Tuesday, January 13, 2004

China Poses Trade Worry as It Gains in Technology

Above is an interesting article about the rise of China as not just a market for technology products and a source of cheap manufacturing, but also as a competitor in the creation of these technologies.

Apparently American tech companies are concerns because, for example, China has the power to set its own standards outside of international standards boards. Also, unfair competition where foreign microchips are taxed at 15 percentage points higher than domestic microchips is rampant.

Summing up the standards issue:

"Given its huge consumer market and an economy in rapid ascent, trade experts say, China will increasingly have the power to influence standards in technology, just as Britain set standards in the 19th century and the United States in the 20th century."

As an indication of China's response to criticism:

"So far, China has shown little interest in addressing the grievances of American technology companies, according to industry executives and government officials. It responded to complaints about the wireless encryption standard by giving companies until June to comply, and has offered no indication that it plans to back off on enforcing its own standard."

This is a natural process of an extremely populous agrarian economy turning into a powerful, educated, and industrial economy. Of course China will have more power as this process continues!

But I should stress that closed societies will never match the capacity for growth, in the long term, as open societies. I am certain these issues will increase with China's power, but diminish as China becomes more open. For now, I'm confident that before China becomes an economic super-power, computer translation technology will work its magic, and we won’t have to learn Chinese :)

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