Moore on China

April 9th, 2008 at 7:26 am by David Farrar

Mike Moore makes some excellent arguments:

There are some who oppose New Zealand’s trade deal with , and want a boycott of the Olympics. It’s precisely because depends on the global trading system that world opinion on now matters to the Chinese.

Thirty million people perished during the cultural revolution and Mao’s great leap backwards. World opinion didn’t matter to the Chinese then. Now it does, and that’s a good thing.

China is going through the same process as Japan, Singapore, and places like Taiwan. As living standards rise, a middle class emerges that seeks out better social outcomes. Wages in the Pearl River delta in China rose 13 per cent last year.

Seven thousand factories will close this year because wages have moved up and these jobs will head inland, or to Vietnam, even Africa. This is the virtue of free markets and globalisation.

For the first time the Chinese Government is answerable to its own laws – you can now sue the Government.

It’s no longer an atheist state; there are the beginnings of freedom of religion. Over 10,000 Chinese Muslims were allowed to go to the Haj in Mecca. Christians sued the Shanghai Government for wrongful arrest when they expressed their religious beliefs. This is an imperfect and uneven progress that should be celebrated.

All this is healthy and Prime Minister Helen Clark has hit the right note. …

The New Zealand /China trade deal is to be welcomed. Would our competitors turn it down? In fact, our advantage will last only a few years, if that, as others sign up.

All this exposes something else about New Zealand’s political process. Our Foreign Minister, Winston Peters, says he’s not a member of Government except when overseas and may not vote for it. How is this possible?

Peter Dunne has said he will vote for the deal but has the Chinese shaking in their boots by saying he won’t go to the reception. The Maori Party has taken different positions, but one MP said we shouldn’t trade with countries that pay lower wages than NZ. That means we can’t trade with Samoa, forcing them to pay more for goods from anywhere else.

At last the adults in the Labour and National Parties have taken control for a short time and done what is right for New Zealand. This deal is worth a few hundred million dollars to New Zealand, small compared to the Uruguay Trade round, and tiny compared to what this country will get from the Doha Trade round.

Why is it so small? Because the terms of China’s accession to the World Trade Organisation collapsed tariffs in agriculture by 90 per cent. Isn’t it a good thing that China is now inside the and answerable to its rules, obligations, and binding legal disputes system? The and the Doha Round is still the biggest global game.

But New Zealand can do a deal with China and advance the WTO. It’s a melancholy fact the best thing I ever did was leave New Zealand to run the World Trade Organisation. China joined the WTO and the Doha Trade round was launched in my time. Modesty prevents me from pointing this out.

Completing the Doha round would be a better achievement, but to be fair to Moore he can’t be held responsible for that not happening!

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22 Responses to “Moore on China”

  1. Lee C (4,516 comments) says:

    The argument sometimes runs that if a cheaper producer arrives it means that the infrastructure in the more expensive location can then concentrate on producing more specialised good to sell to other markets. Now, if we had spent the last ten years investing in NZ’ manufacturing infrastructure rather than welcoming cheaply made goods from the Chinese mainland, thus inferring there is no need to make stuff here, then NZ would be in a good place. As it is, we as a nation will become hostages to fortune. The olny alternative left for most NZ industries will be to relocate where it is cheaper and then sell to China. Result? Unemployment in NZ. Mike Moore calls this a ‘transition’ I call it a ‘sell out’. Funny, NOW the union movement is starting to wake up to the idea. Funny, Stevie Wonder could have seen this coming, so why did they sti by and watch? All the vitriol heaped on ‘rogernomics’ for the hurt it inflicted on ‘ordinary kiwis’ I wonder who will be expected to take the blame this time – oh let me guess…. ‘rich pricks’?

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  2. bobux (349 comments) says:

    Dominion Post readers will have seen Chairman Winston blessing us with his wisdom, in the form of a quarter-page ad on page B5. The usual trite slogans:

    - Winston First opposes Free Trade Agreements with low wage countries like China (explained this to your mates in the Pacific, Winnie?

    - Winston First opposes the sale of Auckland International Airport into foreign hands (note the qualifier – remember who sold it in the first place?)

    - Winston First opposes the sale of our dairy industry to foreign interests
    (As if someone was actually planning that – try re-locating Matamata to Chengdu. Nice scaremongering for the retired cow-cockies in Tauranga though).

    You would think a party that could afford expensive newspaper advertising could afford to repay the money they rorted from the taxpayer last election, wouldn’t you. It seems you would be wrong.

    On the other hand, perhaps this is why the taxpayer is unlikely to ever see a cent – newspaper owners are the latest deserving charity identified by Winston First. Any idea how many other papers published this tripe?

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  3. Lee C (4,516 comments) says:

    So, it is easy to be a nay-sayer, I know. What I would propose is a LOT of spending by NZ into NZ into industry incentivising the establishment of NZ made goods by New Zealanders. If these are too expensive for CHina, then the emphasis should be on quality at a higher price for sale to more lucrative buyers. We are simply incapable of trying to out compete the likes of CHina on price alone. Is there a Political Party out there that might like this idea?

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  4. dime (9,607 comments) says:

    according to a factory owner i deal with in China, several thousand factories have closed since chinese new year. they are expecting 20,000 to close in the next 12 months.. in southern china.

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  5. Pascal (2,015 comments) says:

    Lee C: The olny alternative left for most NZ industries will be to relocate where it is cheaper and then sell to China. Result? Unemployment in NZ.

    Or relocate manufacturing to China to export back to New Zealand when there are no tarriffs on their goods. Lower cost of labour offset partially by higher shipping costs – but no duties. Once more – unemployment in NZ. Is that a feasible scenario?

    Does anyone know if a locally owned company relocates it’s manufacturing base overseas and brings the end product back to New Zealand – do they pay any import duties or are they currently exempt from them?

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  6. sean14 (62 comments) says:

    Lee C – Welcoming cheaper goods from China doesn’t imply that there is no need to manufacture goods here, just that we need to shift our focus to producing goods that international consumers want to buy at a price that will allow NZ manufacturers to be profitable.

    There is no point trying to produce socks in New Zealand for less than the Chinese can do it, it’s just not possible. And why on earth should New Zealand families struggling to make ends meet pay more for New Zealand made goods when they can buy cheaper imports from China? The cheaper goods are, the more people can afford them. That is a good thing. None of this is ‘selling out’, it’s just basic economic reality.

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  7. Lee C (4,516 comments) says:

    “Lee C – Welcoming cheaper goods from China doesn’t imply that there is no need to manufacture goods here, just that we need to shift our focus to producing goods that international consumers want to buy at a price that will allow NZ manufacturers to be profitable.”
    Isn’t that what I said?

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  8. sean14 (62 comments) says:

    Lee C – sorry mate, got my wires crossed there!

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  9. Jack5 (4,786 comments) says:

    Mike Moore has a point in that China for much of its history turned inwards and kept its back to the world. But there are some parts of his argument that need challenging.

    The closing of thousands of small factories … this is normal as a country moves out of the initial phase of industrialisation. Lower costs from returns to scale of bigger, better capitalised factories may well then offset rising wages.

    “It is no longer an atheist state.” The real religion is the Chinese austere version of Marxism. While this is certainly more liberal than it was under Mao, it is still dogmatic, rigorous, and intolerant, as the Chinese security guards with the Olympic torch in Europe showed. Ask Catholics if they get to choose their bishops without state interference. Ask Falun Gong members, Tibetan Buddhists, or the ethnic-Turk Muslims in the north-west of China whether the country is no longer an atheist (that is Marxist) state.

    Moore’s “you can now sue the state” … Oh well, all the Western intellectual-property holders, including of NZ food brands, have just been too stupid to wake up and take advantage of the Chinese legal system, and stop whingeing.

    And what is in NZ’s best interest: an inward looking China, or an aggressively expanding one that is already meddling in the South Pacific?

    Moore’s party has cut us off from our traditional allies. Now it has hoodwinked most other politicians into supporting it into becoming an acolyte of Red China.

    When you sup with the Devil, you must bring a long spoon. Clark, Moore and their ilk have been just too bloody arrogant to do that.

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  10. Robert Black (423 comments) says:

    What do you know about falun gong? Have you ever been to China? The ethnic Turk Muslims were just caught with explosives in Beijing and tried to down a Southern Airlines jet. Oh gee, I wonder how well they would be treated in America, your so called democratic Utopian angel?

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  11. vto (1,128 comments) says:

    agree Mr Black. Much south swell there?

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  12. Robert Black (423 comments) says:

    Only in Hainan Island. How about there?

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  13. vto (1,128 comments) says:

    yep good today, just onshore. he he

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  14. Jack5 (4,786 comments) says:

    Robert Black are you filing from China? If so how do you cope with the internet censorship?

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  15. dad4justice (7,898 comments) says:

    I thought I read China don’t like internet Robert Black?

    http://www.cbsnews.com/stories/2002/12/03/tech/main531567.shtml

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  16. vto (1,128 comments) says:

    Please Mr Black my old friend, don’t tell me you’ve been pinged by the authorities.

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  17. Robert Black (423 comments) says:

    dad4justice, that article is dated 2002, um it is like 2008 now:)

    It is pretty open. They do close some sites. But I have to say China network Facebook is pretty much always open and you can post whatever bad comments you want about China there.

    Foreigners are pretty much left alone here, so we do have freedom of speech. We have no freedom of protest, well actually, I have never known anyone brave enough (or stupid enough) to try protesting here.

    If you want a detailed account of my experiences in China check out:

    http://www.bookhabit.com/competition/book_details.php?book_id=181

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  18. Jack5 (4,786 comments) says:

    “Robert Black” how do we know you’re the real Robert Black and not some Red-star security man who’s got the real Robert’s password by threatening to sell him to a kidney exporters?

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  19. Robert Black (423 comments) says:

    You have a vivid imagination.

    And, in fact this kind of naive distrust of the Chinese has mostly been brought about by Western Media only reporting negaive things about China and the Chinese

    My book is more objective, shows the good parts and the bad

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  20. NoCash (256 comments) says:

    Jack5 – “… Moore’s party has cut us off from our traditional allies.”

    Who are our traditional allies? USA? They said we’re only “a very very good friend”. Australia? Well… they’re negotiating a FTA with China right now as we speak.

    If trading with China is such a big no no to our traditional allies, then why USA is the biggest export market of China and the Americans are happy to trade. Oh… before you suggest… EU is the second biggest export market of China…

    I’m not saying China is a role model, far from it, but to suggest that having a FTA with China is going to negatively affect our relationships with other Western countries is just a pie in the sky.

    It’s only a trade deal, not a military pact!

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  21. kiki (425 comments) says:

    Anyone who supports government support/subsidies for business do a search for “the seen and unseen” it may change your mind. Also a world without borders would be our greatest gift to the future generations.

    This should do http://www.econlib.org/library/Bastiat/basEss1.html

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  22. Jack5 (4,786 comments) says:

    Kiki: what is it you smoke? It sure gives you a sweet view of the world, a sickly sweet view.

    You write: ” … a world without borders would be our greatest gift to the future generations.”

    What about Al Qaeda freaks, drug couriers, and other nasties coming in without check?

    Go to the United States and see how the druggies and no-hopers drift to the states with better welfare. Our welfare system would immediately be swamped by the world’s bludgers. It would be a million times worse than the Third World Aids sufferers who now bleed our overburdened health system.

    We need better protected borders, and we need them fast.

    Did you ever read Aldous Huxley’s novel Island? It tells what happens to the meek, the mild, and the gutless.

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