Professor’s report at centre of US-China trade tensions

Press Release – Massey University

A new report on Chinese auto-parts subsidies, written by Massey University’s Professor of International Business, Usha Haley, has been at the centre of a political storm in the United States.Tuesday, February 7, 2012
Massey professor’s report at centre of US-China trade tensions
A new report on Chinese auto-parts subsidies, written by Massey University’s Professor of International Business, Usha Haley, has been at the centre of a political storm in the United States.

Professor Haley’s report, titled ‘Putting the pedal to the metal: Subsidies to China’s auto-parts industry 2001 to 2011’, was published last week by the Economic Policy Institute, a Washington-based think tank.

Since its release, the report has been used by a coalition of industry groups, trade lawyers, American labour unions and Democratic politicians to push President Obama to file trade-case actions against China with the US Department of Commerce and US International Trade Commission, and to take up the matter at the World Trade Organisation.

According to Professor Haley’s report, the Chinese auto-parts industry has received US$27.5bn in subsidies since 2001, as well as benefiting from government support in acquiring cutting-edge technology, including green technologies. The Chinese government has also committed to a further US$10.9bn in subsidies.

‘Putting the metal to the pedal’ has been referenced in hundreds of news articles since its publication by media outlets from all over the world, including the BBC, Financial Times, New York Times, AFP, Reuters, and Bloomberg/BusinessWeek.

“Research and writing is generally a lonely process, so it’s exciting to see one’s work having broader policy impact,” says Professor Haley about the wide media coverage of her research.

Professor Haley’s report comes at a time of intense interest in China’s business practices as United States President Obama signaled he would take a tougher stance on Chinese subsidies in his recent State of the Union address.

“We are in a once-in-a-generation moment in global business,” Professor Haley says. “Trade flows have swung dramatically in favour of China and some other emerging markets, and theories of comparative advantage and labour costs no longer explain these shifts.

“Policy is needed to correct these imbalances now as they are having sweeping effects on what products we use, where we make them, and how much we pay for them. These are civilizational shifts that may not work out to our advantage because of inaction.”

The auto-parts industry is the most recent sector of the Chinese economy to be investigated by Professor Haley. She has previously presented reports on subsidies in the Chinese paper, steel, and glass industries to the United States Congress, and has recently published an article on the solar-panel industry in California Management Review. She will also be presenting a lecture on the solar-panel industry at Massey’s Albany campus on March 7 as a part of the university’s public lecture series.

“Solar is an important industry for New Zealand, not just because it provides abundant and potentially cheap energy sources, but also because of the quality of jobs it creates,” says professor Haley. “Yet, Chinese subsidies will affect where the solar panels are manufactured, which technologies become the standard, and where these jobs will be created.”

Professor Haley is in the United States this week to make presentations and develop her research on Chinese subsidies to manufacturing. Her previous research on Chinese subsidies has already been incorporated into trade regulation in the United States, EU and Germany.
‘Putting the pedal to the metal’ can be downloaded from: http://www.epi.org/publication/bp316-china-auto-parts-industry/
ENDS

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