China to topple Silicon Valley

[Habu]

Hajo

China will not dominate the steel industry or any other for that matter for the same reason Japan did not. When I was in Metallurgical Engineering in 85 the Japanese were going to own the industry in 5 years everyone said. Funny how that never happened.

Making steel is dependant on raw materials. Eventually you get to the point where you are efficient as hell but you still have to buy the raw materials. Cheap labour and lax pollution laws are just a temporary advantage that will eventually even out.

The US can still compete as can Canada as long as the steel companies invest in technology and equipment. When they stop doing that they are on borrowed time.

As far as silicon chips go, you are only as good as your R & D. Every time Intel or IBM comes out with a new generation of chip the former manufacturing facilities are all made obsolete. Nothing is stopping the US from making the next generation of chip factory in the US except the quest for lower costs. The factories have a finite life, you invest in them do a product run and eventually the lines have to be replaced with new equipment.

[Mini D]

Oregon and Texas have already toppled silicon valley.  With the help of Enron.

MiniD

[Hajo]

Habu....I agree with you in some aspects...others however I do not.  One thing China has that Japan has never had....raw materials.  Japan has to purchase Iron Ore, Coke and most other ingredients for steel making from other countries.  China doesn't.

China has untapped natural resources.  Japan has none.

[212]

U.S. Files WTO Case Against China Over Semiconductor Tax       
      

03-18-04 11:06 AM EST

Dow Jones Newswires

WASHINGTON -- The U.S. on Thursday announced it had filed its first World Trade Organization complaint against China over its tax on semiconductors.

China charges a 17% value-added tax on all semiconductor sales in its $20 billion market. But China also gives a tax rebate of all but 3% to makers who design and produce chips in China.

"The bottom line is that China is discriminating against U.S. technology products," Assistant U.S. Trade Representative Christopher Padilla told members of the Global Business Dialogue, an international business group.

The action begins a 60-day consultation period, after which the U.S. can request that a WTO panel rule on the case.

"We have been pressing these and other concerns with the Chinese," U.S. Trade Representative Robert Zoellick said in a statement. "These discussions will continue because we prefer compliance rather than litigation."

The USTR's office said U.S. semiconductor exports to China were just over $2 billion in 2003, with payments of about $344 million in value-added tax during that year.

"Although imports currently represent approximately 80% of China's market, its semiconductor industry is expanding rapidly, with substantial investment from foreign firms," the USTR said in a statement.

In Senate testimony last week, Mr. Zoellick said he was confident the U.S. could win a WTO complaint on the semiconductor tax, as it is a clear violation of WTO rules against using tax policy to favor domestic producers. He said it was a stronger case than a complaint against China's fixed-currency regime, which many U.S. manufacturers say is kept undervalued to promote exports.

China joined the WTO in late 2001. The U.S. and fellow WTO members informally agreed to give China some time to implement its trade promises before flooding the international trading system with legal complaints. However, the Bush administration is under intense pressure to toughen enforcement against China's trade practices during an election year in which unemployment is the central campaign topic.

Earlier this week, the AFL-CIO petitioned the Bush administration to impose trade sanctions on Chinese goods to offset alleged price advantages stemming from poor labor standards. The National Association of Manufacturers has said it is preparing a similar complaint against China's fixed currency system.

-By Elizabeth Price, Dow Jones Newswires; 202-862-9295;

  Dow Jones Newswires
  03-18-04 1106ET

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