China's Exports Keep Rising Despite Higher Costs (Demo)

“China is offsetting the head winds because it keeps capturing more market share,” said Louis Kuijs, an economist formerly at the World Bank and now at the Fung Global Institute in Hong Kong. “Yes, labor is becoming more expensive over time, but it’s still much cheaper than the U.S. or Europe. The ratio of price to quality is still far more favorable for production in China.”

The country’s investment in heavy machinery will help China increase its share of global exports to an unprecedented 15% or more by 2020, said Janet Zhang, an analyst for GaveKal Dragonomics, a China-based economic research firm.

“China is gradually climbing up the value chain,” Zhang said. “This is an opportunity for companies to upgrade to overcome labor costs and shortages.”

Workers account for about one-third of costs in labor-intensive sectors. But now China’s economic expansion is now focused on investment in new productive capital machinery with capita investment spurred by China’s state-controlled banks.

To compete, America must engage in an all-out initiative to extend capital credit to ALL Americans to acquire viable private, individual ownership portfolios in corporations to expand American-made productive capital capabilities. Such investments can be accomplished using commercial banking insurance and Federal Reserve reinsurance, with the loans paid back out of the future earnings of the investments.

To reinvigorate “Make It In America” and “Made In America,” the federal government should create financial incentives and tax provisions to reward American companies that bring manufacturing back to the United States from abroad, promote manufacturing investment, and incentivize more investment by foreign companies, all with the condition that the employees will share in the ownership benefits generated by the new capital formation projects. The result will be more broadened employee ownership and in-sourcing of jobs created by the new capital formation projects, and make America self-reliant.

The government should impose robust import levies and tariffs (tax) on particular classes of imports that are determined to be manufactured outside the United States and exported back to the United States that do not qualify as “Fair Trade” and unfairly undercut an American-make equivalent. At present, American business corporations are increasingly abandoning the United States and its communities to invest in productive capital formation outside the United States, particularly in China, Mexico, India, and other parts of Asia. As a result, America is experiencing the deindustrialization of America. This has forced policy makers to adopt a redistributive socialist solution rather than a democratic capitalist one whereby democratic economic growth of the earning power of the citizens would flourish simultaneously with new, broadly-owned productive capital formation investments in the United States. Such overseas operations have the advantage of “sweat-shop” slave labor rates relative to American standards, low or no taxation, supportive infrastructure provisions, currency manipulation, and few if any environmental regulations––which translate to lower-cost production. Thus, producing the same product or service in the United States would be far more expensive. For most people, economic globalization means a growing gap between rich and poor, technological alienation of the labor worker from the means of production, and the phenomenon of global corporations and strategic alliances forcing labor workers in high-cost wage markets, such as the United States, to compete with labor-saving capital tools and lower-paid foreign workers. Unemployment is high and there is an accelerating displacement of labor workers by technology and cheaper foreign labor, resulting in greater economic uncertainty and unstable retirement incomes for the average American citizen––causing the average citizen to become increasingly dependent on government wealth redistribution programs.

We need a policy change, which assures truly “Fair Trade” and that exponentially reduces the exodus of our manufacturing prowess and invigorates America’s entrepreneurial exceptionalism and competitive spirit to create products and services in the spirit of “the best that they can be.” We need policies that will de-incentivize American multinational corporations and others from undercutting “American Made,” while simultaneously competitively lowering the cost of production through expanded capital worker ownership. At present, the various incentives in place do not broaden capital ownership but instead further concentrate ownership.

http://www.latimes.com/business/la-fi-china-exports-20120413,0,3141111.story

http://www.latimes.com/business/la-fi-china-gdp-20120413,0,194100.story