This article is little unusual for a Monday, when the readership is at its peak. Generally, like other bloggers, I tend to publish articles on practical guidance or practice on Mondays.
For once, let me go out of my way and write on an imaginary situation, a ‘what if ‘ kind of world where in US stores ‘Made in China’ goods will not be seen.
A majority of stuff in big US departmental store chains is imported from China. (imports from other countries are negligible as compared to China). From pen to playbook, name a durable merchandise at a Wal-Mart or a Target and in all probability, it will be ‘Made in China’.
Our Govt. can not take decision to put restriction on Chinese imports, because it will be against the order of international trade. But our stores could very well implement a ban.
Now let’s get to the imaginary situation, if these big departmental stores stops importing Chinese goods, how the world will look like.
The most immediate aftermath (till first 3 years) will be raised cost of living for us, the dishes and clothes will be costlier. In order for our kids to play, you have to shell out more money. Eventually total US savings will erode rapidly. We, the frugal bloggers will cry foul, we will start inventing and writing frugal methods with renewed vigor.
As with every major change in market, many of us will become poorer. Store sales will go down drastically, resulting in closing out and eventual job loss.
China will start seeing trade imbalance and rapid erosion of its massive foreign currency reserve; it will start selling US bonds in revenge. Value of dollar will go down and US manufacturers will see profit in selling stuffs abroad. As Chinese economy starts going down, it will cease to be a world buyer of oil, raw materials and all other stuff that it now imports, which will make many more economies vulnerable.
American tech giants will feel the heat of retaliation from China. But honestly, do you think 1.5B people in China buying genuine copies of software? You are dreaming like me if you think that way.
In short there will be catastrophe in short-term and we all will feel the heat. Our spending will grow and some of us may have to tap in to savings to make ends meet. But we will reuse and re-purpose our possessions and live life more frugally. Dow will probably hover around 5/6K mark for some time or years. But, in most likelihood, your job will be saved because of the medium to long-term potential of job growth in USA.
In medium term( 3 years to 10 years), a lot of local manufacturing factories will mushroom, we will have industrial belts coming up in the outskirts of the cities. Unemployment (read cause of unemployment) will drastically go down to probably sub 1%, almost all will be employed, including the people who got displaced in the immediate aftermath.
What about working for iPhone case manufacturers in Dakota and making cups and plates in North Carolina? Imagine city of Detroit becoming double its size in next 5 years. (yes I am a populist writer!)
Because there will be jobs abound, people from other countries will migrate in greater number, resulting in increased economics, new home sells, new car sells, greater export to other countries, stronger GDP growth. Probably we will have another boomer generation coming up.
US treasuries which were unwanted in the shorter term, will now have buyers this time from within the country border, surely govt. will love it.
In the Long run (More than 10 years), welcome to wonderland where every one has a job, a car and a home. We will have healthy wage because of the shortage of workers.
Spare a thought for Chinese workers. Following America’s success, businesses from other countries would implement similar strategies and Chinese export will sink but, Chinese population will be enough to consume all the industrial produce and due to less competition, average Chinese worker’s wage will hopefully increase.
Implementation of this wonderland is tough and herculean task. We need to help our stores implementing this, we have to stop ordering cheap Chinese goods over internet. We have to sop buying from new stores which will be created to sell Chinese products.
It’s not about Wal-Mart or Target, its about us who made these stores stack goods from countries like China, where labor is as cheap as 50C per day. This is an interesting blog dedicated to the topic in entirety. Probably it won’t be wrong saying that we are responsible for our job loss.
|Found on Web : If 200 million Americans refuse to buy just $20 worth of Chinese goods, that’s a billion dollar trade imbalance resolved in our favor.|
There might be an argument against me favoring ‘World trade’ and its principles. But, There were lesser world trade at the time of our grand parents, was the world less happier then than today? people might argue that blocking free world trade hampers innovation, but except for drugs (which is mostly not imported), which other innovation is essential for living?
Let me know how do you feel about it? Are you with me or against me? And, I have developed thick skin by now; let the talk be free-flowing.
Only aspect about which I am worried is the possibility of Chinese (supposedly state sponsored, I heard) hacking on to my website to stop me from publishing (idea is very far-fetched though). I have my backup ready and its stored offline, I can recover soon. This hypothetical incident would put me in top-tier of bloggers, haha.. 🙂
Disclaimer: As I said, this article is an imagination and represents only my views. It’s not influenced by any other person or organization. I didn’t receive any monetary compensation for writing this article.