The Great Debate

Update: My apologies. In the first version of this column, I confused two different Camaro models. A corrected version is below.

SHANGHAI –When the third film in Hollywood’s Transformers franchise debuted here in July, vast numbers of young Chinese flocked to movie theaters -- and Chevrolet dealerships. Wealthy moviegoers wanted to buy one of the film’s half-car, half robot main characters, a bright yellow Chevrolet Camaro coupe called “Bumblebee.”

“Everyone knew Bumblebee,” said Richard Choi, the director of sales and marketing for Chevrolet in Shanghai. “I had to get the press guys to call it Camaro, not Bumblebee.”

Over the summer, Chevrolet dealers in China sold about 350 400 bright-yellow Camaros. A separate Camaro model specifically designed to look like “Bumblebee” sold 2000 units worldwide, but will not be available in China until December. nearly one-quarter of the 2,000 “Bumblebee” Camaros the company sold worldwide.

Chinese observers say Chevrolet, though, could have sold vastly more Camaros in China. Chevrolet built the specialized Camaros each Camaro in the U.S. only after it received specific orders, creating a three-month-delay in delivery that frustrated Chinese consumers.

The following is a guest post by Bruce Katz, Emilia Istrate and Jonathan Rothwell. Mr. Katz is the editor of several books on transportation, demographics and regionalism, including “Elevate Our Cities.”  Ms. Istrate is a senior research analyst with the Metropolitan Infrastructure Initiative. Mr. Rothwell is a senior research analyst at the Metropolitan Policy program focusing on urban economics, innovation, and economic opportunity. The opinions expressed are their own.

In debates over how to boost the flagging recovery, promoting exports isn’t usually at top of the list.  But it should be.  Export growth can make this recovery job-filled rather than jobless.

And the White House and allied business leaders agree. They’ve been discussing how to achieve the “new goal” that President Obama set in his last State of the Union speech: double exports over the next five years.

Managing the rise of China’s vast economy and healing the U.S. trade deficit will require a new willingness and capacity to boost U.S. technology exports at affordable prices. More importantly it requires a new language from policymakers and a new mindset.

In a recent survey of American businesses, the proportion who felt unwelcome operating in China had risen sharply, amid tense stand offs involving Rio Tinto and Google. But with U.S. legislators in full flag-waving cry about China as a currency manipulator, is it really surprising China is looking to become more self-reliant?

At the heart of the trade problem is the difficulty the United States (and other western economies) are experiencing in adjusting to China’s rise to superpower status in the 21st century. It is causing the same problems the rise of Germany, Japan and the United States itself caused for Britain in the 19th and early 20th centuries.

- Wei Gu is a Reuters columnist. The opinions expressed are her own. -

The U.S.-China tire dispute threatens to spill into other sectors and squeeze Chinese exporters’ already razor-thin margins further. It might seem mind-boggling to many that Chinese manufacturers are still hanging on to weak overseas markets even though the domestic economy looks much healthier and surely offers more potential.

But there are structural reasons why the grass is greener outside China. The risk of not getting paid, or getting paid late, is significantly lower when dealing with foreign buyers. The cost of international shipping has dropped so much that it can be cheaper to send goods over the Pacific Ocean than across the country.

In addition, selling to large buyers such as Wal-Mart creates volumes large enough to compensate for weak margins. Moreover, Chinese exporters get all sorts of export rebates and local government incentives which help to lower their costs.

The victorious Democratic Party of Japan did not put economic growth at the heart of its electoral sales pitch. The party's manifesto mentions "growth" only once. The word "support", by contrast, appears 19 times.

Even so, there are reasons for optimism that the DPJ's softer and more nurturing policies are just what the economy needs.

The global slump provided a painful reminder of the dangers of Japan's export-oriented growth strategy. Output has fallen even faster than in other rich countries, leaving national income at roughly the same level as in the early 1990s.