The dangers for the world economy: China is increasingly aggressive

(To Massimiliano D'Elia)
29/12/15

Beijing claims that, according to the agreement to join theWorld Trade Organization (OMC), of 2001, China in the 2016 will automatically become a market economy.

What does it mean? A country that wants to base its economic organization on private property, on business freedom and on the exchange of goods and services in free markets.

The fear is that, to allow a giant like China to market its products and industrial capabilities, it could mean for us having to redesign politics and economic organization.

The cost of labor in Italy and in EU countries is very high because it includes social security protections for workers and adjustments to safeguard the environment for industrial plants. Everything is included in the final price of the product. In China, on the other hand, the phenomenon of exploitation of workers and minors persists, the problem of the poor quality of the raw materials used, the lack of adaptation of the industries to the strict directives provided by the Kyoto Protocol on greenhouse gases.

In summary, allowing China to export its products in a conventional and autonomous way could create a financial short circuit due to the excessive difference in the prices of identical products. On the other hand, a unique and virtuous access could be opened for Western products towards the Chinese market.

The European Commission, as mentioned, is called this year to have to express itself on the recognition or not of China, as a market economy. As always, the opinion of EU countries is not unique. The proposal must be approved by all 28 Member States. Among them the main supporter is the United Kingdom, while Italy is firmly opposed. The main economy of the Union, Germany, has an ambiguous position: at the end of October, on the occasion of a meeting with the Chinese prime minister, Li Keqiang, in Hefei, the German chancellor, Angela Merkel, declared that she was favorable "in line in principle ", but in other circumstances he admitted that the recognition could be a double-edged sword and that the Asian country still has a long way to go, especially with regard to the awarding of public contracts. He also stressed the vulnerability of some European industrial sectors, from steel to solar energy.

For supporters, recognition could pave the way for European industrial investments in China and for Chinese ones in the Union's infrastructure; for detractors, it would threaten the steel, ceramic and textile industries because it would be more difficult to apply "anti-dumping" tariffs.

The US also warns Europe of a turning point that could cause flooding of low-cost Chinese products in US and European markets. THE'Economic Policy Institute of Washington estimates the number of risk places in 3,5.

According to Commission sources, however, the fears of the industry would be exaggerated; to protect them, safeguard measures could be used, such as those against public subsidies, used against other market economies.

In a globalized world it is unimaginable not to encourage everyone to enter the markets freely. With prudence and chorality, the inevitable revisiting of some commercial parameters could favor everyone, from consumers to producers, especially in an economy, the current one, which is showing more and more symptoms of stagflation: very modest variations in GDP, salary block for workers and increase in consumer products higher than purchasing capacity.

We probably need the short circuit that could be created with Chinese products and capabilities.