China Trade Surplus: Gusher Profits for U.S. Corporations (August 2005)

[applegrove]

China Trade Surplus: Gusher Profits for U.S. Corporations August 13, 2005

Charles Hugh Smith - Weblog

"Alarmist headlines blare the "bad news": China's trade surplus with the U.S. is at record highs. But if this is so bad for the U.S., why are U.S. corporate profits at record highs? Could the two facts be related? Of course they are. U.S. companies' manufacturing of goods in China is creating enormous profits, not for the Chinese but for American corporations.


As every American shopper knows, American companies are having just about everything made in China these days-- to the tune of about $230 billion a year. In doing so, they have slashed manufacturing costs in half or more, even including the cost of shipping. But have you ever noticed the price of these items dropping in half as a result of these cost savings? Of course not. The companies have been retaining the savings as corporate profits.

Just how big are corporate profits nowadays? Try $1.1 trillion--fully 10% of the entire U.S. GDP. As a result, U.S. corporations are sitting on a cash horde of some $634 billion, which is rising by tens of billions each year.

......Snip

But the elephant in the room no one talks about is the enormous U.S corporate profits being made by moving manufacturing to China. John Q. Citizen naively assumes China is making huge profits selling stuff to American consumers, but this is simply incorrect; how many items do we buy made by Chinese corporations? Virtually nothing; maybe a few million dollars' worth of Haier dorm-room fridges and some foodstuffs, but everything else is made in China either by or for American corporations.

..... Snip"

http://www.oftwominds.com/blogs/China-trade.html

[applegrove]

1. A few months old - but timely re: Google swift-boating n/t

[xchrom]

2. it's part of the spin in the news media

to state things a certain way -- i.e. the profits are all in china, this has teh net effect of protecting u.s. corporations from american ire.

[applegrove]

3. Americans have seen lower prices.. they need them desperately as

under-employment rises. But yeah - the spin that Google is the only corporation compromising itself by dealing with the human rights challenged regime in China.

Any search engine is likely going to speed up liberalism and human rights in China .. a lot sooner than making clothes or fake flowers will and selling them in the USA.

[xchrom]

4. under paid and under employed.

globalism has only been prtrayed as a fait accompli -- never has there been an adequate discussion presented about what trade with restrictions would look like in the modern context.


what i know for certain is that lack of economic diversity constitutes a threat to the nation.

[applegrove]

6. Actually - nobody told you but the USA is getting rid of jobs that

require oil. And concentrating on jobs that are in high tech, science, biotech, pharmaceuticals, nanotechnology, computers, software, etc. .... all of which will not require oil as the product itself can be licensed and made overseas. Then the military can use the oil that is left in its factories.

Your government must really dislike you - not to tell you that.

When oil hits $200 a barrel in 20 years - American will not have any industries in civilian goods. At least your children will have gone into some other field. And in the meanwhile you get to shop at Costco (I hope) or American Apparell to save money as salaries go down, and to create good jobs in the USA.

All the while workers are fighting inflation with lower salaries.

Now what have the rich sacrificed? Sending kids to war? No. Sending taxes to kick ass science program in public schools? No. Shared risk health care strategy that is more cost effective and fairer and better at preventive medicine? No.

Nada.

Don't let anyone ever tell you the workers of America are not doing their part to sacrifice.

[xchrom]

11. lol -- nobody told you that socialized medicine

would make the american worker and american goods more competitive.

and nobody told you that india will do our most hour intensive white collar jobs for way less than half the price.

nobody told you there isn't a job that can't be outsourced and that mentality is being spread like a virus world wide.

[applegrove]

13. They are going for jobs that don't require oil. In the meantime ya''lll

are supposed to drive an SUV. I don't know why?

[applegrove]

9. Profits are in the CEOs pockets. Stockholders too. And the worker gets

cheaper goods. And china wins. US workers giving up a lot in this time in America. More than doing their part. Perhaps the rich could be drafted? That would give them a chance to participate in democracy - seeing as how they are not sacrificing anything.

They need something. Either pay more taxes or they need a project. Perhaps they could fun shared risk health care?

[Oakland]

5. Close, no cigar

First, they are not American corporations. They are global corporations.
GM is losing its ass in North American and cleaning up in China. So , who is getting a pay check? Stock holders, CEOs, Chinese workers, and oh year - don't forget the unemployment checks given to US workers. So illegals work her, send billions back to homelands. Corporations move jobs overseas, send billions overseas. US gets cheap TVs and homelessness. You know where you can plus your TV - don't ya.

[applegrove]

7. Read my "nobody told you but" post above.

[xchrom]

12. you need to do more homework re: illegal aliens.

time and again it's been found that they no appreciable impact on the hourly wage of the american worker.

[applegrove]

14. I didn't talk about illegal aliens. Wages are goind down because

of longer periods of underemployment and unemployment.

[xchrom]

15. the reply says i responded to #5.

which is what i was intending.

[applegrove]

16. Sorry.

[teryang]

8. Recently, a trend seems to be lower gross revenues growth but...

...greatly increased income for multinationals. Thus the increasing disparity in the distribution of income is reaching a level which accelerates "cost cutting" measures in the US and exportation of manufacturing, jobs and capital. There will be an economic crisis sooner or later.

These trends were documented in Kevin Phillips book Wealth and Democracy, which portrays the political decline of our nation state caused by crony capitalism. The decline is not unprecedented but is presaged in the declines of the Spanish, Dutch, and British empires which went through a similar sequence of dynamic industrial, economic and military innovation, followed by export of capital, reliance on financial instruments rather than industry, and a marked decline in the standard of living and national power. As Phillips points out war after the dynamic period accelerates the decline.

IMHO Our administration is following a misguided and outdated Roman/Machiavellian model where "dictators" or autocrats making war are regarded as strong leaders or virtuous (amoral/unethical) statesman. Phillips feels that the decline could be politically rectified by elites adopting the language if not the essence of populism. The adoption and implementation of the Roman "wartime dictator" government model by Straussian neo-cons makes such a self correcting mechanism unlikely. The legal framework of dictatorship on behalf of the crony corporatists is likely to be permanent or indefinite in nature. Military and political defeat abroad is likely to be the only thing that can bring this corrupt and unconstitutional state of affairs down.

[applegrove]

10. And the neocons are not doing well abroad. The world it seems

will go on with multi-lateral agreements. The only thing that can keep certain corporations from completely skipping the bounds of humanity.

But in a world that will soon have no oil, and where all the big markets will be outside Europe and the USA (for the first time in 1000 years)... China, India, Bangladesh, Pakistan, Indonesia, & Russia all will make what - market of 6 Billion to the US & Europe's 1.5? Makes sense for USA to concentrate on certain industries that take more sophistication and less oil.

But we need a strong UN.