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When Everything Is Made in China
Businessweek ^ | JUNE 7, 2002 | Jeffrey E. Garten

Posted on 06/07/2002 4:50:30 PM PDT by mdittmar

Edited on 04/13/2004 2:16:31 AM PDT by Jim Robinson. [history]

During the past few months, Intel Corp. (INTC ) announced a $100 million investment in Shanghai to assemble Pentium 4 microprocessors. Dell Computer Corp. (DELL ) moved its giant PC-making facility from Kuala Lumpur to Xiamen. The provincial government of Shenzhen said it would provide $5 billion to boost its integrated-circuit industry. It's not hard to connect the dots. "China is becoming a manufacturing superpower," Kenneth Courtis, Goldman, Sachs & Co.'s vice-chairman for Asia, says, "and the momentum seems unstoppable."


(Excerpt) Read more at businessweek.com ...


TOPICS: Business/Economy; Foreign Affairs; Government; News/Current Events
KEYWORDS: nwo; unlist
As I unload more and more freight each day marked "Made in China",
I wonder if we are financing our own destruction.

Beijing Time Friday, June 07, 2002 Boeing to Set up Maintenance Company in Shanghai

1 posted on 06/07/2002 4:50:30 PM PDT by mdittmar
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To: mdittmar
Everything does mean everything. Event the Pakistani Nukes are Made in China!
2 posted on 06/07/2002 5:26:34 PM PDT by mikeIII
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To: mdittmar
There is one extremely important aspect of this " Constructive Engagement " policy not mentioned in this article : the profits of these Chinese enterprises go directly into the coffers of the PLA ( People's Liberation Army ), which uses the money to buy high tech weaponry from Russia, North Korea, and Israel.

The PLA furnishes labor to the overseas corporations: prison labor.This means workers in Seattle, who would normally be manufacturing parts for Boeing, are drawing unemployment, or competing with HS dropouts for entry level service jobs.

Major corporations in this country lobbied agressively in 1994 for the right to be part of this Constructive Engagement plan. Did they know what they were getting into ? Yep.Were they worried about the effect on their own employees and on the Nation's security ? Nope.What did they worry about ? Getting paid. They got our government to guarantee they would get paid.

Who was President then ? Who got campaign contributions by the bushel from the US corporations and the Chinese Army ? Thought you'd never ask !

3 posted on 06/07/2002 5:46:52 PM PDT by genefromjersey
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To: genefromjersey
Major corporations in this country lobbied agressively in 1994 for the right to be part of this Constructive Engagement plan.

and they are us.

4 posted on 06/07/2002 5:50:29 PM PDT by mdittmar
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To: mdittmar
Exactly !

Sorry for this paraphrase, but: Not everyone who crieth " Yea ! Yea ! " hath the brains God gave a pissant.

5 posted on 06/07/2002 5:57:59 PM PDT by genefromjersey
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To: mdittmar
Well, what do you expect. They have no minimum wage requirements, no overtime laws, no environmental laws, no retirement and the government factories essentially use slave labor. Of course they can make it cheaper and that's all Americans care about right now.

Well, at least when they pull the rug out from under us we'll have steel and food, thanks to Bush and the new farm bill.

I know conservatives like to scream about those two things but think about it for a minute, when America is one big brain with no production we'll starve. Intellectual property isn't very tasty and can't be worn and you sure can't build a house out of it.

6 posted on 06/07/2002 6:12:28 PM PDT by tiki
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To: mdittmar, johnhuang2
Have you read the original article in Harpers magazine June issue?

Is the approximately 90% of all foreign investment that is geographically located in China's coastal provinces a dangerous concentration?

Yes, but it is not all about geography either. Includes but not limited to... Look around here for more info.

Should Washington take another look at tax and tariff incentives to make the entire Caribbean Basin--Mexico, Central America, and the islands--more attractive to foreign manufacturers?

ABSOLUTELY.

7 posted on 06/07/2002 6:54:48 PM PDT by maui_hawaii
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To: mdittmar
Math (numbers provided by the US government ITA):

exports to Mexico (total): $111,349m
exports to China (total): $16,185m

China only represents 14.5% of the market Mexico represents. That equates to 6.8 times more sales in Mexico than in China.

imports from mexico: $135,926m
imports from China: $100,018m. Thats only one quarter more imports from Mexico, but with about 7 times the benefits.

"But we manufacture things in China to sell to their vastly huge internal markets, hence it is not considered ‘an export’…” as some may argue... click here for one measure

Refering to the above link... 80% of 16.9 million= 13.5 million consumers vs 390,000 in China. Thats about 35 times smaller...consumer wise, US vs China. More investment in Mexico will make it boom, for us.

Hopefully someone figures out that the relationship with Mexico is far more impressive... and beneficial. Yet everyone still seeks his own...

Ford had it figured out... pay the people enough to buy your own product. More investing in Mexico, and importing from Mexico= more exporting to Mexico. Not so with China.

8 posted on 06/07/2002 9:18:33 PM PDT by maui_hawaii
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To: RightWhale, soccer8
bump
9 posted on 06/07/2002 9:21:03 PM PDT by maui_hawaii
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To: mdittmar
The mushrooming investment also reflects the obsession among global CEOs to lower production costs by outsourcing whatever they can to large-scale specialists.

The idea that 'the global economy will lead to each nation specializing in what they do best' is quite a stupid argument. Its something to fight, not promote.

10 posted on 06/07/2002 10:25:18 PM PDT by maui_hawaii
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To: mdittmar
"critical mass"

I don't like the sound of that...

11 posted on 06/07/2002 11:57:20 PM PDT by Tauzero
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To: tiki
Well, what do you expect. They have no minimum wage requirements, no overtime laws, no environmental laws, no retirement and the government factories essentially use slave labor. Of course they can make it cheaper and that's all Americans care about right now.

You are quite wrong. There is a minimum wage in China and it is adhered to by the foreign invested corporations that have set up shop in China. Overtime is also required by law and similarly paid (triple time on a national holiday). Wage and benefits taxes, which include retirement you say does not exist, amount to 64.4% of the paid wage and include such items as housing allowance, unemployment, medical benefit and pension. Again, mandated by law and paid by the foreign invested corporations.

As for your assertion of slave labor, I am not sure if here you comment in jest or you are indeed this seriously misinformed. Working conditions at a companies like Intel, Panasonic and most Western owned foreign corporations are quite nice with facilities and physical working conditions that rival any factory in the U.S. (Actually, complaints from many of the foreigners that go in to build the factories or set up equipment in them is that they are nicer than what the company maintains back home).

Only when you mention that companies in China do not have such onerous envrionmental laws as we have here in the U.S. are you close to correct. Still, as a matter of sound business, no corportation would subject itself to the future risk and liability of having been a gross polluter even if the General Manager was of a mind to try and get away with it - and none that I associate with would.

About the government owned factories of non-national security interest, those are being closed or spun off as private enterprises as quickly as the government can shed them. Most are of the old communist mold with great inefficiency, many more workers than are necessary and with a very large population of retired workers to support with pensions.

With these factories, the government has taken four courses: Sold them to private investers (preferably foreign), sold or handed them over to the people that ran them, closed them outright, or hung on to them because the hardship of laying off so many at one factory would be too severe. In none of these instances is anyone working as a slave. In the worst case scenario, they are collecting very little pay and quite idle in their work.

Certainly not all of China is this way. But when we speak of the foreign corporations setting up shop there, which is at the heart of your comments, this is the way it is. It is not as you have portrayed it.

12 posted on 06/08/2002 12:38:02 AM PDT by BJungNan
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To: BJungNan
LINK

Good stuff here.

another...

And finally here

13 posted on 06/08/2002 9:39:21 AM PDT by maui_hawaii
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To: mdittmar;backhoe;seamole;madfly;Alamo-Girl;amom;Jeff Head;Mercuria;ANNAZ;RippleFire;UN_List;"NWO"

14 posted on 06/08/2002 9:42:32 AM PDT by TaRaRaBoomDeAyGoreLostToday!
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To: BJungNan
The 'slave labor' thing has a lot to do with prison labor...

Other than that, IMO, I think it is a several front problem.

First, OUR corporations, some of them are some real SOBS. The problem is on Wall Street just as much as 'China'. Those corporations often try like crazy to decrease wages to up their profits and some of them intentionally seek out prison or even child labor...thats the real BS.

As far as the assertion that many US companies actually pay more than local Chinese companies... oh yeah. Many Chinese would kill someone to get a good job in the Marriott or something. The conduct of some corporations is good, and the conduct of others, well, not good.

15 posted on 06/08/2002 9:53:20 AM PDT by maui_hawaii
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To: BJungNan
As far as my assertions in #8.

I am not advocating cutting China off from the planet. I am however saying that our investment dollars will be far better used in Mexico, and to our south in general. By jumping straiight into China we have skipped a whole lot of greater economic potential. The growth would be tremendous to our south should we choose to pursue it. It requires a broad, long term plan though.

Secondly though, I am not a fan of the one party controllers of China. There are some people with constructive views on things, but in general the political system is screwed up. The best ideas never make it to the table because the CCP isn't in control of them.

16 posted on 06/08/2002 10:05:30 AM PDT by maui_hawaii
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To: BJungNan
In the end though, a booming Mexico = bigger and more profitable export locations for Asia, China included. China thinks that if the money doesn't go straight to them, it does not benefit them.
17 posted on 06/08/2002 10:16:19 AM PDT by maui_hawaii
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To: BJungNan
Of course, even then, I think China needs much more competition, even in Asia.
18 posted on 06/08/2002 4:06:27 PM PDT by maui_hawaii
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To: maui_hawaii
Besides lower land and labor costs, China has other significant advantages over Mexico and the rest of Latin America, such as working power grids, skilled labor force (particularly for hi-tech), stable political environment (compare China to democratic Argentina), rapid economic reforms, and China's large domestic market. Companies look at all these factors before making their investment decisions. The Chairman of Taiwan's largest chip foundry cited all these reasons for deciding to build chip plants in the mainland several months ago. Mexico simply doesn't have as fast a growth rate for PC's or cars or other important industries as China does. And companies want to be close to where their markets are.

In the overall picture, China is becoming more firmly established in its role as a major player in the global supply chain and as a large market in and of itself.

19 posted on 06/09/2002 12:27:42 AM PDT by latourette
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To: maui_hawaii
The idea that 'the global economy will lead to each nation specializing in what they do best' is quite a stupid argument. Its something to fight, not promote.

Companies will always seek to lower their production costs because their customers will always seek to buy low-cost products. That's the nature of capitalism itself. The old Soviet Union tried to repeal the basic laws of economics like "division of labor" and "comparative advantage," but reality caught up with them. Sure, it's bad if US companies have to resort to Third World workers to provide the low-cost goods that US consumers seem to always demand (Wal-Mart even displaced Exxon as #1 in the Fortune 500 this past year), but China today is just playing the role of "low-cost provider" that Japan, Korea, Taiwan, etc. used to play in the past but can no longer play because their workers' wages have gradually increased over the past several decades as a result of exporting goods to the US. It's easy to denounce China for playing this "low-cost provider" role today but very hard to ask US consumers to stop always wanting to buy low-cost goods, which is the ultimate source of the problem.

20 posted on 06/09/2002 1:45:42 AM PDT by latourette
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To: mdittmar
America needs China today because China plays the role of "low-cost provider" for a wide range of goods that Japan, Korea, etc. can no longer play due to their higher wages. At any given time, America's consumers need some Third World country or other to produce the low-cost goods that contribute to and maintain Americans' high standard of living, which is the highest in the world. All in all, China is increasingly becoming strategically important to America in the most important way possible -- America's very economic livelihood. As such, it's conceivable that over the next few decades America will be more interested in protecting China from external or internal threats than in militarily containing or otherwise being aggressive towards China. There is a historical precedent for this called the Taiping Rebellion which occurred in China about 100 years ago. Some charismatic, Falun Gong-type religious group (whose leader thought he was Jesus Christ) threatened to overthrow the then-ruling Chinese emperor. The Western nations would not countenance it because it threatened their economic interests in China, so they helped the Chinese emperor put down the rebellion. Some Westerners even served in China's army to put down the rebellion. Such a scenario is not inconceivable in this day and age, given China's increasing economic importance to America. With so much Western, Japanese, Korean, etc. investment in China these days, the last thing foreign investors want to see in China is any regime change. With respect to tech investment in China in particular, where the West's computer products are increasingly being manufactured in China, America doesn't want to nuke its own tech factories in China but do the very opposite, i.e. make sure China remains safe and stable for decades to come. Intel's Chairman, Andy Grove, has said that in a few years 80-90% of all computer parts and components will be made in China. What's good for China is good for America, it seems.
21 posted on 06/09/2002 2:14:16 AM PDT by latourette
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To: mdittmar
Of course absolutely dependence on foreign labor, esepcially communist China who wants to nuke us and drive us out of Asia is horrendous and horribly destructive to our national security and economic stability. This kind of dependence is even far more dangerous than our reliance on foreign sources for fuel. There is no appreciable difference, yet whenever TRUE conservatives attack this wholesale dependency THEY are portrayed as lunatics, isolationists, bigots, and even "communists" by their alleged "own". The facts are clear: preferential trade with this totalitarian communist nation has not made it more democratic or free politically (as if this should be the purpose of trade in the first place), but an even stronger, more advanced enemy no less totalitarian and eager to use the fruits of "free trade" with us to blow us to bits. The entire mindless nonsense and insanity of the lie of "global trade" is that it simply isn't global, it's singular: China. If it were truly global as the proponents of profits over patriotism claim, where are all the goods and products made in say: Brazil, Germany, India, or even Canada for example? You won't find any not because these countries cannot produce goods, but because they cannot underbid China's hundreds of millions in child, prison, and "slave" labor or buy enough US Congressmen to make it possible.
22 posted on 06/09/2002 2:29:20 AM PDT by rebelsoldier
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To: rebelsoldier
they cannot underbid China's hundreds of millions in child, prison, and "slave" labor or buy enough US Congressmen to make it possible.

Just to be accurate, 67% of Republican Congressmen voted for China MFN while only 51% of Democrats this. This is not to say Democrats are angels, but that the fact of the matter is that Republicans from Nixon to Bush Jr. have been pro-China trade. It was Bush Jr. who signed off on China joining the WTO and thereby gave China permanent MFN status. The only difference between Clinton and Republicans on China may be that whereas China had to allegedly bribe Clinton to be pro-China trade, the Republicans all voted for China trade completely and absolutely voluntarily. As for "slave labor," Chinese dissident Harry Wu has said that there's about 8 mil. Chinese in laogai prisons at any given time. This is a small percentage of China's overall population. It's true that China has cheap labor but this cheap labor is not necessarily slave labor but just regular average workers who don't happen to make a lot of money by First World standards.

23 posted on 06/09/2002 2:41:54 AM PDT by latourette
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To: latourette
I know both political parties have sold out this nation to foreign interests against our collective best interests for bucketloads of campaign cash, legal and illegal. So what? My interests lie with the long term future of American industrial technology, not any politician's career or party's success. The security and continued stablity of the United States is my concern, not China's ability to mass produce low quality finished goods at low prices, especially when the nation is a self-avowed, military adversary of the US and an economic competitor that violates every damn last one of our mutual trade agreements in whole or part. This doesn't even include the betrayal of this trade relationship in military technology and security terms, which alone should disqualify them as not only a trade "partner", but as a member of any international alliance that includes them as a voting member.

As for China's labor policies, what they classify as volitional labor, would be considered in most civilized societies as abject servitude as I have personally known quite a few Chinese whose vocational paths had been predetermined by government assessment committees and assignments according to their "ability". Furthermore, Harry Wu's revelations were but a tip of the iceberg of subject labor, prison labor, child labor, and labor as penalty (not including prison labor proper). Yet even this isn't really the crux of the issue. Our national industrial base is, and wildly one-sided trade with this one nation to our detriment is the issue. That not only equals a dangerous trade dependency with China, but an undeserved enrichment of a totalitarian society at the expense of other more rational and democratic ones including our trusted and proven allies. We don't need to feed a shark waiting to bite our heads off at the first opportunity.

24 posted on 06/11/2002 10:35:47 PM PDT by rebelsoldier
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