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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."
Like tariffs, quotas are used to protect domestic industry at the expense of foreign industries and more importantly consumers. They usually require this protection because they either have a poor product or a product that costs much more than their competetitor's. Preventing imports forces consumers to spend more than they normally would on the same good.
However in terms of software this may be a blessing for China. Linux's problem isn't price so much as it is marketing. However the real question is whether China will be able to use Linux or must they code their own O/S?
Corporations: your universal scapegoat for all society's ills.
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?
I'd wager that their domestic software industry will do well, but their domestic industry as a whole will not.
Why?
Ok, limiting software that people can use limits people's choices (obvious), but it also removes the ability for people to choose the absolute, best software they need to do their job. Consequently, you'd have to make some purchasing decisions which might actually affect the ability of your company to do work. Imagine how a video post production house trying to get by without AfterEffects, Flame, 3D Max, Maya - you get the picture.
The only way they could possibly circumvent this is by loading their machines up with 70% worth of crap they don't want - hey ho, I think I've found the solution!!
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..
While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically.
implies that they plan to issue a general nationwide ban on too much foreign software. However, that's not what the article says. It actually says:
Officials say a new law will be announced by this summer requiring a minimum percentage of software purchased by the government be produced in China.
So we see that this policy would only apply to government purchases. Thus, this is little different from when a corporate IT department standardizes on choosing certain software products and not others.
The U.S. federal and state governments also promote a variety of policies by placing extra conditions on their procurements and contractors.
So, while this is somewhat interesting, this doesn't look to me like as big a trade issue as a lot of posts seem to be making of it.
If the Chinese were doing something illegal wrt to clothing, the most likely of which would be dumping products in US markets, then the US would likely appeal to the appropriate trade organization and ask the practice to stop. This might result in tariffs placed on China and theoretically increase sales of US domestic products in that category.
The interesting thing is that MS claims it is not a monopoly, and the prices it charges are determined by a competitive market and are generally the cheapest it can sell the products for and still make a profit. If we accept this as fact, and look at the deep discounts offered to in certain US and non-US markets, it appears that in fact MS is dumping product, a practice that is defined as unacceptable under many treatise.
We therefore have a situation in which MS is a monopoly and charges arbitrary prices not controlled by the free market, or it is the habit of dumping product onto certain markets, with the assumed intention of destroying competition. In either case, the action warrants defensive measures to protect those markets.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
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.
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.
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It's the end of my comment as I know it and I feel fine.
Because I would get sick and angry. The American govt. and many American institutions always talk in favour of free trade and try other nations to come into the WTO. But while talking like the biggest supporters of globalisation abroad (maybe because of jobs they talk different at home) the US has never been very supportive of free trade.
They only allow free trade when it serves their interest. This is not to say they are the only ones, because the EU also protects their markets wherever they can.
Only Americans seem to think that the US allows free trade, which it doesn't. The only countries that swallowed this load of crap and opened their boarders to foreign products were developing and least developed nations.
While the EU and the US heavily protect their markets (mainly through subsidies, 'cause they can afford to) in some areas China is now doing the same in other areas.
What China is doing is bad, but they are just following up on the example set by the US.