So? China is not a capitalist country or a free market country, and they are under no obligation to enable an American company profit for as long as it wants. Most of the money being taken in by Avatar comes from normal chinese people, and is sent straight to America. A controlled market economy is supposed to keep this outflow of cash controlled.
It's a different economic model being practised in China, and this move is perfectly in line with the stated goals of the model.
Nobody loses, it's just an American Multinational that does not profit as much.
As long as they would have chosen to go to see the movie potential utility has been lost, from a basic economics perspective. How much exactly depends on the maximum they would have paid to see it, how much it would have cost and what alternatives (eg dvd) are available
This not the place to go through all of economics. I am not the person to do it either. I just wanted to point out a fallacy in your 'nobody loses' statement: You are only considering the business side of the equation.
To an economist, the consumer is where the numbers get added. When a consumer chooses option A over option B, there is value in that choice. It might be savings (and the ability to use the amount saved on something else). It might be additional value (Avatar is better then Chinatar). That value is the scorecard for an economy.
In China the DVD will be copied, which isn't as likely with the film experience.
Frankly, both countries worry about the balance of payments, which Chinese consumers consuming American movies helps. To have China focus on keeping every last dollar inside the borders is a form of protectionism, which if other countries followed would result in a general slowdown of trade. Sure this particular movie is a tiny blip, but then if so they should just play the movie until nobody wants to see it.
India doesn't have a hard time making movies - Bollywood is a huge success and they export to the rest of the world. Seems like a healthy balance to me.
"Nobody loses" - you feel it's healthy that the government dictates what's playing in cinemas? The fact that it's Avatar just tells you about the odds for a film that actually has some value, eg criticism of the ruling party.
That's how the chinese system works. It's a communist country with a communist party and a controlled economy: it's not a suprise if this happens. If you don't like such a system that's fine, protest the system, but don't protest a tiny part of the system.
If you don't want communism, then say that, but don't say "Avatar should be allowed to make as much profit as it wants, but I don't care about the system". Do you understand the distinction here?
Looks like it's to protect domestic Chinese films, as the 3-D version is still playing in theaters.
Alternate point of view:
"According to a report in the Hong Kong newspaper Apple Daily, the move was made at the urging of propaganda officials who are concerned that "Avatar" is taking too much market share from Chinese films and drawing unwanted attention to the sensitive issue of forced evictions."
Apparently only 20 foreign movies are allowed to be shown in Chinese theaters every year.
Regardless of the reasons, it's still a very fenced-in society.
Someone tell me again why we allow Chinese imports?
We should seriously consider allowing only 20 kinds of Chinese-made consumer electronics into the US, and banning any model which gets popular enough to threaten non-Chinese manufacturers.
... and don't forget the greed. Looked at where stuff is made recently? I see a ton of stuff around me that comes directly from China. We like to buy stuff cheap from China, and we like to ignore the fact that China is not a free society. If we cared we would vote with our wallets, but we don't care. And in my opinion so don't a lot of Chinese (I didn't say all, or even most, but a lot) as long as it brings in the cash and the BMWs.
Funny, when I read this initially my first thought was: it would be inconsistent for the US, as champion of the free market, to attempt to impose its will on a country such as China by itself acting contrary to free market principles.
Then I remembered: the US has not had a problem doing just this with/to other countries before; for example South Africa. There were not only the apartheid-era sanctions; there have also been the post-apartheid era "negotiations" (for example, 'halt your satellite development program or we will oppose your entry to GATT').
It seems fair to say the US has used "steamroller" tactics like this before. So maybe the question should rather be: why is the US handling China differently?
B) We already get occasional shipping containers full of Chinese illegal aliens sneaking into the country. We don't want them to be armed and trained soldiers too.
If another person starts banging their fist in your face, you do not magically become better if you start banging your fist in their face. In the short run your hand will hurt and it won't make your face better, but in the long run it might prevent them from continuing to bang their fist into your face.
Similarly, in the short run, cutting off china will hurt economically (both our people and theirs). In the long run, if it causes them to open up, it will probably benefit us and their people (though not necessarily their leadership).
That plan (opening up society by economic isolation) didn't work particularly well for Cuba, Iran, North Korea, or any other embargoed country that I know of.
"[And] as Frederic Bastiat put it, it makes no more sense to be protectionist because other countries have tariffs than it would to block up our harbors because other countries have rocky coasts."
That's an excellent equilibrium analysis, and I completely agree with it. In the short run, treating protectionism as constant, retaliatory trade restrictions will harm the US as well as China.
The only flaw in that reasoning is that it treats tariffs as being unchangeable. China and other countries have eliminated protectionist policies in response to retaliation. As far as I know, no coast has even become less rocky in response to a blockaded harbor.
Cuba and Iran are only isolated from the US, and the US was never a major part of their foreign trade. North Korea only survives because it is propped up by external powers (China, and to a lesser extend, South Korea).
In contrast, China makes many consumer electronics intended for the US market.
International isolation worked fairly well for South Africa. Threads of isolation also opened up the Japanese and Chinese markets to US-made auto parts, and it opened the domestic Chinese consumer electronics market to foreign-made semiconductors.
> International isolation worked fairly well for South Africa.
Not really. South Africa's main exports were mainly commodities and anything it imported it imported through proxies (such as Taiwan or Israel). Disinvestment was a major boon to South Africans since it allowed them to buy foreign assets at cents to the rand.
Sanctions also increased the Laager mentality which probability increased the length of Apartheid.
The reasons why South Africa turned to CODESA had probably more to do with the happenings in the Soviet Union and Eastern Europe (since South Africa’s biggest problem was that the ANC&SACP movements were funded by the USSR).
Btw, I don’t know why you say that it worked, when by all objective measures black people are worse off now than under Apartheid (e.g. a 13 year drop in life expectancy). South Africa is on track to become a failed state in 10-15 years.
Embargos are a (light-weight) act of war. And like most acts of war, they hurt the civilian population more than they hurt the leadership.
Protectionist trade policies to attempt to balance a huge trade deficit is just economic policy. Free trade is all well and good when both partners are trading freely, but China is not doing that. China uses forced-low labor costs, low quality standards, low environmental standards, and import quotas to ensure they come out way ahead on the balance of trade. This hurts US businesses who can't compete with Chinese companies prices because they have to adhere to much higher standards/costs.
Simply adding tariffs to Chinese imports wouldn't be enough though; while that would bring some money into the US budget, it probably wouldn't help US businesses start up to pick up the slack in imports, and US consumers would wind up footing the bill. We'd also need a reduction in taxes on businesses that produce the sort of products we import from China so we can kickstart US production. The lower taxes should lead to more US jobs and lower prices on the products, and the government shouldn't lose revenue because it'll be getting the extra tariff money. (It'll be a long time before US businesses can produce the volume of goods we import from China, even with tariffs and tax breaks in place.)
> Free trade is all well and good when both partners are trading freely, but China is not doing that.
There's no need for the other partner to trade freely to make free trade from your side advantageous to you. Have you heard of the theory of comparative advantage (http://en.wikipedia.org/wiki/Comparative_advantage) that explains why this works?
"The fundamental logic of free trade can be stated a number of different ways, but one particularly useful version - the one that James Mill stated even before Ricardo - is to say that international trade is really just a production technique, a way to produce importables indirectly by first producing exportables, then exchanging them. There will be gains to be had from this technique as long as world relative prices differ from domestic opportunity costs - regardless of the source of that difference. That is, it does not matter from the point of view of the national gains from trade whether other countries have different relative prices because they have different resources, different technologies, different tastes, different labor laws, or different environmental standards. All that matters is that they be different - then we can gain from trading with them." (http://web.mit.edu/krugman/www/negot.html)
Did you read the Criticism section of the wikipedia article, which describes how the theory doesn't apply if capital flows freely (as it does) and that even when it did apply it created uneven distribution of wealth which have caused countries like China to enact policies to ensure that Comparative Advantage does not apply?
At issue here is that we're not trading goods we're good at producing for goods China is good at producing. Instead, we're trading the future earnings of US citizens for Chinese goods. That might have been ok when our debt was low and the goods were low-value, but now our debt is unsustainable and the goods are high technology which we invented and used to produce, but don't anymore. The theory was that we were becoming a 'service economy', but the Chinese don't want or need our services. We have nothing to trade with them except our future financial independence... and the future is coming very quickly.
Think on the bright side: if the US economy can survive this kind of one-sided trade it can survive anything... The same can't be said of other economies.
Because if everyone responded to import quotas with import bans...
I proposed an import quota identical to the Chinese one, except that it only applies to China.
If every country responded in kind, then no country would be doing what China is doing. (No one provoked China's bad behavior.) If every other country responded in kind only to the one country who is behaving badly, that single country would be isolated and might change their behavior.
That works better in middle school than it does in macroeconomics. Each country has different economic needs - strict tit for tat won't necessarily lead to an optimum. Don't worry, America has its share of import quotas and tariffs, as well.
If society reaches the point where all countries but one are aligned on the same principles, and only one country in the world is behaving badly, then I think your solution will work.
Think about it. If Chinese Govt is willing to sell stuff to us dirt cheap by using dirt cheap labor, It is beneficial for us to buy them. It makes economic sense for us to buy something for less than what it's worth. We gain by doing so. The Chinese Govt gains too, by getting more than what they pay for the people. The real losers are those who work dirt cheap. So, end of the day, it's not our problem. If I can save 200 or 300 dollars on my iPhone because of them, I am glad.
I think these recent signs of heightened sensitivity by the Chinese censor is actually a good sign. Are they panicking because it is impossible to turn the information tide?
I think China is getting incredibly good at operating in an imperfect rule where they do not control all information and cannot stop information completely. They control or influence enough flow to influence public opinion, commonly accepted narratives and history.
I think that this makes them extremely robust. Sneak ten thousand satellite internet connections into North Korea and you will have a measurable impact. There is no equivalent for China.
They control or influence enough flow to influence public opinion, commonly accepted narratives and history.
American power does this without tyrannical media control just fine, it just takes a lot more resources. It's a matter of PR efficiency, more than anything.
As it's still on ~900 3-d screens, I don't really think it's a censorship issue, unless you figure political views are linked to stereo vision capability ;)
Anyone who wants to see Avatar (or any western movie) in China can just plunk down the 9-10 yuan (<$1.50) for a (probably pretty decent) bootleg DVD that can be found in just about any marketplace. I'm sure this is mostly for posturing and perhaps economic reasons. I'm sure they sometimes do these things just to remind people that they're there and that they can, even if the people there aren't overly impressed or bothered by it.
My inlaws in China probably watch more American movies than I do and I have netflix.
The funny thing is that it is Americans' relative willingness to pay for movies that allows the American movie industry to create in the scale that they do. If bootlegging weren't so prevalent in China, perhaps their movie industry wouldn't need to be supported by decree, and perhaps their marketplaces wouldn't be awash in what are effectively advertisements for America.
Don't want to one-up you for the sake of it, but last time I bought bootleg DVDs in China, I paid Y5.50 (about 80 US cents). The better prices will be outside of the main markets populated by foreigners - the guy I bought from was on the top floor of a market geared to only locals. Prices increase as you go out from there - foreigner markets in Beijing and Shanghai, then eventually other popular places like Vietnam, Thailand, Bali, etc.
It's a different economic model being practised in China, and this move is perfectly in line with the stated goals of the model.
Nobody loses, it's just an American Multinational that does not profit as much.
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