Economics, Politics, Social Commentary and occasionally Superstring Theory.

Wednesday, December 01, 2004

EU Sees China As A Threat

The EU released a report today that warns member countries of a coming Chinese storm, the Telegraph reports. While most of this is the same boilerplate "anti-China" stuff, there is an interesting finding: that Chinese are taking advantage of a protected home market in electronics to dump cheaper products on EU. If this is true, the report is essentially encouraging anti-dumping petitions to be filed. I don't know enough about EU anti-dumping law to speak intelligently about it, but it should work similarly to U.S. law.

Dumping occurs when a foreign competitor is exporting products at a price lower than what it sells the products for in its home market. For example, if the Chinese are selling PC's in Germany for $100, and selling them in Shanghai for $300, that's dumping. (Of course, China is a non-market economy [NME] so the caculus gets a little trickier, but you get the idea.) The worry is that the producer is using monopoly rents in their home market to finance below-cost sales in the export market in order to capture market share and drive competition out of business.

Check back later for a longer post on anti-dumping law and its problems.

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