A Glossary of Political Economy Terms About Cartels Broken down and applied to Chinese SOE's

Lets see how my common sense building is doing on Chinese Economic Warfare in scope the Communist Political Parities State Owned Enterprise Cartel activities as through the scope of:

http://www.auburn.edu/~johnspm/gloss/cartel
As normal writing goes " " will represent their words and [ ]will represent my analysts and application.
Anybody who is anybody in economics knows who the Rider I is.

"Cartel


A formal organization set up by a group of firms that produce and sell the same product for the purpose of exacting and sharing monopolistic rents.
[Such as Chinese Manufacturing SOE's or even SOE's that represent the whole market place such as resources, shipping, production, packaging, marketing, financing, selling and then re-shipping. These have of late tried to be conglomerated into centralized SOE's so that they can get past the international cartel laws as they don't have to work together closely if a lot of the aspects of a market place are all under the same roof. However, there are still links to outside cartels, as not all of the Chinese SOE's have the complete market under their scales. But trust me they are working on conglomerating massive SOE beast that  cannot be competed with]

 The intended purpose of a cartel is to reap monopoly profits by artificially restricting output and thus driving the price above the level that would prevail if they remained in competition with one another.
[It has been noted numerous times that the SOE board that overseas the SOE's make sure that the SOE's do not take each others market shares and even when they each tried to invest the SOE board overseas and sets quotas limits and restrictions on certain market shares they may or may not invest in. As such this allows the Centralized Board to know at all times what each SOE is doing and if any start to fall or are needed to procure certain areas then can acquire certain strategies of the ones who have a major holding on the complete market of industries to make movements in favor for the whole group of SOE's]
This they normally accomplish by agreeing on a relatively high common asking price for their product that none of the member firms will be permitted underbid, but sometimes the member firms may simply agree to divide the market geographically and grant each other local monopolies without necessarily enforcing a uniform price structure. [The SOE's have been known to do each of these. As the SOE's of China own more than 40% of its market shares, they use their massive sizes to mulit bid for resources which allows the Chinese to set a monopsony style resource acquisition as with so many SOE's all competing for the same resource it sets a high market share that the SOE board will get their resources for their purposes. Along those lines certain SOE's are allowed to have competitors and when private competitors try to compete the government restricts them through red rope and bureaucratic nightmares so as not to take more shares from the SOE's so that they can conglomerate and acquire more market shares for the SOE board. They try and say that each SOE works separately and distinctly. However, when one SOE can benefit the others market shares they just conglomerate with that SOE, creating a massive market splitting between their business entities and stopping foreign and domestic competition. This can create certain monopoly style economics of the mass of market shares. Where foreign or even domestic as their own citizens are more important, can not compete fairly with them.]
Since exceptionally high rates of profit in an industry normally would attract ambitious outside firms to make new investments to enter the industry and gain market share by cutting prices, a successful cartel must somehow secure the cooperation of all the significant producers in the industry. It also must find some way to exclude non-cartel firms from selling to customers within the cartel's market area(s) -- such as by getting their national or local governments to grant cartel members a legal monopoly or to enact administrative or tax barriers to sales of the product by outsiders.
[This has been shown by stopping Chinese PCB's from entering certain markets. Along with unfairly applying legal laws to foreign business that would not equally be applied to their SOE's in the same industry. The Chinese SOE board also works with the economic advisers on how the impact of any currency changes will affect the SOE's ability to compete in foreign and domestic markets. This mindset of cartel activities can also be seen by the first draft of China's Anti Monopoly law which allowed for SOE monopolies]
 Since the essence of the cartel's strategy is to restrict the total production of their product below the levels the member firms would produce if left to themselves (that is, to produce at levels where the marginal cost of production is well below the price per unit), the cartel must also work out some mutually acceptable formula for assigning maximum production quotas to each firm in the cartel and then find some way to enforce the output quotas against firms that might want to grab a larger share of the profits by producing at higher levels.
[We have seen China use their SOE's in dumping type tactics that do not allow for fair competition. This is done by the SOE banks giving massive amounts of loans to the SOE's to keep producing high levels of stock. While the SOE's cannot pay the loans back and they have to create a dumping tactic just to keep themselves a float. Once they keep dumping because of uneconomical loans from the SOE bansk to the SOE's, it creates hardships and impossibilities for competition domestically or internationally. This is because foreign companies have to abide by normal economic principles of maintaining a nominal loan process and pay back. While domestic SME's and PCB's cannot get the same loan breaks that the SOE's do. As the SOE board will find a way to push the SOE's. Whether they have to keep loaning them money to float, Conglomerate them, or shut them down and allow another SOE to take over their market shares. This in itself is a way for setting quotas and maximizing profits for the SOE's. As the dumping tactics as long as the government can make the currency and SOE strategy look legitimate they can keep it going.]
 (Lower cost producers in the industry generally would be able to make even larger profits by cutting prices and expanding their market share than by cooperating with the cartel.) If the cartel agreement were a legally enforceable contract, then the government and the court system could be counted upon to do the enforcement job for the cartel, and in many fascist and authoritarian countries (as well as a few present day democracies with recent histories of authoritarian government) this has in fact historically been a general practice. However, in the United States, Great Britain and most other advanced democratic capitalist states, cartel agreements are normally either unenforceable in the courts or are held to be positively illegal as "restraints on trade" that are contrary to the public interest because of their adverse effects on consumers.
[However, in China they keep allowing their SOE's to conglomerate and take more market shares by buying up and entering smaller SOE's market shares instead of allowing that going under's SOE's SME's or PCB's competition to take over the market shares and be able to grow to a healthy economic level so as to check the SOE's dominance and cartel strategies.]
Even in those countries that outlaw private cartels, however, it has often been possible for politically powerful but economically endangered high cost producer firms in a few industries to secure the "cartelization" of their industry in a back-door fashion. Under the guise of establishing a government regulatory regime that allegedly will protect the interests of the consumer through establishing price controls, assigning exclusive market areas to prevent "cut-throat competition," and excluding "unqualified" competitors by restrictive licensing requirements, independent regulatory commissions in fact have often functioned mainly to serve the economic interests of the dominant high-cost firms in the industry being regulated.

as id cited on this blog post
Time to ride the Harley and Chase after Jets.

This analysts should be backed up with proper cites. However, it was just an exercise of my common sense skills to see if I could pull up thoughts under the scope of another definition and apply it. Meet me on Route 66 lets see if your old bird can still beat my old stallion.