[tinyrick2]

Don't you think that by limiting foreign companies' products the local companies would operate less efficiently since there is no competition? I think I was taught about this in my econ 101 class. Why does it work differently this time?

[coldtea]

Several factors.

(1) Econ 101 classes mostly sell students an idealized version of economy.

(2) Top-tier countries have used all kinds of techniques (protectionism, tariffs, etc) to get successful, but now that they don't need those anymore, they pay lip service to the Econ 101 "laws" that are against those same techniques.

(3) While clothed in scientific parlance, a lot of what is Econ 101 is just BS to promote the interests of those in power, not what's best for the people in general (that's how an ecomomics professor gets grants, becomes policy advisor, etc).

The scientific part is just using some math while still basing their ideas on idealized unworkable models and unprovable assumptions.

That said, even if all the above was not true, the internal market in China is 1.6 billion people. 4-5 times the US is more than enough to have lots of internal competition.

Heck, there are US-only brands the rest of the world doesn't care at all about -- and that's on a 350 million people market, and they still do just fine.

[ttoinou]

   The scientific part is just using some math while still basing their ideas on idealized unworkable models and unprovable assumptions.

You don't need maths to show that less competition changes the incentive to the point that it could bring down quality of service.

[coldtea]

Yes, but also don't need maths to know that competition can be controlled with 20 ways (and usually is, e.g. US ISPs), or that you can have tariffs AND internal competition.

Or even that you can have a fine quality product at a good price even without competition at all -- e.g. produced by a single vendor, as long as the vendor is so inclined.

[ttoinou]

If competition is controlled then there's less competition and one can expect efficiency to drop down ceteris paribus. Now you have to explain why controlling competition could lead into better quality or cheaper prices. (The only thing I see is that it could let governments keep more money, thus more power ?)

  fine quality product at a good price even without competition at all 

Threat of competition is also a form of competition (for example a software product not protected with patents, anyone could compete so the producer offers good prices)

[Can_Not]

The US is really big, if there's not a mis-configured regulation, adding overseas competition won't really increase efficiency as the perfectly sperical market in a vacuum equation suggests.

[ttoinou]

Maths have nothing to do with economics. I said efficiency as a way of comparing market offer from the point of view of customers (you can picture the formula "quality/price" if you want but that doesn't mean that it is objectively & mathematically defined), meaning that prices go down and/or quality increases

   mis-configured regulation

Do you have examples of good protectionist regulation ?

And no I gave a specific example with software patents so even if the US is big enough it can benefits from outside products

[dogma1138]

Not necessarily the same things happened also in Russia.

Competition can still happen just locally and while competition is good when the scale is unbalanced it can be just as bad or worse than no competition at all.

Almost no one is developing a Google search competitor because it’s near impossible to do so while people have access to Google the need isn’t there and you can’t compete unless you are actually better there isn’t as much niche to search as people think. You also have the problem of resource imbalance where Google can just go and buy out the local competition at ease due to their wealth this what has happened with dating and P2P commerce sites all over the world.

[RobertoG]

You can't develop an industry from nothing without protection. This is how happened in the USA, protecting nascent industries from others (the UK mainly). It seems that the Chinese are very aware of this historic truth.

The corollary being that, if you are already a developed country, and you want to avoid competition, a good way to do it would be to force, other countries, to "open they markets".

A good book about the subject: https://www.goodreads.com/book/show/187808.Kicking_Away_the_...

[tqkxzugoaupvwqr]

> Don't you think that by limiting foreign companies' products the local companies would operate less efficiently since there is no competition?

There is no foreign competition but Chinese companies still have competition from other Chinese companies.

Even if the Chinese market is less efficient because competition is limited to China: The goal is to foster a healthy national economy, create knowledge, and most importantly keep total control over technologies and communication channels.

[seanmcdirmid]

No, it’s still true. Chinese companies in protected industries are as inefficient as expected.

[coldtea]

Really, Weibo, TaiBao, Alibaba and co are "inefficient"?

[seanmcdirmid]

Taibao and Alibaba aren’t really protected. As for Tencent, look at its success in other countries when competing against google and Facebook....