Corporate Oct 7, 2012
Even as the world looks at China for phenomenal success in manufacturing, an Indian American, who had a two-year stint in the Obama Administration, believes it is the US' free market economy, which promotes entrepreneurial culture, will finally trump the Chinese model.
"I am very confident that the American economy will prevail over the Chinese model in the 21st century. An entrepreneurial culture that welcomes immigrants and embraces the free-market will trump China's more closed, economic model," Ro Khanna, the former Deputy Assistant Secretary at Commerce, told PTI.
In his book 'Entrepreneurial Nation: Why Manufacturing is Still Key to America's Future' which was released early this year, Khanna profiles 15 successful American manufacturers and highlights their comparative advantage.
"Despite cheaper labour abroad, currency manipulation, intellectual property theft, and subsidies to foreign competitors, these American manufacturers are winning," writes Khanna in his book.
"The United States makes 20 percent of the world's products, with 10 percent of our economy, while China makes 20 percent of the world's products with 40 percent of its economy. The US has six times productivity over China.
"When it comes to making complex equipment and machinery, the US is still the world leader," Khanna said.
Khanna, whose provocative book has been widely acclaimed in the US, says that the problem with China is that "it is cheating" and currency is undervalued, and providing illegal subsidies to its manufacturing sector and helping their exporters.
"We need a level-playing field. If there were a level playing field wherein China played by the rules then there would be no problem in trade," he said. Both the presidential candidates - Barack Obama and Mitt Romney -recognise the unfair trade practices of China, he said.
The US, he said, has successfully brought several cases against China at the World Trade Organisation.
China "really needs to open up" in the 21st century society. If there is a level playing field then the US manufacturing sector can compete, he said.
More From Firstbiz Staff.