The US Congress has approved US $ 787 billion stimulus package designed to revive the battered American economy through tax cuts and creation of employment. There is another important rider : “Buy American†.
The public works projects receiving money from the federal stimulus package have to use U.S. made iron, steel and manufactured goods. This is a laudable clause.
Will it create trade barriers?
China the biggest beneficiary of US spending had this to say while pointing figures †American greed machine†(refer Hu Jintao at World Economic Forum).
So, when America looks after itself, Chinese reaction is “China could be a victim of such protectionism.†(Mei Xinyu, a trade expert with the Chinese Ministry of Commerce).
America has wisely kept the trade open to the natural democratic value adding partners like Japan and Europe. Canada is a bad exception which would benefit with NAFTA.
The Tigers, Dragon and the Elephant
South East Asia were the economic tigers once upon a time. They roared at America. They forgot they were mere hyenas, feeding at the carcass of the US spending.
The dragon stands to loose its bad breath too. China is not a economic power in itself. its a borrowed economic power, living on the consumption of America. It built a host of infrastructure including its military might with it. Middle earth will be struck in the middle now.
The elephant needs to restructure. India has produced a generation of zombies who keep awake at night and sleep during the day times. The Business process Outsourcing (BPO) has resulted in the death of natural struggles to grow up and fight for the bread which has driven the India’s internal consumption led economy. Instead, the teens at their primes were plucked and put in the lap of luxury at call center jobs. US should keep its zombies to itself. However, the Information Technology sector might survive. There will be a great trade with America on mutual terms. India does signify a huge market for free world and is necessary to co-operate. Unlike China, Indian economy is not a dependent economy of US. It has its own inherent strength. Like US, Japan and Europe, Indian too has a consumption led economy. India must take a cue from USA and keep China out. Banning those toxic toys from china is a right step to future.
Restructuring the world
This crisis, America must redefine the world order. It was American consumption that was driving the world predatory traders like China. America should build a consortium of free world economies. These countries should invest in each others economies and add value. Manufacturing and services must not go out to predatory and hostile economies like China.
Its time America in-sources and right-sources to redefine future of the world.
