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China Plans Domestic Software Quotas
October_30th writes "In order to fight the alleged Microsoft monopoly, the Chinese government is establishing quotas for foreign software. While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically. Regulations like this are, of course, expected to come under fierce criticism from the WTO."
Quoted from the article:
"I believe the era of exorbitant profit for software should end," said Li, the science ministry's deputy director in charge of new technology. "Basic software services should be cheap, just like water, electricity and gas."
This is great news for Open Source, whose goal is to make software cheap and affordable for everybody. Microsoft has been making exorbitant profits from their products for way too long, and I'm glad that China is embracing the new way of Open Source where software is a basic social right of all citizens.
This move isn't solely in support of Linux, because China wants its own software industry to have a chance to grow and flourish before Microsoft gains total dominance there. Once the Chinese software industry has grown, the largest software companies there can be socialized and given to the People of China.
Have you read the GNU Manifesto lately?
Before someone screams "Yay! Another victory for the anti-Microsoft lobby", its worth noting that this is not good.
From the article -
China says it is merely trying to level the playing field for its own software companies.
Bah! If every country were to level the "playing fields" - there is no point in such things as patents and WTO laws.
Why does the US still buy Japanese and Chinese products? Maybe the US should "level" the playing fields too. Why does any other country have to respect any other country's patent or trade laws?
As much as I like the fact that this means widespread adoptation of Linux - just remember that they are essentially violating even the basic trade law premises of free and fair trade.
The article's ending makes it worse -
So far, Linux has not made big inroads. IDC software analyst Jenny Jin estimates it has "a very small percentage" of the operating system market, probably less than 4 percent.
I wonder what this means. Homegrown Windows like OS? Whatever it is, this is plain wrong.
While other countries respect trade laws at the expense of their workers, industry and economy, why should China be allowed to be any different?
the government may require that up to 70% of software on Chinese computers is produced domestically.
So how do they plan to calculate the percentage? Number of software packages? Size in megabytes? Lines of source code? Weight of documentation?
Chinese programmers: Please make lots of free, useless little utilities so for every foreign software package your people need, they can install two of yours to balance them.
Back during the "Japanese Invasion" of the auto industry (when the Japanese got their quality up and held their price low, resulting in a major market shift among consumers) the US passed similar legislation, requiring a percentage of "US content" in any company's cars sold in the US. I think the number was also 70%.
Interestingly, the Japanese did this by opening assembly plants in the US. And employed US auto workers.
The US auto companies had claimed that there was a cultural gap, that the reason US car manufacturing had such a hard time with product quality was the US union auto workers. (Union reps said it was management techniques.)
The Japanese hired UAW members. And got better quality than in Japan. B-)
A friend of mine, a union organizer, put it this way:
"The US auto workers will give you what you ask. If you ask for quantity they'll give you quantity. If you ask for quality they'll give you quality. And if you ask for trouble they'll give you trouble."
B-)
What had ACTUALLY happened is that the Japanese had wholeheartedly adopted a management style promoted by a US theoritician, with major worker involvement and worker-to-management information and idea flow. Meanwhile, spured by the McCarthy-era anti-Communism witch hunts, the US executives eliminated anything that looked socialist or communist ideas from their own workflow, cutting themselves off from information and ideas from their blue-collar workers - who knew the actual processes and factory goings-on the best.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
so, if Microsoft (or any foreign software company) decides to outsource some software development to China, will it be considered a domestic product, since it would technically be made in China?
China has violated so many of the promises it made when it entered the WTO(while still enjoying all the benefits) this really will not matter. So far, China has been making a lot of influential WTO members very rich so they look the other way. Basically China has immasculated the WTO, and I for one am sick of it. They want all the benefits but none of the costs of free trade. Every time America tries to protect one of its own industries, China raises a huge hissy fit and threatens the US with a trade war, although the amount of exports to China are so small we really could do without them.
Either get the WTO to grow some balls and challenge China or scrap the organization. I am tired of Chinas constant protectionist bs while forcing free trade on other countries. And before the China supporters flame me I know that there overall trade deficit is not that high, but if you take a look at there trade policies(namely demanding technology transfer, and destroying any standards that are foriegn and turning around and forcing companies to use Chinas standards if they want to do business) you can tell that they do not plan to trade with these other nations very long. Trade with China is a very bad idea, maybe once the WTO actually enforces its rules, it might not be so bad, but for the time being it really pisses me off..
I can see several ways in which this could be bad for all the rest of us (while not being all that good for China, either).
1 - mass civil disobedience, encouraged by the Chinese government looking the other way: China writes some code, and makes up the slack by pirating everything else. Everyone justifies the piracy by pointing at the government and saying "well, I'm not allowed to BUY it". The rest of the world ends up feeding China's growth but doesn't actually get any money.
2 - GPL black hole: code goes into China but code doesn't come out. What's to stop a desperate Chinese coder from "borrowing" a pile of downloaded source, making a few changes, and selling binaries within China? Nothing. The rest of the world ends up feeding China's growth with free code, and gets nothing in return. The Great Firewall of China might aggravate that even further - maybe insiders *want* to share their code with the rest of the world, but aren't allowed to?
3 - hmm. China's also making custom processors. What's to stop there from being a positive feedback loop here of Chinese code for Chinese chips driving Chinese chip sales in China, which drives Chinese code in China? Nothing - that may even be by design. This'd close off sales of both hardware and software to China even more. Good for China, bad for everyone else.
Like many other posters, though, I don't think China could get away with this, because of the WTO. They'd get hammered not only by the US, but also the EU, India, Japan, and anyone else who makes software that I'm forgetting.
One example documented in Michael Pollan's book The Botany of Desire is the U. S. marijuana industry. U. S. grown pot used to be of rather poor quality. Law enforcement cut off the supply from foreign competators. Under this unintentional protectionist program, U. S. grown pot became some of the best in the world.
Alternatives to the Microsoft desktop will reach critical mass a lot faster with some protectionism. Short term, the people in the Chinese goverment will be using software they find unfamiliar, and a little harder to configure, and perhaps a bit awkward to use. But this shall pass. They are obviously willing to take short term hit to come out ahead in the long run.
Religion is the main cause of atheism.
China tried same result in 1970s. Each small village and rural family had to produce X steel amount to meet national goal. Result was pathological disaster.
I suggest you read Slashdot
Like the labor theory of value, this is another economic myth that just isn't true. A unbalanced level of trade may indicate a problem, but the symptom is not the problem.
A though experiment illustrates this. Take the case of a single pair of shoes worth 50 dollars. If the shoes are exported, the nation loses one pair of shoes, but gains 50 dollars. If it imports the shoes, it gains one pair of shoes, but loses 50 dollars. Whether a nation imports or exports shoes depends on how much it values a pair of shoes over 50 dollars.
Currencies are goods as well, but they are goods all too often ignored by the politicians and media. They are a particularly useful good, in that they are the best good suited for buying foreign goods. If the US (as an example) imports more than it exports, then the other nations are going to have a surplus of US dollars usable only in the US (or the currency markets). Currency fluctuations lead to this kind of imbalance. If you see a trade imbalance, take a look around and you'll probably also see a recent fluctuation in currency values.
There are other causes to a trade imbalance symptom, however. The point is, the trade balance in an of itself is not a problem. At most it's a symptom of another problem.
Don't blame me, I didn't vote for either of them!
Yeah, I just got back from teaching in China. It's a lot closer to Fascism than Communism right now. People are separating into classes, and the notion seems to be 'exploit labor to accumulate capital so that we can buy machines and weapons, and so the political brass can get their BMWs.'
I think America dislikes Cuba a lot more than China because there was a lot of American investment in Cuba when Batista was dictator and Castro nationalized, i.e. stole, that capital. It's a matter of revenge. We can't have foreign countries stealing our investments, ya know? And Cuba was setting itself up as an example, so we went and made an example of it. That, and a lot of the folks in Florida are from the former Cuban upper class and they hate Castro and they're very politically active.
___
It's the end of my comment as I know it and I feel fine.
I think what China is doing is extremely bad for me and others alike in the US, but excellent for it. Protection makes sense when mixed with competition. I just hope it finds a suitable 'x' in the x% local-competition and 100%-x% aggressive-open-competition formula.
/my/ country ... I also wish the democratic populace would lessen their support for flagship varsity teams (MS, IBM, Oracle, etc.) and think of their JV team which may yield a future Varsity player better than any in existence, given the opportunity to train.
The best example is my highschool, which had an idiot coach who reserved the tennis courts four and half of the five days to the Varsity team players, giving only 2 hours for JV players, many of whom had never played tennis before.
The end result was that our varsity team improved dramatically, but our JV team was as bad at the end of the year as the start. What did this mean? Kids like me and a *select* few others with parents willing to pay for lessons were able to practice and get into varsity. Those without the money continued in JV and never made varsity. This resulted in our varsity team winning LESS than our varsity team of years past, because we were filled with the affluent JV players and not the talented-yet-latent JV players.
This ties in wonderfully well into economics. Those who have parents/foundations/communities etc. which let them *practice* are the ones who will succeed in a capitalistic, hyper-aggressive, winner-takes-all society (just watch our Reality Shows where all but the best leave in humilation and with $0).
China realizes that the average chinese family cannot compete with "Varsity" teams and is letting their "JV" teams have court time, in the hope that they will one day become "Varsity." Kudos to the brilliant PRC! However, I really wish I could post more kudos to
This is not to say let -everyone- have equal time. Oh, not at all! Just let the JV have *some more* time than currently given. Dedicate resources to ANALYZE them, spot the rapid achievers, and send them up to the next grade where they're given some more resources. Let the dedicated resources mitigate the leverage affluence provides to the few.
Please note, there's the even simpler matter of Dominos selling pizzas at $3.50 to kill competition in my homecity, locals unable to sell below $6, only to price it up to $22 once colonizing the area. Pizza Hut moved in and the "added competition" has reduced the price to $20. Yay... duopolies..
Side-rant: I wish schools would teach kids who flunk classes Civics instead of that class again.. I rather they graduate knowing how to be a member of a democracy than memorize the A B B C E D A answers to the final they're retaking for the 5th time. The only Civics anyone learns these days is from Rap which teaches the alternative to the status quo is drugs and promiscuity or from advertisement which teaches you should revitalize your hair by giving patron to status-quo brands X, Y and Z. I doubt drugs, promiscuity, or giving patron to brands will improve our Civics.
Yeah, I just got back from teaching in China. It's a lot closer to Fascism than Communism right now. People are separating into classes, and the notion seems to be 'exploit labor to accumulate capital so that we can buy machines and weapons, and so the political brass can get their BMWs.'
My god... I can't believe you lived in China and you call what you saw Fascism.
The profound changes you saw in China iwhere I live as an expat, btw) are the effects of rampant Capitalism, not Fascism. The classes divide, the poor are insanely poor, and the rich drive around in Ferraris. Freedom of speech spreads, free entrepreneurship takes root, and people turn from the collectivity to think for themselves.
Take a hard look at America, and you'll see it's not Fascism that the Chinese are emulating.
Here's a backgrounder on the pertinent trade law on clothing and software (I don't believe it: something on Slashdot that falls into my area of competence!):
According to the WTO Agreement governing trade in Textiles and Clothing must be made subject to GATT disciplines until Jan 1, 2005, at the latest. That is, all textile import quotas that were legal unter the 1973 Multifibre Agreement must be abolished, and WTO Members must afford textile imports full most-favoured-nation treatment (i.e. you can't discriminate between imports of different countries any more) and national treatment (i.e. you can't treat imported textiles less favourable than those of national origin, such as by taxing them higher).
This was the principal concession made to developing countries during the Uruguay Round that gave birth to the WTO, liberalizing the clothing sector where developing countries tend to have the competitive advantage. This caused them to accept other WTO packages such as GATS, TRIPs and TRIMs, liberalizing areas where developed counties tend to have competitive advantages. (Never mind that the EU and US in particular have since resorted to all kind of dirty tricks to delay and circumvene the liberalizing provisions of the Agreement on Textiles and Clothing...)
However, the US-PRC situation is peculiar: As a condition to agreeing to China's WTO accession - which had to be OK'd, as everything in the WTO, by consensus of all Members - the PRC Accession Protocol provides that the U.S. may legally maintain import quotas on Chinese clothing up to 2009. After that, China can sue the US in the WTO Dispute Settlement Body (a kind of World Trade Court system) if quotas are maintained.
As to the Chinese software quota, this seems to be a clear-cut violation of the WTO Agreement on Government Procurement, in particular Article III thereof. It's possible, though, that the Chinese may invoke exceptions, such as the security exception of Article XXIII. The same provision was, incidentally, used (or abused, IMHO) by the U.S. to deny Iraq reconstruction contracts to the countries opposed to the war. At any rate, given the interests at stake, expect legal action by the U.S. soonest if this measure is not abolished immediately.