in censorship, unwittingly employ slave camps and more.
  - BobbyJo 5y ago
    I don't think people buy goods made in China because they like seeing the rich get richer.
kazen44 5y ago
Because china, unlike most of the other countries in the world, has a massive population and resources to get atleast partially self sustaining. Also, the fact that exporting manufacturing to the east let to a lot of short-term profits for western companies. The question is at what costs, looking at climate change, the current shortage of nearly anything manufactured right now and the destablisation of society thanks to the dropping of quality of life of many people in the west.
- angelzen 5y ago
  > destablisation of society thanks to the dropping of quality of life of many people in the west That's not a bug.
toast0 5y ago
China can control its market without serious reprisal because there aren't any serious reprisals available that are palettable. As an individual country, blocking or tarrifing imports from China isn't very effective because it hurts consumers and industry that rely on importing products and raw materials/commodities/industrial inputs from China more than it hurts China who can often export to other countries instead. Blocking exports to China is tricky because one the one hand, China doesn't import too many things, but on the other hand, for those things they do import, they're a large portion of the global market, so a country that cuts off those exports will leave their exporters will a large surplus, often of perishable goods, that will be difficult to deal with. So, trade controls are tricky. Most western countries don't have much in the way of laws that could restrict foreign ownership of land or businesses except in exceptional cases. And military intervention would be wholy inappropriate and probably disasterous. Really just not a lot of options.
- ithkuil 5y ago
  > palettable palatable From "palate", roof of the mouth, and by extension taste.
- AnthonyMouse 5y ago
  > As an individual country, blocking or tarrifing imports from China isn't very effective because it hurts consumers and industry that rely on importing products and raw materials/commodities/industrial inputs from China more than it hurts China who can often export to other countries instead. This isn't really true. If there is a tariff on importing iPhones from China, in the short term iPhones become more expensive by the amount of the tariff, but also the US taxpayer pays lower taxes for the same level of government services because the tariff money is going to the US government. So to US citizens in the short term it's net-zero. In the longer term, Apple builds an iPhone factory in India or Mexico. The US iPhone customer doesn't even really notice the difference from this, but China obviously does. > Blocking exports to China is tricky because one the one hand, China doesn't import too many things, but on the other hand, for those things they do import, they're a large portion of the global market, so a country that cuts off those exports will leave their exporters will a large surplus, often of perishable goods, that will be difficult to deal with. Nobody really even wants to block exports to China. Gaining fair access to the Chinese market is kind of the point, and for things like soybeans or something like that, "fair access" mostly just means they're buying your products. It's more complicated when you start talking about tech companies and censorship, because then it's about more than just "they're buying it from you." Moreover, where export restrictions hurt isn't necessarily for things where they're paying a lot of money. It's for things they can't get elsewhere. > Most western countries don't have much in the way of laws that could restrict foreign ownership of land or businesses except in exceptional cases. That wouldn't be that hard to change. Especially for ownership of land, the change would be locally popular because it would make housing more affordable, and the foreign interests who would have to sell their holdings don't get a vote in US elections.
wonnage 5y ago
There aren't any real rules, it's just whatever you have the power to get away with. Also it's not like there's some supreme world government that can actually enforce these rules...
- whynotkeithberg 5y ago
  How is that any different than the US???
notabanker 5y ago
What's different in China's case compared to other protectionist countries is they can get away with being protectionist. How can they get away with it? They have powerful people lobbying with foreign governments on China's behalf. Take Apple for example: they contract out iPhone manufacturing to Foxconn in China. Due to the low cost of manufacturing they are able to generate astronomical profits. Every measure against China will directly or indirectly impact some US multinational corporation and it's natural for the corporation to lobby Western governments to put the brakes on such measures. On the contrary, if you look at Iran or Russia, multinational corporations don't have a similar deep-seated interest or supply chain infrastructure as they do in China. How did this come to be? A lot of it can be attributed to Deng Xiaoping's setting the tone for China's relationship with the West: “stabilize the position, observe calmly, take all in stride, never take the lead, and hide our capacity to bide our time.” More on that in this essay: https://www.hoover.org/research/china-us-relations-eyes-chinese-communist-party-insiders-perspective-zhong-gong-yan-zhong https://www.hoover.org/research/china-us-relations-eyes-chin...
coldtea 5y ago
>why China is able to close its market to foreign companies? Why shouldn't they? It's their market. Do you propose we do like the British, which bomb them and opened it by force to have them buy opium? For perspecive, and to answer the "seems they don't play by the same rules as anybody else", part, the US has historically had tons of tarrifs on its own, it's how it got big - they only switched to "free trade" when Europe was devastated from WW II, and the US was already top dog dictating this "free" trade terms: "The United States pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century. Between 1861 and 1933, they had one of the highest average tariff rates on manufactured imports in the world." [1]. Even so, US still has tarrifs and protectionist policies in many areas, not to mention the whole "yield the power of our military and diplomatic power to enforce favorable deals making a mockery of the free market we pay lip service to" thing. Not to mention selectively targeting countries they don't like to close their markets via embargos, and using their force to force adherence to those embargoes to other countries around the world, something which no country dares do back (and can't anyway). Talk about "not playing by the same rules as anybody else". [1] https://en.wikipedia.org/wiki/Tariff_in_United_States_history https://en.wikipedia.org/wiki/Tariff_in_United_States_histor...
- cscurmudgeon 5y ago
  https://en.wikipedia.org/wiki/List_of_countries_by_tariff_rate https://en.wikipedia.org/wiki/List_of_countries_by_tariff_ra... China has twice the tariff rate of the US, *in addition* to directly stopping foreign companies.
  - coldtea 5y ago
    Yes, because China is not in the development stage the US is now, but where it was decades ago and with huge setbacks from the 19th century and Mao era. The finger pointing to that is a "I kicked the ladder after I've climbed" thing (or "do as I do now that I'm on top, don't do what I did to get on top, I don't want competition up here" kind of advice).
- midnight_toker 5y ago
  Fair point, but two wrongs dont make a right.
hosh 5y ago
Pre-CCP history — the two Opium Wars demonstrated to the Chinese about staying in control of domestic markets ahead of foreign merchants, otherwise, they lose some of their sovereign power: https://en.m.wikipedia.org/wiki/Opium_Wars https://en.m.wikipedia.org/wiki/Opium_Wars To be fair, Imperial China has a history of developing vassal states in its sphere of influence, so what goes around, comes around. Main thing is that China used to have greater influence and I think the current generation of Chinese citizens see no reason why China shouldn’t be a superpower, even if they have to share it with the US.
angelzen 5y ago
They heavily invested in their STEM workforce, making it feasible to take over Western know-how. See OP article.
markus_zhang 5y ago
> why China is able to close its market to foreign companies? It is not though, many foreign companies do business in China. Even Facebook and Google retain part of their Ad business. > Same thing for trade sanctions on Iran which impacted European companies but not China (if I'm not wrong). Seems they don't play by the same rules as anybody else. First, EU doesn't like the idea that US sanctioned their companies because of Iran oil, that's why they rolled out some law that protect against it recently. Second, it's just US (and part of other western countries' as they have to eat it) rule, regarding the Iran oil example. China is not playing by that rule simply because so far there is not enough push from US.

JumpCrisscross 5y ago

> why China is able to close its market to foreign companies? Because we assumed that prosperity would lead to liberal democracy. That underwrote complacency while profit motivations took root.

SkyMarshal 5y ago
Or that capitalism was an inextricable part of democracy, and bringing the former would inevitably lead to the latter. A quite foolish assumption given the 20th century counterexamples of capitalism + authoritarianism - Nazi Germany, Fascist Italy, Imperial Japan. In the 90s, Wall St. and corporate America bankrolled the largest ever lobbying campaign to open US markets and the WTO to China, and got it by 2000. Just two decades later and the result is massive inequality, a decimated middle class, vulnerable supply supply chains, and rising authoritarianism again. The US has stupidly snatched defeat from the jaws of victory in the Cold War.
- JumpCrisscross 5y ago
  > that capitalism was an inextricable part of democracy, and bringing the former would inevitably lead to the latter This was never argued by anyone of prominence in the debates on China's WTO accession. Raising living standards through trade was the pitch. The faulty assumption was wealthier Chinese would demand more freedom. That didn't happen.
  - SkyMarshal 5y ago
    The implication at the time - the "End of History" era - was that free trade capitalism had prevailed and was the way to raise living standards, and that political liberalization would follow. However you slice it, it was a poor assumption.
- pjlegato 5y ago
  Fascism is not a capitalist economic model. It is a "third way" socioeconomic system that proposes an alternative to both capitalism and socialism where both capital and labor are regulated by an all-powerful stern father figure Leader, who mediates and subordinates their petty squabbling to nationalistic interests.
  - cbnotfromthere 5y ago
    By definition fascism is non-Marxist socialism.
- TomAbel 5y ago
  Nazi Germany, Fascist Italy, Imperial Japan practiced corporatism[1] rather than capitalism [1]https://www.sjsu.edu/faculty/watkins/corporatism.htm https://www.sjsu.edu/faculty/watkins/corporatism.htm
  - masswerk 5y ago
    Regarding Nazi Germany, let's say, it's complicated. While it's true that Hitler apparently envisioned a corporate society in "Mein Kampf", in actuality, the industry was much more structured capitalist than anything else, even in WWII. Thus, corporatist tendencies merely controlled the labor force and bound the intellectual class and educational system to the state, rather than actually defining the economic system. (This is also true for Austria, which was an explicitly corporate state in the 1930s before the Anschluss.) Edit: As far as economic theories of the "Third Reich" are concerned, there was (quite naturally) a fascination with Fordism.
gandalfian 5y ago
It's not over yet.
pstuart 5y ago
But was that the driver or was it cheap labor for immediate quarterly profits?
nyolfen 5y ago
> Because we assumed that prosperity would lead to liberal democracy. That underwrote complacency while profit motivations took root. this might be a formal narrative, but the simple truth is that we did it because it made powerful people rich and entrenched specific factions in both parties
- Alupis 5y ago
  > this might be a formal narrative, but the simple truth is that we did it because it made powerful people rich and entrenched specific factions in both parties I don't think this is true. When these policies were first enacted upon, the revolution had just ended in China and Mao had just taken over. The population of China was large, but nothing like today, and cheap labor was plentiful all around the world. In short, there was nothing in particular that made doing business in China more lucrative than any other developing nation at the time. The belief was that doing trade and business with the new Chinese government would encourage the developing nation to embrace western ideals... which it clearly did not. Today, doing business in China is lucrative only because they have well over a billion people to buy products and use services... it's clearly short-term profit-driven thinking that has the likes of Apple bending over backwards to stay in the CCP's good graces, all the while the CCP steals Apple's IP, forces Apple to bend their morality, aid in censorship, unwittingly employ slave camps and more.
- BobbyJo 5y ago
  I don't think people buy goods made in China because they like seeing the rich get richer.

kazen44 5y ago

Because china, unlike most of the other countries in the world, has a massive population and resources to get atleast partially self sustaining. Also, the fact that exporting manufacturing to the east let to a lot of short-term profits for western companies. The question is at what costs, looking at climate change, the current shortage of nearly anything manufactured right now and the destablisation of society thanks to the dropping of quality of life of many people in the west.

angelzen 5y ago
> destablisation of society thanks to the dropping of quality of life of many people in the west That's not a bug.

toast0 5y ago

China can control its market without serious reprisal because there aren't any serious reprisals available that are palettable. As an individual country, blocking or tarrifing imports from China isn't very effective because it hurts consumers and industry that rely on importing products and raw materials/commodities/industrial inputs from China more than it hurts China who can often export to other countries instead. Blocking exports to China is tricky because one the one hand, China doesn't import too many things, but on the other hand, for those things they do import, they're a large portion of the global market, so a country that cuts off those exports will leave their exporters will a large surplus, often of perishable goods, that will be difficult to deal with. So, trade controls are tricky. Most western countries don't have much in the way of laws that could restrict foreign ownership of land or businesses except in exceptional cases. And military intervention would be wholy inappropriate and probably disasterous. Really just not a lot of options.

ithkuil 5y ago
> palettable palatable From "palate", roof of the mouth, and by extension taste.
AnthonyMouse 5y ago
> As an individual country, blocking or tarrifing imports from China isn't very effective because it hurts consumers and industry that rely on importing products and raw materials/commodities/industrial inputs from China more than it hurts China who can often export to other countries instead. This isn't really true. If there is a tariff on importing iPhones from China, in the short term iPhones become more expensive by the amount of the tariff, but also the US taxpayer pays lower taxes for the same level of government services because the tariff money is going to the US government. So to US citizens in the short term it's net-zero. In the longer term, Apple builds an iPhone factory in India or Mexico. The US iPhone customer doesn't even really notice the difference from this, but China obviously does. > Blocking exports to China is tricky because one the one hand, China doesn't import too many things, but on the other hand, for those things they do import, they're a large portion of the global market, so a country that cuts off those exports will leave their exporters will a large surplus, often of perishable goods, that will be difficult to deal with. Nobody really even wants to block exports to China. Gaining fair access to the Chinese market is kind of the point, and for things like soybeans or something like that, "fair access" mostly just means they're buying your products. It's more complicated when you start talking about tech companies and censorship, because then it's about more than just "they're buying it from you." Moreover, where export restrictions hurt isn't necessarily for things where they're paying a lot of money. It's for things they can't get elsewhere. > Most western countries don't have much in the way of laws that could restrict foreign ownership of land or businesses except in exceptional cases. That wouldn't be that hard to change. Especially for ownership of land, the change would be locally popular because it would make housing more affordable, and the foreign interests who would have to sell their holdings don't get a vote in US elections.

wonnage 5y ago

There aren't any real rules, it's just whatever you have the power to get away with. Also it's not like there's some supreme world government that can actually enforce these rules...

whynotkeithberg 5y ago
How is that any different than the US???

notabanker 5y ago

What's different in China's case compared to other protectionist countries is they can get away with being protectionist. How can they get away with it? They have powerful people lobbying with foreign governments on China's behalf. Take Apple for example: they contract out iPhone manufacturing to Foxconn in China. Due to the low cost of manufacturing they are able to generate astronomical profits. Every measure against China will directly or indirectly impact some US multinational corporation and it's natural for the corporation to lobby Western governments to put the brakes on such measures. On the contrary, if you look at Iran or Russia, multinational corporations don't have a similar deep-seated interest or supply chain infrastructure as they do in China. How did this come to be? A lot of it can be attributed to Deng Xiaoping's setting the tone for China's relationship with the West: “stabilize the position, observe calmly, take all in stride, never take the lead, and hide our capacity to bide our time.” More on that in this essay: https://www.hoover.org/research/china-us-relations-eyes-chinese-communist-party-insiders-perspective-zhong-gong-yan-zhong https://www.hoover.org/research/china-us-relations-eyes-chin...

coldtea 5y ago

>why China is able to close its market to foreign companies? Why shouldn't they? It's their market. Do you propose we do like the British, which bomb them and opened it by force to have them buy opium? For perspecive, and to answer the "seems they don't play by the same rules as anybody else", part, the US has historically had tons of tarrifs on its own, it's how it got big - they only switched to "free trade" when Europe was devastated from WW II, and the US was already top dog dictating this "free" trade terms: "The United States pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century. Between 1861 and 1933, they had one of the highest average tariff rates on manufactured imports in the world." [1]. Even so, US still has tarrifs and protectionist policies in many areas, not to mention the whole "yield the power of our military and diplomatic power to enforce favorable deals making a mockery of the free market we pay lip service to" thing. Not to mention selectively targeting countries they don't like to close their markets via embargos, and using their force to force adherence to those embargoes to other countries around the world, something which no country dares do back (and can't anyway). Talk about "not playing by the same rules as anybody else". [1] https://en.wikipedia.org/wiki/Tariff_in_United_States_history https://en.wikipedia.org/wiki/Tariff_in_United_States_histor...

cscurmudgeon 5y ago
https://en.wikipedia.org/wiki/List_of_countries_by_tariff_rate https://en.wikipedia.org/wiki/List_of_countries_by_tariff_ra... China has twice the tariff rate of the US, *in addition* to directly stopping foreign companies.
- coldtea 5y ago
  Yes, because China is not in the development stage the US is now, but where it was decades ago and with huge setbacks from the 19th century and Mao era. The finger pointing to that is a "I kicked the ladder after I've climbed" thing (or "do as I do now that I'm on top, don't do what I did to get on top, I don't want competition up here" kind of advice).
midnight_toker 5y ago
Fair point, but two wrongs dont make a right.

hosh 5y ago

Pre-CCP history — the two Opium Wars demonstrated to the Chinese about staying in control of domestic markets ahead of foreign merchants, otherwise, they lose some of their sovereign power: https://en.m.wikipedia.org/wiki/Opium_Wars https://en.m.wikipedia.org/wiki/Opium_Wars To be fair, Imperial China has a history of developing vassal states in its sphere of influence, so what goes around, comes around. Main thing is that China used to have greater influence and I think the current generation of Chinese citizens see no reason why China shouldn’t be a superpower, even if they have to share it with the US.

angelzen 5y ago

They heavily invested in their STEM workforce, making it feasible to take over Western know-how. See OP article.

markus_zhang 5y ago

> why China is able to close its market to foreign companies? It is not though, many foreign companies do business in China. Even Facebook and Google retain part of their Ad business. > Same thing for trade sanctions on Iran which impacted European companies but not China (if I'm not wrong). Seems they don't play by the same rules as anybody else. First, EU doesn't like the idea that US sanctioned their companies because of Iran oil, that's why they rolled out some law that protect against it recently. Second, it's just US (and part of other western countries' as they have to eat it) rule, regarding the Iran oil example. China is not playing by that rule simply because so far there is not enough push from US.