NSW ban on Chinese imports

[vincent191]

The NSW government propose to ban the NSW public service to buy Chinese imported goods. Do you think this is a smart move?

Personally, I don't think so. China buys a lot of commodities from NSW, mainly coal and China is fast becoming Australia's major trading partner and we sure don't want to start a trade war.

Nathan Rees is a fool to even suggest such a move. The manufacturing industry in NSW is long dead. We can no longer produce uniforms (aka Pacific Brands), paper, staplers & pens etc competetively... but we are damn good at mining. So let us concetrate on what we are good at and let the Chinese do those things that we are not good at.

It is the balance of trade that is important Nathan not the micro management of silly non issues.

 

[prawn_86]

Its the whole globalisation arguement.

Im all for globalisation and think this is a stupid idea by NSW. If they want to improve Aussie industries, do it in an area where we could be competitive, such as value-adding to our minerals, or green technology etc. Not something that is going to support unsustainable industries AND cost more taxpayer dollars.

Typical example of government inefficiencies.

 

[Kez180]

The more limits we place on international trade the closer in our satisfaction curves move...

 

[Naked shorts]

It doesnt matter if its good or not, will it get votes? Yes

stupid fking political system

 

[aleckara]

I disagree with most economists on this issue on the basis that they haven't stepped out of their offices and seen the roses.

Most economists see the market as ever-knowing. If Australia is losing jobs, getting into a massive pile of debt, spending recklessly, people are killing themselves because of starvation, etc. its because this is the most efficient path. It isn't because of policy decisions or whatever. I think it is a copout to justify their "theories" rather tahn state the truth. That people can't just leave themselves open to the world - people have to help themselves and take action.

I'm sorry - I find this belief highly naive. There isn't real globalisation in the world since the main factories of the world have artifically low currencies, and generous subsidies for investment, and massive foreign investment restrictions. I don't believe in protectionism but it's one of those things - the lowest common denominator always wins. It's like saying if the rest of the world is violent you should be a pacifist. Sorry but your going to be wiped out if you take the good stance. So if your main competition (say China for example) is highly protectionist the only thing they need to fear is other countries being protectionist and levelling the playing field. And lately both Japan (low interest rate = low dollar) and China has voiced concerns about the possibility of increased protectionism. Wonder why.

Protectionism does lead to increased prosperity for a country (not necessarily for the world system) IF every other country has a free market.

 

[gav]

Assuming the Chinese imports are cheaper than from anywhere else, NSW will be paying a lot more. Isn't NSW in more debt than any other state?

 

[Timmy]

Protectionism is a typical reaction at a time of economic stress. Backward decision by the NSW pollies. And now the people of NSW will end up paying more than they should for goods and services.

 

[vincent191]

Protectionism can also lead to inefficiencies. If you don't have to compete then you may get complacent and consumers may have to pay more for inferior goods.

Let us take our car industry for example. Back in the 60's they were a protected species with very high tariffs. Australians were getting an inferior product (Holden Toranas & Geminis & Camira) compared to the Japanese (Corolla, 120Y, Datsun 1600).

Then along came Senator Button who introduced a gradual decrease of the tariff. Australian car manufacturers had to get efficient or face extinction. As a result today's Holdens are a world class product.

It is a fallacy that countries like China have cheap labour. There is such a thing as "Labour / Capital" substitution. That is to say in China you can have thousands of cheap labourers working in sweatshops manufacturing cars. In Japan and Australian you don't need thousands of cheap labourers......you use robots and automation. In other words you can substitute machines for humans or capital for labour.

 

[Bafana]

May generate jobs and improve the local economy.

Bit concerned on what China's reaction will be - Is it against Chinese companies only or all foreign companies?

If focused on China only, the reaction, the end game, will not be good as the Chinese (no racism intended - just observations from doing business with them) have long memories and believe in revenge served up cold and deadly. They tend to go a for a kill not a mauling. With the latest mining company deal falling through and now this someone is oing to be losing face and wanting payback.

Have seen it often where sound economic decisions are thrown out the door all in the name of payback.

 

[aleckara]

Protectionism can also lead to inefficiencies. If you don't have to compete then you may get complacent and consumers may have to pay more for inferior goods.

Let us take our car industry for example. Back in the 60's they were a protected species with very high tariffs. Australians were getting an inferior product (Holden Toranas & Geminis & Camira) compared to the Japanese (Corolla, 120Y, Datsun 1600).

Then along came Senator Button who introduced a gradual decrease of the tariff. Australian car manufacturers had to get efficient or face extinction. As a result today's Holdens are a world class product.

It is a fallacy that countries like China have cheap labour. There is such a thing as "Labour / Capital" substitution. That is to say in China you can have thousands of cheap labourers working in sweatshops manufacturing cars. In Japan and Australian you don't need thousands of cheap labourers......you use robots and automation. In other words you can substitute machines for humans or capital for labour.

The problem with your argument is that all manufacturing is moving to China, not just non-automated work. We don't do anything anymore expect of course dig holes in the ground and build houses. If it was possible to outsource mining to another country I'm sure Australia would have already done it by now too.

Basically any industry that hasn't been protected either by nature or by the government has moved offshore because if it is possible the Chinese are cheaper at everything.

The argument that someone can do it cheaper so you give the work to them is not valid. Besides Australia is a debtor nation. If someone else is better at making a couch than I am but I have no money or don't think I have any skills to pay them back (we don't have as much exportable skills anymore) do you think I should still buy the couch off him? Even if the work is less efficient if I do it myself I have to do what I can afford to not put myself in a worse situation later. I should live with a worse couch (or car) for that matter because in all honesty I buy what I can afford.

Most economic arguments sight all the short term benefits but ignore the creeping long term pain mainly because it is slow and human beings are adaptable to slowly changing economic changes. In the end the good will cost you the same most probably anyway - only difference being that it is paid in debt in the future. If we buy locally at least the money circulates one more time and if they those employees buy Chinese products at least we get more product for our dollar.

 

[Timmy]

Have seen it often where sound economic decisions are thrown out the door all in the name of payback.

Understand your point, but let's not forget who has thrown sound economic decisions out the door first - the NSW government.

 

[vincent191]

Australia is essentially "a farm and a quarry with a beach around it".

Instead of flogging a dead horse in trying to maintain an uncompetitive manufacturing industry we have to look towards improving the farm and make sure the quarries don't fall into foreign hands.

Some far sighted Aussies have ventured into other business sectors and we have been very succesful. Just look at our tourism, wine and overseas students (education) sectors. They have gone up by leaps & bounds and earning the country many many billions of dollars every year.

My message to Nathan Rees is not to upset our major NSW coal customer by short sighted half cooked proposal. If China source it's coal from somewhere else NSW will be stuffed.

Let's not fool ourselves there are other sources of coking and thermal coal besides NSW namely South America!!! They are our biggest concern, not China.

 

[disarray]

With the latest mining company deal falling through and now this someone is oing to be losing face and wanting payback.

Have seen it often where sound economic decisions are thrown out the door all in the name of payback.

a mate in the industry mentioned that while RIO and BHP are competitors they both hate the chinese with a passion because they break contracts whenver they feel like it. the are fed up with the chinese rewriting the rules whenever they feel like it so teamed up to kick them in the balls.

seeing this latest chinese economic sabre rattling saying "we reserve the right to veto foreign commercial mergers" its time companies stood up to them and told the chinese in no uncertain terms to go fk themselves.

 

[GumbyLearner]

a mate in the industry mentioned that while RIO and BHP are competitors they both hate the chinese with a passion because they break contracts whenver they feel like it. the are fed up with the chinese rewriting the rules whenever they feel like it so teamed up to kick them in the balls.

seeing this latest chinese economic sabre rattling saying "we reserve the right to veto foreign commercial mergers" its time companies stood up to them and told the chinese in no uncertain terms to go fk themselves.

Touche

 

[theasxgorilla]

The problem with your argument is that all manufacturing is moving to China, not just non-automated work. We don't do anything anymore expect of course dig holes in the ground and build houses. If it was possible to outsource mining to another country I'm sure Australia would have already done it by now too.

Its funny, when I pick up a product from IKEA it almost never says made in Sweden. Romania, Russia, Italy, Portugal yes, but never "made in Sweden".

What it will say is, "Design and Quality, IKEA of Sweden". That would be, one of the most successful businesses in the history of the planet.

 

[Timmy]

a mate in the industry mentioned that while RIO and BHP are competitors they both hate the chinese with a passion ... its time companies stood up to them and told the chinese in no uncertain terms to go fk themselves.

Sounds just like 2 bitter old shop assistants having a whinge about their customers!

 

[vincent191]

You have to ask yourself, why didn't they do just that and ask China to f themselves?

It is because they had the commercial brains not to go and upset the customer. There is plenty of iron ore & coal in the world. The only thing they lack is the infrastructure to export it in large quantities to China BUT they will get there one day. Brazil's Vale has already arrive and not far behind is a stream of junior south american miners.

Africa is already making discoveries of huge good DSO fe (Sundance resources), they are going to be the next cab off the rank. So, fortunately both BHP & RIO may not like to jump into bed with the Chinese but they have to be mindful which side of their bread is buttered.

 

[Smurf1976]

Globalisation failed last time it was tried and by the looks of it it's going to fail again this time too.

Relocalisation, the opposite of globalisation, is in our future in my opinion. I'm not judging, just observing that that's where we seem to be headed. If protectionism doesn't do it then an end to cheap oil will.

 

[nunthewiser]

personally think all chinese quadbikes sold on ebay should be banned in every state

do not buy one

they cheap for a reason

signed a disgruntled chinese quad bike buyer in the past

spend the extra and get a jap made one , you will not regret it

 

[disarray]

You have to ask yourself, why didn't they do just that and ask China to f themselves?

It is because they had the commercial brains not to go and upset the customer. There is plenty of iron ore & coal in the world. The only thing they lack is the infrastructure to export it in large quantities to China BUT they will get there one day. Brazil's Vale has already arrive and not far behind is a stream of junior south american miners.

Africa is already making discoveries of huge good DSO fe (Sundance resources), they are going to be the next cab off the rank. So, fortunately both BHP & RIO may not like to jump into bed with the Chinese but they have to be mindful which side of their bread is buttered.

good point vincent. perhaps though RIO and BHP teaming up to ream china was a commerical "fk you" meant to send a message? apparently (i'm not privy to the inner workings by any means) china has for years and years just torn up contracts to nab a better price for themselves whenever it suits them. it must be infuriating in the extreme to deal with a customer such as this and i can speak from first hand experience when i say 10% of your client base cause 90% of your problems so a regular purge of painful customers is actually good for the business.

now china can for sure go to brazils next teir but like you said they lack infrastructure, this will take time and investment and doesn't do anything to satisfy rapacious (apprently) demand now. and africa is just LOL in so many ways. sovereign risk, no infrastructure (like, NONE), even sundance resources is nothing more than holes in the ground in a country with religious tension between christians and muslims ready to boil over (wow that's a shock) and the promise of a mine next to a milling plant on a 500k railway heading to a port - none of which exist yet.

china plays hardball in negotiations, fair enough, but they are full of **** when they cry their bitter tears , wave the sanction stick around, threaten to veto foreign mergers with local anti-trust law(lol!?!) and play the race card because their own history of blocking foreigners, breaking contracts, implementing protectionist policies and manipulating the yuan can be thrown right back at them.

the chinese love to play the "little emperor", rattle the sabre and demand everyone kowtow, now more than ever given their economic resurgence. for this as much as anything the west should stand up to them and maybe even diversify their markets? lots of emerging economies / developing nations out there could use a 100% reliable commodities supply. no one respects a bitch.