3 ms·

>> US Treasury secretary Janet Yellen pressed China to stop flooding the market with cheap green technology exports. What a joke! Wouldn't everyone benefit fro

>> US Treasury secretary Janet Yellen pressed China to stop flooding the market with cheap green technology exports. What a joke! Wouldn't everyone benefit from cheap green technology?

SoftTalker 3y ago
US-based panel manufacturers won't benefit.
- yumraj 3y ago
  Exactly, and when China has a monopoly, they can jack up the prices.
  - bootsmann 3y ago
    But solar panels aren't chips, the hurdle for new entrants is significantly lower. I don't think this is a strategic move by China and more a result of Xis attempt to reignite their economic growth.
amenhotep 3y ago
It depends if they're actually producing them at that price, right? If they are - and I do assume that's probably the case - then that's great, everyone benefits from cheap solar panels/whatever else and we can expect them to keep getting cheaper, brilliant. If they aren't, if they're losing money on each panel/whatever they sell, then it's economic warfare rather than progress and the point would be to drive other manufacturers out of business. Not brilliant! Not good for future expectations! Yellen would presumably be justifying her stance based on a claim of (2) and maybe she privately believes (1) and it's simple protectionism, but it would be surprising if she admitted that.
- hangonhn 3y ago
  Chinese industrial policy is quite a bit more sophisticated than just dumping money and subsidizing industries. They only do that in the beginning. They first subsidize and erect barriers to outside competitors. It then becomes a chaotic place with many domestic competitors. They then lower (or eliminate) the subsidies and basically it becomes survival of the fittest among the domestic producers. This is when domestic producers innovate and become more efficient. Once they are sufficiently strong and competitive, they start taking down the barriers to foreign competitors and also start exporting. This is exactly the playbook they used for EVs. (BTW, this isn't new or Chinese. Both Japan and South Korea had done versions of this. Japan originally learned it from Germany.) All this to say by the time Yellen or anyone has started complaining, the subsidizes are gone already. The Chinese companies has been incubated into very competitive companies. The US is starting to reconsider the idea of industrial policies now. The recent op-ed by Marco Rubio suggests even the traditional free-market party is rethinking it.
  - AnthonyMouse 3y ago
    > Chinese industrial policy is quite a bit more sophisticated than just dumping money and subsidizing industries. They only do that in the beginning. > All this to say by the time Yellen or anyone has started complaining, the subsidizes are gone already. Just because the subsidies are gone doesn't mean they haven't had their effect. Once you've already paid to develop the technology and build the factory, the incremental cost of making more units is much lower and you can outcompete companies that never received subsidies to do that. > The US is starting to reconsider the idea of industrial policies now. The recent op-ed by Marco Rubio suggests even the traditional free-market party is rethinking it. One of the big problems the US (and Europe) have is that subsidies aren't just money. We keep passing rules the cost of which can be absorbed by large established companies, but make it harder to get new companies off the ground. Meanwhile developing countries don't impose those rules. That isn't a short-term disaster when you already have a lot of large established companies that have already recovered their startup costs, but it's a long-term disaster. New companies form in places where that isn't the case, and those companies start to take market share from your own established companies. But it's a hard problem to solve because the inefficiency doesn't have a single cause. It's not some specific individual rule, it's the existence of thousands of separate rules that require teams of compliance bureaucrats to operate under, and identifying and eliminating the ones that can't survive a cost/benefit analysis is specialized detail-oriented work not easily turned into a sound bite. Meanwhile the ones who most know how to identify the least efficient rules are the compliance bureaucrats, but they want to keep them because that's their paycheck.
    - hangonhn 3y ago
      > Just because the subsidies are gone doesn't mean they haven't had their effect. Once you've already paid to develop the technology and build the factory, the incremental cost of making more units is much lower and you can outcompete companies that never received subsidies to do that. Oh 100%. I totally agree with you there but the implementation of these policies make it very hard for someone like Yellen to point her finger at and say "Get rid of it to play fair." because by the time she does, it's already gone. The subsidies are now in the capital of these companies as you've rightly pointed out. How do you even fight that? I don't know how the US can continue to defend global free market in the face of market distorting measures like these without putting up trade barriers. Otherwise we risk becoming de-industrialized over time.

>> US Treasury secretary Janet Yellen pressed China to stop flooding the market with cheap green technology exports. What a joke! Wouldn't everyone benefit from cheap green technology?

SoftTalker 3y ago

US-based panel manufacturers won't benefit.

yumraj 3y ago
Exactly, and when China has a monopoly, they can jack up the prices.
- bootsmann 3y ago
  But solar panels aren't chips, the hurdle for new entrants is significantly lower. I don't think this is a strategic move by China and more a result of Xis attempt to reignite their economic growth.

amenhotep 3y ago

It depends if they're actually producing them at that price, right? If they are - and I do assume that's probably the case - then that's great, everyone benefits from cheap solar panels/whatever else and we can expect them to keep getting cheaper, brilliant. If they aren't, if they're losing money on each panel/whatever they sell, then it's economic warfare rather than progress and the point would be to drive other manufacturers out of business. Not brilliant! Not good for future expectations! Yellen would presumably be justifying her stance based on a claim of (2) and maybe she privately believes (1) and it's simple protectionism, but it would be surprising if she admitted that.

hangonhn 3y ago
Chinese industrial policy is quite a bit more sophisticated than just dumping money and subsidizing industries. They only do that in the beginning. They first subsidize and erect barriers to outside competitors. It then becomes a chaotic place with many domestic competitors. They then lower (or eliminate) the subsidies and basically it becomes survival of the fittest among the domestic producers. This is when domestic producers innovate and become more efficient. Once they are sufficiently strong and competitive, they start taking down the barriers to foreign competitors and also start exporting. This is exactly the playbook they used for EVs. (BTW, this isn't new or Chinese. Both Japan and South Korea had done versions of this. Japan originally learned it from Germany.) All this to say by the time Yellen or anyone has started complaining, the subsidizes are gone already. The Chinese companies has been incubated into very competitive companies. The US is starting to reconsider the idea of industrial policies now. The recent op-ed by Marco Rubio suggests even the traditional free-market party is rethinking it.
- AnthonyMouse 3y ago
  > Chinese industrial policy is quite a bit more sophisticated than just dumping money and subsidizing industries. They only do that in the beginning. > All this to say by the time Yellen or anyone has started complaining, the subsidizes are gone already. Just because the subsidies are gone doesn't mean they haven't had their effect. Once you've already paid to develop the technology and build the factory, the incremental cost of making more units is much lower and you can outcompete companies that never received subsidies to do that. > The US is starting to reconsider the idea of industrial policies now. The recent op-ed by Marco Rubio suggests even the traditional free-market party is rethinking it. One of the big problems the US (and Europe) have is that subsidies aren't just money. We keep passing rules the cost of which can be absorbed by large established companies, but make it harder to get new companies off the ground. Meanwhile developing countries don't impose those rules. That isn't a short-term disaster when you already have a lot of large established companies that have already recovered their startup costs, but it's a long-term disaster. New companies form in places where that isn't the case, and those companies start to take market share from your own established companies. But it's a hard problem to solve because the inefficiency doesn't have a single cause. It's not some specific individual rule, it's the existence of thousands of separate rules that require teams of compliance bureaucrats to operate under, and identifying and eliminating the ones that can't survive a cost/benefit analysis is specialized detail-oriented work not easily turned into a sound bite. Meanwhile the ones who most know how to identify the least efficient rules are the compliance bureaucrats, but they want to keep them because that's their paycheck.
  - hangonhn 3y ago
    > Just because the subsidies are gone doesn't mean they haven't had their effect. Once you've already paid to develop the technology and build the factory, the incremental cost of making more units is much lower and you can outcompete companies that never received subsidies to do that. Oh 100%. I totally agree with you there but the implementation of these policies make it very hard for someone like Yellen to point her finger at and say "Get rid of it to play fair." because by the time she does, it's already gone. The subsidies are now in the capital of these companies as you've rightly pointed out. How do you even fight that? I don't know how the US can continue to defend global free market in the face of market distorting measures like these without putting up trade barriers. Otherwise we risk becoming de-industrialized over time.