I went to the sales yesterday in my local area. On item after item there was label which said “Made in China”. A few said something different – “Made in India” or “Made in Indonesia” or “Made in Korea”.
For just six pounds I was offered a reduced set of Christmas lights. They were in an attractive large box. Each light was mounted in an artificial flower, a poinsettia. One of the forty was a fuse bulb. It came with a 13 amp plug for Uk circuits fitted as standard, and with two spare bulbs, 1.5m of cable to the wall and 4 metres of cable for the set as a whole.
How can they do it for such a price? That product requires the assembly of flowers, cable, plug, bulbs and bulb holders, all to be mounted on a stiff card and placed in a box. It is then sent half way round the world in a container ship, sent by lorry to a shop, and finally retailed to the public. The English on the box was fine, and the product betrays considerable knowledge of the UK market at Christmas.
In case after case the Chinese product is well designed, appropriate for the shop and the market, of good quality and very price competitive. It gives me a sense of unreality to see the collosal Chinese industrial achievement on most shelves of our stores, and to realise how much capacity we have given up here in the UK to make things for ourselves.
This is just one small and not necessarily the most impressive example of great value from China. It is further evidence that we can import our lifestyle from China, and borrow the money as a nation to do so. As we hear enthusiaism for the retail boom post Christmas used as evidence of our recovery, we should show a little humility. It may be good news for our retailers, and good news for consumers who still have the money to buy these goods. It is not going to create a large number of jobs in the UK making the things we want to buy.
The government has made much of its intention to rebalance the economy, and to shift activity into manufacturing. That will require bolder policies on taxation and regulation than are currently on offer. It will require French and German style skill by government to buy home made products within EU rules. It will also need to relieve the squeeze on the private sector which is programmed to get worse given the trajectory for higher public spending and tax revenues set out in the Budget forecasts.
More jobs and more enterprise require more realistic tax rates, which could boost revenues as growth accelerates. A 52% marginal income tax rate on the successful, 28% capital gains tax, and an extra 1% on both Employer and Employee National Insurance is not a winning package to promote more industrial risk taking in a very competitive world.