7 minute read
China Inc. • J. T. Craig
aegis 2006
craig
New York: Scribner Book Company, 2005. 352 pp. J. T. Craig In the midst of America’s global war on terror, and the constant violence in Iraq, it is easy to forget about the other issues that America as a nation must face in our generation. The one issue that looms above all others is the rise to economic dominance that is now occurring in China. Aspects of this problem penetrate the news. Reports of outsourcing, of factories closing, of global corporate giants such as Wal-Mart using Chinese workers as cheap labor, are blips on the non-stop news crawl of the 24 hour networks. The full picture, however, of what China’s rise implicates is almost never addressed, and other than politicians using outsourcing as part of their stump speeches, solutions to the “China problem” are not often discussed. Ted C. Fishman’s book, China, Inc.: How the Rise of the Next Superpower Challenges America and the World, aims to change the lack of knowledge and discussion about how China affects the American economy, and America’s standing in the global power structure. To even begin contemplating all of the ways in which China is growing and thriving, one needs to understand that China has, at a low estimate, 1.3 billion people living there. There are most likely many more people, perhaps up to 1.7 billion people, but they live in rural areas where a census may not reach them. This, I believe, is the key factor in understanding the enormity of China’s potential. The amount of skilled and unskilled labor at the disposal of Chinese companies, and American and other corporations operating within China, is staggering. It is not that the Chinese are the lowest paid workers in the world (they aren’t) that makes them so enticing to business interests, but rather, that “China…sits in a relatively stable part of the globe and offers the world’s manufacturers a reliable, docile, and capable industrial workforce, groomed by government enforced discipline.” The sheer amount of people, combined with the largest urban migration seen in the history of the world (90-300 million people have left China’s farm lands for the cities), and the fact that America, and the rest of the world, are addicted to cheap merchandise to buy, is creating an economic juggernaut unlike any ever seen. The more money that is poured into China, the more we and the world facilitate China’s power. The reason why American manufacturers, along with Europeans and every other country, are being beat by the Chinese is because they have a docile workforce that learns to craft tools, ornaments, cars, etc., with precise skill by hand. It is cheaper to pay a laborer in China to craft a car part, or machine part, than it is to buy a multimillion dollar machine and computer system to do the same job. As the Chinese begin to infiltrate and expand on each potential job market, their skill and quality of work increases. Chinese electronics, clothes, computers, DVDs, and everything else are made cheaper, and of equal if not better quality. Meanwhile, China as a nation has enough people to create the largest crop of technical and science students and workers ever seen. Not only is science and engineering the ideal field for many young Chinese students, the Chinese are also sending out students across the globe, learning from the top institutes, and returning to China, where investment and work opportunities eclipse those available anywhere else. In essence, there is a lot of potential for recruitment of scientists and engineers in China, but the non-Chinese world is losing the opportunity to use them. Rather, we educate them with the best technology, and then lose them back to their home country. The problem is this: America and the world are now bound together with China. To attempt to stunt the growth of China by not investing in it would not stop its economy. Not only does America and the world depend on Chinese products (cheap in price, not in quality) to be able to spend and consume as much as we do, but we are also bound to China by China’s
reinvestment in American debt. China is the largest buyer of American bonds. Essentially, China is financing our consumer spending spree. It is because China is buying our debt that we can have low interest rates. And so on. Conversely, China needs us to spend and be in debt so that it can continue to build a city the size of Houston every month, and continue to buy military technology. What if foreign investments were to suddenly disappear? Fishman writes,
When Asians pull out of our markets, Americans may discover abruptly that interest rates climb and the value of assets…declines…in the worst scenario, the United States’ willingness to fritter away its national wealth to finance private consumption and unproductive government spending would extract a permanent price on the economy.
It is possible that this won’t happen. It would be necessary for Americans to reduce their consumption, to invest in more savings, and for the government to reduce its spending. Combine this with the Chinese slowly moving their currency, the Yuan, away from its ties to the dollar, and things could equalize. However, it seems to me that at this continued pace, the Chinese investing in real estate, American businesses, etc., and Americans needing cheap merchandise to buy, thereby increasing their debt, that this is an unbreakable cycle. This could be good, or bad. Good, because America and China are tied together, and therefore each is dependent upon the other’s continued success to maintain the standards of living and prosperity of its citizens. Bad, because for either to collapse means a negative economic impact on a global scale the likes of which have never been seen. As one reads this book, a feeling of unease and dread overcomes the mind. The sheer amount of statistics, money, and logistics that has become the Chinese juggernaut seems unstoppable. Mr. Fishman does not do much to allay these feelings. The one area that he stresses we must become better in is education. Without drastically altering and investing in the education system there will be no chance to stay competitive with China. One would think that with the amount of money going into China, that there would be a push amongst American high schools to introduce Chinese language programs. However, “a recent count of Chinese-language students in American high schools came up with just fifty thousand, while in China there are nearly as many people learning English as a second language as there are people who speak English as a first language in the United States, Canada, and Great Britain combined.” The math skills and science skills of American kids in high school and college is not much better. There needs to be a push towards science and math education along the lines of the Sputnik era, one that will pave the way for new science and math education standards. This idea is nothing new in our public discourse, but perhaps the threat of China could finally force some real movement on the issue. Unfortunately, assuming that these new standards would happen, I do not think that it would be enough to maintain the status quo of our global power. In the end, it comes down to sheer numbers; they have a billion more people in their country than we have in ours. And their population only continues to grow as the economy does. As Fishman observes, “[I]f per capita incomes in China…were to double overnight, the size of China’s economy would instantly top the U.S. economy…If, however, the incomes of the Chinese up a mere half of those in the United States, a standard of living that the Chinese someday aspire to, China’s economy would be two and a half times as large as America’s.” This simple statistic sums up what our generation of American citizens must come to grips with, and deal with. If things continue at this pace, we will essentially be renters in this world, owing our debt, and our products, to foreign whims, our new landlords. Steps need to be taken to stem the tide of spending, and focus needs to be put on new trade agreements, and education. This will allow us to at least remain the competitive, if not the economic, force we once were.
