We must remember that China relies on the West
SEAN O’GRADY writes about President Trump’s trade war with China that he “cannot accept the fundamental truth about China: it makes things very cheaply because it has a vast low-wage workforce and has invested in manufacturing. It is as simple as that” (‘Any war with China – trade or armed – will be hard to win’, Irish Independent, November 1). I don’t think it is as simple as that.
First of all, China no longer makes things very cheaply: the average wage in Beijing and Shanghai is more than $1,400 (€1,230) a month, while in Bangladesh it is $60 a month, hence China is now outsourcing its labourintensive manufacturing to cheaper countries. A similar thing happened to Ireland: in the 1990s, companies like Sennheiser were outsourcing to Ireland because the Irish average wage was 30pc below the average OECD wage, and while this may not seem that much, Ireland also had access to the single market, and it had low taxes. This was then replaced by the credit-driven “If I have it, I’ll spend it” mentality, and a similar thing happened to China, which became a country not as much of ghost estates as of entire ghost metropolises.
Secondly, it’s far from obvious that “any kind of war with China would be difficult to win”. Remember the panic in China when President Trump issued an order banning ZTE from US operations? It nearly bankrupted the Chinese telecom giant. The truth is that Chinese companies still depend on Western technology transfers.
Yes, China can dispose of its $1.2trillion worth of US government bonds – but then what? It’s China that relies on and benefits from exports to the US, not the other way round.
Last but not least, the Ceann Comhairle’s warning to TDs and senators that contacts with Taiwan will offend the Chinese government was very misguided. What if the US officially recognises Taiwan? Will Ireland sacrifice its biggest export market (the US) for the market to which Ireland exports less than it does to Switzerland? Grzegorz Kolodziej
Bray, Co Wicklow