very important topic… but not the only one (energy, anyone?) where the Dems need more than oppo positions.

Lots of great points. A few reactions:

I think Bush’s options will be seen differently than the steel situation, because textile manufacturers and (wholesale) consumers are much less numerous and politically and economically important than steel producers and consumers. And as you alluded to, they’re more concentrated, with NC probably the only swing state where textiles are important (the other main centers for textile production or wholesale consumption being SC, NY and CA). So, unlike that situation where Rove played economist (to the detriment of manufacturers who were consumers of steel), I think this is one where even a half-assed â€economist†like Rove wouldn’t see a simple solution that would have a supposedly easy to predict effect on votes in key swing states.

The other point is just to reiterate your point about the importance of infrastructure. With lean production and in-time inventories, it’s a lot easier to produce many things with low-skilled workers. But there are still plenty of innate or invested advantages that are important. For instance, Lesotho, despite the skill of it’s workers and whatever paltry wages they may be paid, is always going to be behind China in several key factors, such as access to shipping–how many miles is it from Lesotho to a major port? 500 or more?–access to raw materials, proximity to markets, etc. Plus, what’s the â€spin off†potential? For instance, one of the reasons Detroit developed as the center of auto manufacturing was that it was a center for marine engine production and specialty ship building going back to the mid-19th century. Grain, timber and ore shipping on the great lakes created the marine engine demand, and as a result you had a cluster of small engineering shops that created a critical mass of both tooling infrastructure, skilled workers and supporting industry so that it was easier to expand into other types of manufacturing. Most places where they produce textiles and clothing don’t have that potential synergy between industries; of the developing world, only China and India seem to have it. Even Mexico, in the maquiladora zone, is essentially a bunch of factories practically pre-fabricated in the US–at least in terms of the robotics and machinery inside the factories–and then sent to Mexico and placed inside the factories. (That’s why exports to Mexico were higher before the passage of NAFTA, because US manufactuers were preparing to increase production in Mexico; the â€exports†to Mexico were really just the tools that would be used to increase the exports from Mexico to the US.) But now, China is reaching that â€critical mass†where little needs to be exported to China to assist them in enhancing their manufacturing capacity, it can just be purchased in China. AFAIK, that’s not the case in any of the other major export-driven economies (except, like I mentioned, India.) So while I hadn’t put a lot of thought into it, I suspect you and the people you quote are dead on in predicting that, in the absence of some other countervailing developments, China’s export capacity, physical and economic infrastructure, technological advancements, and slave wages are likely to lead them to overwhelm just about every other export economy in just about every other product that could be efficiently produced in the PRC.

DH,

Great points. We ARE still exporting to China (at least that’s what the folks who fly business class with me to Shanghai SAY they’ve been doing). They used to fly all over the world and now they just fly to China.

But they’ve made the investments to really transition quickly away from even those few exports.

I’ve grown more troubled, today, as I’ve responded to this post when I think that China is basically skipping the upcoming G7 meeting. Are they doing it because they don’t want to discuss their plans for the Yuan with anyone? Or are they doing it because they no longer feel the need to cooperate? Whatever the reason, it seems ominous to me.

DH

You might be surprised. During my last trip, there were a number of newspaper articles about how LITTLE China has taken in technology transfer from, say, the automotive companies. They admit they still can’t compete against VW and the Americans, to say nothing of the Japanese who are just coming online. Which says,

1) The developed countries ARE able to retain their advantage at some things

2) The Chinese aren’t getting as much technology out of the manufacturing going on in their country as you would think

3) Contrary to fears among Americans, the piece-of-shit Chery car that the CHinese are preparing to import probably will be no more of a threat than the Yugo

I’ve actually said this before, but the Chinese car company most prepared to compete is SAIC, who has been getting their technology transferred from GM. So they will follow in some of GM’s woes before they’ll be able to compete with them.

And to answer some of your further questions–yes, I see a lot of guys travelling to China to sell very exact tools and gauges, things like valves and measurement devices and so forth. I’m not sure if China just hasn’t tried to manufacture these items, or hasn’t yet gone online with them. But for the moment (and I’ll grant you, this may not last) they seem to rely on the developed countries for the trappings of highly advanced manufacture.

We’ll see what happens in the next two years, though, when China will become the world’s dominant chip manufacturer. That may be the tipping point on some of this exacting stuff.

But for now, from what I hear on the the old NW â€Bus†to China, the Chinese still have some really serious inconsistencies wrt to manufacturing. They’re working it out. And I’ve seen more than one veritable shack with an ISO-9001 compliance sign outside of it. But it’s not a done deal yet for China.

Trouser war? Pshaw! Why in my day, we went to war over pasta and citrus! Ah, Pasta-Citrus. Now that was a war!

Meanwhile, I guess we’re only just now learning that trade, currency holdings, and the â€race to the bottom†are the non-lethal superweapons of the future.

Don’t forget the other, even poorer countries like Bangladesh that used to make clothes. Too many of them are losing out to China as well.

Admittedly, trade is not my strong suit. Just off the cuff, though, it seems to me that letting the Chinese get a leg up in the trouser war could lead to trouble. Maybe even a corda war.