(Original title: The theoretical basis of the US trade war with China - Zhou Qiren reads Samuelson)
Source: WeChat Gonghao to Xiaotian
Editor's Note: After the US launched the 301 survey on China, many academic circles discussed the end of the globalization wave. This reminds us of a small article by Zhou Qiren in 2006, "Reading Samuelson in Taizhou." The article begins with a paper by Samuelson, and he thinks about the trade model of economics between the two countries. He argues that when a country has no comparative advantage in the past, suddenly it has made tremendous progress in productivity. Trade may not be beneficial to both sides, and it is likely that one party will be damaged. This idea shocked the industry in 2004 and is still under discussion. Undoubtedly, many people in the US political and business circles are realizing that the US trade with China is increasingly becoming a tool to help China's rise, and it is challenging the US's global leadership core and economic competitiveness.
Standing in the position of China, through continuous learning and innovation, we will quickly accumulate competitiveness in industries that did not have advantages or no capital at all. Through trade and the introduction of foreign capital, continuous learning of the opponent's technology and knowledge is an important means for China's reform and opening up. By reading both sides of the article, we are able to think about the reasons for the success of the Chinese economy and to understand the strategic anxiety of the United States. In particular, we have found that the US trade survey with China is basically aimed at China's inclusion in the "Made in China 2025" strategic planning industry. Its core goal is to block the rise of China's late-competitive industries and thus curb China. the goal of.
Professor Zhou Qiren’s text is in simple language and shared with everyone.
Reading Samuelson in Taizhou
Zhou Qiren
At the beginning of April, I went to Taizhou, Zhejiang Province, and took a paper by Paul A. Samuelson. I made an appointment with a few classmates to discuss this big article that has received much attention. It is also loved by your life: take a little readable things, walk, see, read, and think in the real world. "Walking Miles, Breaking a Million Book" is too high a requirement, but you can still do it when you read the article on the business trip.
The background of Savin is the rise of China and India's economy. The protectionism of the United States and other developed countries has re-emerged. The gains and losses in the past have caused controversy. This article was published in the 2004 Summer of the famous American journal JPE. Savon is a world-class master, and the argument seems to be very different from the popular view of supporting globalization. It is difficult to make a sensation. What the classmates have checked, since the publication of the great text of Savon, today, the international debate continues.
It is a master of pure economic theory. When Samuelson started, he handled the complicated trade world. Of course, first of all, with the tradition of Ricardo and Muller, the question is: If two economies with different products and different productivity have closed each other, the old and the dead do not interact, what is the result? How about opening up to each other and free trade? The conclusion is of course the famous "comparative advantage theory" - the two economies each produce products with comparative advantages, and free trade can raise the welfare level of the two countries, because such a total output of the economy is the highest .
Savon went on to ask if the productivity of the two countries changed, and the inference of free trade to enhance the total welfare of the two countries remained unchanged . To this end, he distinguishes between two situations: First, a country has greatly increased productivity in areas with comparative advantages; second, a country has unexpectedly increased productivity in areas that did not have a comparative advantage. Read this, we must be careful: if the two situations of productivity improvement are the same, why should scholars like Samuelson pretend to be high-level, not to separate the problems? What is the difference between these two productivity improvements?
Still take the "shirt for the plane" as an example. In the first case that Savon envisioned, the shirt was the comparative advantage of China. After the productivity of Chinese shirts was greatly improved (Savin assumed “up to four times the originalâ€), China continued to use shirts for American aircraft. Will it harm US interests? of course not. Because the productivity of Chinese-made shirts has increased and the productivity of American-made aircraft has not changed, the relative price of Chinese shirts has become cheaper. That is to say, the terms of trade in the United States have improved due to the increase in the productivity of Chinese shirts.
As for China’s terms of trade? Savon's analysis is dependent on demand. "Under Muller's needs" - that is, Muller's hypothetical two countries spend their average income on both airplanes and shirts - the technological advancement of shirts has also improved the welfare of China. Adding together, Savin's deduction "strongly confirms" the views of economists who support globalization.
But Samuelson’s second productivity advancement is quite different . Please note that this productivity advancement does not occur in the shirt making department, but in aircraft manufacturing that originally had no comparative advantage in China! This is of course a bold idea, because China only engages in production with comparative advantages. It has always used only shirts and aircraft, and how to improve the productivity of its own aircraft. Savon certainly understands our doubts, so he pointed out that China’s technological progress in its own import sector is completely “risingâ€. As a thought experiment, suppose that China has made amazing technological progress in the aircraft manufacturing sector without any end, so what is the impact on the US economy?
Savon’s answer is shocking – if China really improves productivity in aircraft manufacturing, it could “permanently harm US interests†. This theory is out, the world is awkward. Those who advocate trade protectionism think that they have finally found a heavyweight master who can provide a theoretical basis for the "protection policy." The opposition questioned Samuelson's theoretical apostasy and was stunned by the fact that "an economist" -- not a sociologist or other family -- actually stood up against anti-free trade. The most exciting of course is Samuelson himself, who stated that "from my above analysis, I can't conclude that selective protectionism should not be adopted." He claims that his analysis is nothing more than pointing out that " sometimes the improvement of productivity in a country can only benefit itself, but it will ultimately harm the interests of other countries. "
Focus on it. “Sometimesâ€â€”what is the change in the relative interests of China and the United States when Savon’s vision of China suddenly sharply increases the productivity of aircraft that does not have a comparative advantage? Samuelson’s reasoning is as follows: (1) the potential of the world’s total output has increased greatly; (2) the comparative advantage of American aircraft construction has declined until the productivity of Chinese aircraft has risen to such a position that “the two countries are engaged in The situation of not engaging in trade is the same, and there is no longer any advantage in import and export.†(3) Therefore, the United States voluntarily returns to the non-trade state, and it produces both aircraft and shirts, resulting in a decline in per capita real income. That is, "the interests are permanently damaged." Of course, China does not trade. However, at this time, China has improved aircraft productivity and can close the door to enjoy the rise in real per capita income.
I guess there won't be a lot of readers who like this reasoning. I don't like it myself. However, under the premise of setting, how the students and I pushed, Samuelson still stood. Let's take a different path. So we read in a critical article, "The author assumes that China’s sudden export of a huge technological advancement in the United States is unrealistic, because in the free trade state, the specialized division of labor between China and the United States can only lead to Each strengthens its original comparative advantage." Yes, if Savon’s envisaged premise is in vain, will his rigorous logical inferences become a castle in the air?
However, I think that the most powerful part of Samuelson's paper is precisely his vision that "the backward economy has greatly increased productivity in sectors that did not have a comparative advantage ." No matter what you see and hear in Taizhou, it is enough to prove that Savon’s idea is close to reality. I have come to Taizhou for tracking observations almost every year. Historically, this is said to have 1,100 companies per 10,000 resident population, and the productivity of manufacturing is making amazing progress. Looking back, is there a field of technological advancement here, is it to "strengthen the original comparative advantage"?
Take the three companies visited this time as an example. The first to make motorcycle and ATV engines, the second to export tents, sun umbrellas and beach chairs, and the third to make electronic films for capacitors. Of course, they are not making planes, but these three lines of business, a short year and a half ago, a long decade ago, did not exist in Taizhou! They are not "have not had a comparative advantage", what is it? The actual experience is that as long as someone hits the first shot, the success fails before and after, and the imitation of innovation is used together, as if inadvertently, a considerable proportion of the national market share is arranged locally - not relying on relatively faster progress in productivity, but also relying on what? Looking back for more than a decade, Taizhou’s comparative advantage is probably only agricultural and sideline! If you can only improve the productivity of the comparative advantage department that you have, you will not have Taizhou today.
Looking farther, not only Wenzhou, Ningbo, Shaoxing, Zhejiang, the Yangtze River Delta, and the Pearl River Delta came up like this, but the United States, the United States, the later Japan to the United States, and Savin mentioned the "economic history is all over" There are countless examples, all of them. In this way, the productivity revolution in the sector that did not have a comparative advantage is precisely the common feature of the economy . So Savon’s idea is not only true but also very common. The premise of gently acting as a highly simplified analytical model is simply a pen.
Readers may ask: The premise of not thinking about Savon's vision, its inference is impeccable, and you also agree that " China's technological progress may damage US interests for a long time "? Yes, I have to agree, because there is no basis for disagreement in the limited scope. The only thing that can be added is that there are still many advantages in Europe, America and Japan in the real world. The productivity progress in countries where China and India do not have comparative advantage has just begun, far from being universal and not fast enough. . Therefore, the so-called "sometimes free trade has long harmed the interests of the United States" is not a fact of today's overall situation.
The heroic spirit of cooking should add a little advance. Looking at the world in the long run, I think Samuelson’s worries have a cause. To avoid long-term damage to US interests, the only way out is to continuously develop more products and industries with comparative advantages, and at the same time speed up the adjustment of increasingly unstoppable production and services. How much time is there? The benevolent sees benevolence, the wise sees wisdom. Standing in Taizhou, the United States has to work harder.
This article Source: NetEase Comprehensive Author: Zhou Qi Ren Editor: Wang Xiaowu _NF
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