Understanding China, One Blog at a Time

An American in China

Dont Dilly Dally with the Da.li- Revenge in China

Posted by w_thames_the_d on November 27, 2010

Great article here, it says that in essence, if a country meets wiht the DL, their exports to china are reduced for the next two years, basically amounting to a punishment for their transgressions..

“The cost of upsetting the feelings of the Chinese people- November 4, 2010: How much business do you lose if you allow the Dalai Lama to visit?
By Malcolm Moore

Foreign governments who allow the Dalai Lama to visit are often accused of “hurting the feelings of the Chinese people”.

China has repeatedly warned foreign heads of state not to meet the Dalai Lama, with Zhu Weiqun, the executive deputy head of the Communist party’s United Front Work Department, saying: “We will take corresponding measures to make the relevant countries realise their mistakes.”

Now, for the first time, two economists at the Georg August University of Goettingen in Germany have calculated the price that you pay for upsetting China’s feelings.

In a research paper that crunches the figures on exports to China, and then correlates them with the map of the Dalai Lama’s state visits, the two economists find that a country’s exports to China fall by around 12.5% for around two years after its leader meets the Dalai Lama.

“Since China is neither a democracy, nor a free market economy, its administration has greater capacity to impact on trading decisions than the government in a democratic free market economy. Such significant scope for government intervention thus gives leeway for the utilization of trade flows as foreign policy tool,” the two economists conclude.

The worst hit sector is “machinery and transport equipment”, which is the only product group with a consistent negative effect of Dalai Lama meetings on exports. This makes sense. Just about the only thing that China buys in bulk from Europe, which is the most frequent destination for his Holiness, is advanced machinery. And of course, with France, Germany and the UK all vying to sell engineering to China, the Chinese can switch to other suppliers with no negative effect.

The economists say that the Dalai Lama effect on trade is limited to the Hu Jintao era (2002-2008, when they last have trade figs). “We find at best weak evidence to support the existence of such an effect in earlier years.”

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