Paying A Premium In China

Dave Johnson

Over the weekend the San Jose News carried a story, Made in China, bought in China — for more, describing some of the barriers Chinese consumers face when buying goods made by non-Chinese companies — even if the goods are made in China,

The laptop computer Luo Guangli carried out of the Apple flagship store in Beijing was no different from the models sold in the United States. It had the same high-resolution screen, an identical processor and the same printed label on the back: “Assembled in China.”

The only difference — besides a manual written in Chinese — was the price. Luo paid $2,760. That’s about $460, or 20 percent, more than an American buyer would spend at an Apple Store or buying it online.

Practices like these result in terrible trade imbalances that threaten the world’s economy. We have been writing here about how China keeps its currency low so goods made there start out the gate with a pricing advantage that may bas much as 40%. But that’s just the start.

That Apple laptop is made at a factory that’s granted a rebate on China’s 17 percent value-added tax, as long as those computers are exported and sold abroad. Chinese buyers aren’t so fortunate. Before that same machine can be sold domestically, it is first sent to Hong Kong, a special administrative region of China, then returned to the mainland with a 20 percent import tariff, industry experts said.

And this is if the Chinese government lets you sell your product at all.

Why is this called “trade?”

The article lists just a few of the barriers China puts up to keep goods from being imported. The result of these practices is that Chinese consumers are held poorer and unable to purchase goods made elsewhere. And it means that working people in other countries are made poorer as well. And then there is the effect of the resulting imbalances on the world economy.

American companies move factories to China to take advantage of the subsidies offered by the government there. We lose jobs, Chinese people are kept poor and can’t buy those things or things made here. A few wealthy people here make more money, a few wealthy people in China make more money. A few hi-end backs are scratched.

This is one more example of the manipulation of rules for the benefit of a few — a few in China and a few here — at the expense of everyone else on the planet. This world’s system is more and more falling into this corrupt pattern. That is the biggest imbalance bubble of them all, and never, ever pops in good ways — not for the “lesser” people and not for the people at the top.

Hint:

guillotine

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