The European Union voted on Friday to impose tariffs as high as 45% on electric vehicles from China, threatening a broader trade conflict with Beijing which has already vowed to protect its companies.
They tend to be more efficient. However central planning in China which ramped up production yet has reduced demand, means an excess supply.
That doesn’t really follow. You’d have to explain how you think ramping up production led to reduced demand exactly. Meanwhile, it’s not excess supply if you have customers around the world who want your product.
In a capitalist, closed system, they would have ramped down production, but also wouldn’t have had the capital to ramp up production so quickly.
That sentence doesn’t make sense. Companies don’t voluntarily ramp down production under capitalism.
If they weren’t seen as a strategic asset, then Europe and USA wouldn’t care that China is subsidizing cheaper products. They dont want their car industries dead as then they are dependent on China.
I think you missed my point here. It’s fine for the US and Europe to want to keep their industries alive. However, what we’re seeing is that they are not able to compete with state driven planning using capitalist markets. So now they’re starting to engage in non market behavior of putting tariffs on Chinese goods because capitalism is not proving to be competitive.
Ramping up production didn’t reduce demand. Demand reduced due to a softening Chinese economy, mainly due to debt and housing.
I agree, it’s not excess supply when you can sell it overseas. However, its also not central planning when you wanted to Ramp up supply for domestic consumption but end up using capitalism to keep efficiencies.
Companies ramp down production all the time. What do you think redundancies and factory closures are for? They react to market conditions or seek new markets (as happened in this case).
I thinknyouve got it backwards. Central planning can efficiently produce anything. As in, it can make as much of a product at the cheapest price as possible. The problem is central planning is less efficient at deciding how much is needed. It will often over or undershoot. Thats what happened here. Tonsaybthey can still sell overseas, so its still central planning being efficient is incorrect. Central planning didn’t work to produce the needed amount so trade through capitalism is being used to improve efficiency of the capital used.
Pretty much the only people losing money on housing are investors, many of whom are foreign.
I agree, it’s not excess supply when you can sell it overseas. However, its also not central planning when you wanted to Ramp up supply for domestic consumption but end up using capitalism to keep efficiencies.
It absolutely is central planning when the state decides on the overall direction of the economy. The state doesn’t need to micromanage the details of the economy any more than your brain needs to consciously micromanage every muscle movement when you try to walk. The state wanted to create a lot of housing for people to live in, and that was accomplished. Now, the state is directing the economy to wind down real estate and transition to high tech which is happening.
Companies ramp down production all the time. What do you think redundancies and factory closures are for? They react to market conditions or seek new markets (as happened in this case).
Companies don’t do that voluntarily, they do it when they’re in a financial trouble. Meanwhile, thanks to brilliance of capitalism there are very few redundancies left. Everything is just in time economy, that’s why a single ship getting stuck in Suez Canal can bring the world economy down.
The problem is central planning is less efficient at deciding how much is needed. It will often over or undershoot. Thats what happened here.
Except it’s not what happened here because as you yourself admit there is global demand for the goods that China produces. Overshooting would be producing goods that nobody wants.
Central planning didn’t work to produce the needed amount so trade through capitalism is being used to improve efficiency of the capital used.
It’s just regular trade between countries, it has nothing to do with capitalism and predates it by a wide margin.
That doesn’t really follow. You’d have to explain how you think ramping up production led to reduced demand exactly. Meanwhile, it’s not excess supply if you have customers around the world who want your product.
That sentence doesn’t make sense. Companies don’t voluntarily ramp down production under capitalism.
I think you missed my point here. It’s fine for the US and Europe to want to keep their industries alive. However, what we’re seeing is that they are not able to compete with state driven planning using capitalist markets. So now they’re starting to engage in non market behavior of putting tariffs on Chinese goods because capitalism is not proving to be competitive.
Ramping up production didn’t reduce demand. Demand reduced due to a softening Chinese economy, mainly due to debt and housing.
I agree, it’s not excess supply when you can sell it overseas. However, its also not central planning when you wanted to Ramp up supply for domestic consumption but end up using capitalism to keep efficiencies.
Companies ramp down production all the time. What do you think redundancies and factory closures are for? They react to market conditions or seek new markets (as happened in this case).
I thinknyouve got it backwards. Central planning can efficiently produce anything. As in, it can make as much of a product at the cheapest price as possible. The problem is central planning is less efficient at deciding how much is needed. It will often over or undershoot. Thats what happened here. Tonsaybthey can still sell overseas, so its still central planning being efficient is incorrect. Central planning didn’t work to produce the needed amount so trade through capitalism is being used to improve efficiency of the capital used.
There’s not much indication that the Chinese economy is actually softening. Also, not sure what debt from housing you’re talking about. 90% of families in China own their home. What’s more is that 80% of these homes are owned outright, without mortgages or any other leans. https://www.forbes.com/sites/wadeshepard/2016/03/30/how-people-in-china-afford-their-outrageously-expensive-homes
Pretty much the only people losing money on housing are investors, many of whom are foreign.
It absolutely is central planning when the state decides on the overall direction of the economy. The state doesn’t need to micromanage the details of the economy any more than your brain needs to consciously micromanage every muscle movement when you try to walk. The state wanted to create a lot of housing for people to live in, and that was accomplished. Now, the state is directing the economy to wind down real estate and transition to high tech which is happening.
Companies don’t do that voluntarily, they do it when they’re in a financial trouble. Meanwhile, thanks to brilliance of capitalism there are very few redundancies left. Everything is just in time economy, that’s why a single ship getting stuck in Suez Canal can bring the world economy down.
Except it’s not what happened here because as you yourself admit there is global demand for the goods that China produces. Overshooting would be producing goods that nobody wants.
It’s just regular trade between countries, it has nothing to do with capitalism and predates it by a wide margin.