par far wrote:Is it fair to say, as Europe's industries go down the toilet, it will benefit China because they will move production to China.
Not just China. In fact the whole of Asia is going to be far more profitable for industrial production, not just because of lower labour costs, but now also lower energy costs looking at the way things are going
Still living the myth of "lower labor cost" there?
I will tell you a secret, so please get closer, and don't tell that anyone!
My friends in Tiencin and Shanghai are buying flats costing double my home.
When I was doing due diligence with one of my buddies who has a furniture factory, specializing in kitchen cabinets, it turned out to be a dead end.
Because in China, a regular cost of kitchen cabinets they are buying is about $12000.
If you just stand up in front of a new build apartment house in coastal China, it is +/- 1000 flats, and you can't buy a henhouse there, not having $300k.
Low labor cost
You are fuckin'kidding
I'll tell you 3 things ALAMO, which even you with your finger on the pulse of the Polish industrial and trade scene, might not be aware of the importance of
1. China's middle class now certainly numbers in the hundreds of millions, and perhaps in another 10 years will be the size of the population of the European continent in total.
Their ultra-rich population is larger than the populations of many smaller European countries.
Of course there are hundreds of thousands of expensive, high-rate apartments being built in every Chinese city. Of course this demand, and moreover the rapidity of growth of this demand - spikes the price of modern furniture.
However if you think that this means that they have no spare working hands anymore to work for a dollar a day then you're sorely mistaken. With the growth of prosperity comes the growth of inequality. There are still hundreds of millions of Chinese peasants moving from depressed land-plots to the cities. There is a huge urban underclass of poor who work as these same industrial labourers, 12-hours a day in manufactories and sweatshops. They live in conditions, where modern MDF-panel kitchen cabinets are far down on the list of priorities - they make do with simpler things.
Were this not so then China would be busy importing cheap labour from wherever else like Russia and Europe are doing from Central Asia and the Middle East respectively. With their birth rate crisis they might have to turn to that sooner rather than later, but for now they still are very much capable of assembling kitchen cabinets at a fraction of what it costs to make them in Europe.
2. I said Asia, not just China. China is developing very rapidly so we can assume that gradually the business of lower-value production will be increasingly taken up by Vietnam, Bangladesh and a host of other countries in the region. China will start to switch to more higher-value production though, and it has in fact, all the advantages in this segment as well.
3. Really the main thing is not even the labour cost. That's important, but low energy prices are even more critical. Europe has always had the advantage due to well-developed electrical grids, efficient distribution and gas pipelines. With things going the way they are, one can easily see more LNG terminals being built in Asia, more nuclear power plants - and these are already the most efficient and cost-effective sources of energy. Europe's advantages will start to erode
The EU is becoming increasingly transparent in pushing environmentalism as a means of ridding itself on its dependence on outside sources for energy supply, and robbing Russia of its geopolitical leverage specifically.
That's all fine, but they and the US are insisting the rest of the world subscribe to the measures too. I'm all for green energy and phasing out pollution, but not via a scheme of coercion that screws growing competing centers of production in developing countries.
The only way the EU's green energy production can be globally competitive is if they force everyone else to use green energy too.
If the Europeans and Americans can't have their own fossil fuels, then no-one else can have theirs either.
They do this by essentially imposing a carbon tax on anyone wishing to export to them. Either products or energy. And a variety of protectionist measures dressed up as safety/enviromental/whatever regulations besides.
If what you're selling was made with dirty energy or polluting factories then pay the tax, you figure that into your selling price and as a result you become less competitive.
Already this is forcing tons of Russian manufacturers to embark on modernization efforts to filter out impurities, close down more coal power plants, introduce environmental legislation in the Russian parliament.
Our biggest market is Europe and always will be so the attitude seems to be - if you can't beat them, join them. To be honest it's not such a problem. Russia has the money and technology to play the Europeans at their own game. Creating new hydrogen production plants, environmentally-friendly products and organic food for export to Europe, competing for contracts to build new solar energy plants and so on.
China will likely manage as well.
However for ASEAN countries, for India, for nascent industries in Africa and Latin America, for the Middle East with its huge reliance on fossil fuels export - it's a huge problem.
Their economies have the potential to be wiped out with tariffs and penalties before they even get going.
This is not good ultimately for Russia either, as with Europe becoming less interested in Russian gas, oil and coal - Russia still needs markets to sell all its huge reserves of those to.
The trouble for the Euro-American environmental strategy, is that their market is simply becoming a less significant share of the total world market with every year. More and more countries can simply trade between themselves and ignore the EU's and America's carbon-neutral pressure.
This is why they are trying to push through all these changes at the international level, at the UN, via the Kyoto conference and so on.
If the Atlanticist agenda in this area ultimately fails however, or only just partially succeeds - then what you'll end up with, is the EU just using a form of significantly more expensive energy than Asian producers. It will be the EU instead, that will find their production uncompetitive in the global market.