1. Do you agree with the statement that China is using unfair government support

Question

1. Do you agree with the statement that China is using unfair government support to create national champions that could eclipse their rivals abroad? State your reasons!

2.Do you see Tesla's move to open a factory in China a good one? What effect will it have on the American auto industry?

Article Link: https://www.nytimes.com/2017/10/09/business/china-hastens-the-world-toward-an-electric-car-future.html?&moduleDetail=section-news-4&action=click&contentCollection=Technology®ion=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=article

Explanation / Answer

1. Yes I agree with the statement that China is using unfair government support for creating national champions that could eclipse rivals abroad. They focus on planning the economy centrally and make it difficult for foreign companies to enter the Chinese market. The creation of National champions helps the company for using the strategic aims of the government and in turn companies get easy access for financing through the government. The champion companies are usually state-owned. They engage in unfair practices of merger and acquisition. The concepts like crowding out are used for making it impossible for other private sectors to participate.

2. Yes I see Tesla's move to open a factory in China a good one. It would help to eliminate the requirement for shipping cars from the other side of the globe. It will also help to increase manufacturing drastically. It will be an environment friendly decision. It would also be able to increase the lagging sales of the company in China apart from the environmental benefits.

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