Tuesday, January 29, 2008

Made In The USA, Stimulus Package continued...

Stimulus for U.S. or for China continued...

February 2007, The Christian Science Monitor printed an article by Peter Navarro regarding China's brand of mercantilism. They had foresight that the government still has yet to pick up on.

"Watch your flanks! That's a sound piece of advice US politicians have ignored as they remain mesmerized by the train wreck called Iraq. Meanwhile, a ruthlessly mercantilist China is running a flanking maneuver so effective that it now threatens America's economic, financial, and political independence.

America is addicted to a daily "fix" of Chinese capital that floods in to purchase US government bonds – and thereby fund the US budget and trade deficits."

Click Here For The Full Article

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An issue with all of the manufacturing outsourced to China from the U.S.? A new bill that will increase operating costs by 25-30% this year...for companies operating in China. Doesn't that mean that the goods will also include a cost increase? Why not manufacture them in America, offering jobs to the increasingly unemployed population?

"China’s National People’s Congress passed the Law of Employment Contracts on June 29, 2007. It formalizes workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest in the world, it is stirring apprehensions most in the ranks of Taiwan’s China-based small and medium enterprises - operations that are usually too small to support a professional human resource management framework.

Among other mandates, the law requires employers to sign written contracts with every employee. Also, after two contract renewals, workers automatically earn the right to work for the employer indefinitely. Employees can only be let go for clear cause and would still receive a pension. In the expanded role for trade unions, employers will be required to consult with them before making rules and regulations, concluding employment contracts or implementing economic dismissals.

The bill was the first major national law in China circulated in advance to gauge public reaction. As a result more than 191,800 separate comments were received via the Internet, newspapers, periodicals, and letters soon after the Standing Committee of the National People’s Congress launched the plan.

Hsiao Hsin-yung, a human resource consultant specializing in China’s labor regulations, suggested that complying with the law could increase the operating costs of Taiwanese manufacturers by some 30%, creating a heavy burden for already struggling enterprises."

Asia Times Article

With businesses already discussing moving away from China to more favorable locations because of cost, how will this affect the U.S. economy?

"China on Tuesday introduced a labor law that enhances rights for mainland workers, including open-ended work contracts and severance pay."

"Higher costs may drive manufacturers with low margins out of China, damping investment in factories that helped push inflation to a 10-year high. Olympus, one of the world's largest digital camera makers, and Yue Yuen Industrial, the biggest maker of shoes for brands like Nike, are among companies shifting some production to Vietnam to cut costs."

International Herald Tribune

So, when you receive your rebate check, that is if the Stimulus Package ever gets passed through the Senate without so many changes that the President vetoes it, where are you going to spend your money?

If you did not read my original post regarding the Stimulus Package, here is the link. Just food for thought. MADE IN THE USA! Click Here For Stimulus Pkg Post Link

Sources: (The Christian Science Monitor) (Asia Times) (International Herald Tribune)

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