Change the World - Why China Wins

With this episode in my series inspired by World Changing, my random stop in the book finds a section entitled Why China Wins. It’s well understood that China has become an emerging economic super power. According the book, “China is rapidly becoming the world’s factory. By one measure, China is responsible for thirteen percent of global economic output, making it the size of Japan’s, the third only in size to the United States and the European Union.” And they’re just getting started. China is one of the only countries still growing in the midst of a global economic recession.  We all know that Walmart is the largest retailer in the world, but do we know how much of the product sold on their shelves are produced off shore? According to World Changing, it’s as high as seventy percent, and they do more business with China than Russia and the United Kingdom.

So what makes China such an economic powerhouse? One primary reason has to do with the fact that the goods they produce are done so economically and with increasing quality. At one time, print on the bottom of a product that states - Made in China - was a sign of poor quality. But that’s no longer the case. For more than a decade, China has pegged it’s currency value to that of the US dollar. As the dollar value fluctuated on global markets based on perceived economic strength, the Chinese yuan moved up and down to match. As the Chinese economy increased in strength, that fixed exchange rate meant prices remained low in comparison to US buying power. In 2005 China recalculated the conversion rate, but maintained the peg.

Many Chinese manufacturers provide food and housing for employees, and even with a growing middle class, the Chinese cost of living is amazingly low compared to that of the US. The average factory worker earns one hundred dollars per month. Although that sounds incredibly modest, it is significantly better than the unbelievable poverty and back breaking work of rural farming - usually the only other option for most citizens.

Illegal immigration is a hot issue here in the US, but the Chinese have a similar situation with their system of residency permits. Rural migrants are not allowed to live in urban centers where most of the growing factory jobs are. Undocumented workers from farms are moving to cities and willing to work under harsh conditions out of fear that they will be reported. It’s nearly impossible for those on the outside to know which workers are legal and which are illegal. It leads to circumstances where Chinese companies play on worker fears and take advantage by paying lower wage, demanding longer hours, and expose them to hazardous environments.

Workers and the environment pay a steep price to keep the cost of goods down. Many environmental regulations are no enforces. Which would be bad enough if those regulations were stringent, but they are not. To maintain the country’s phenomenal growth, a new coal fired power plant is brought on line every seven to ten days. China uses more coal than the US, Japan, and Europe combined. In many ways, by exporting our manufacturing base to China, we’ve also exported our carbon, our acid rain, our air pollution, and our green house gas emissions. Chinese air and water quality is some of the worst in the world.

Even though there are serious environmental and societal concerns regarding their frenetic growth, China is beginning to take responsibility for their impact. Recent announcements suggest that they are well on their way to building one of the largest solar installations, replacing coal burning power plants with cleaner gas burning plants, and building cleaner coal burning plants. Right now, while we debate cleaner coal facilities here in the US, their newest plants are already more efficient and produce less pollution. Many Chinese firmly believe they are the next great super power and are adamant about securing the resources they’ll need to create the world’s largest middle class. If they can maintain their double digit expansion, it won’t be long before the US competes with them for everything. We shouldn’t be blindly turning to China to be our primary debt holder and manufacturing base without considering the consequences.

What do you think about how we've exported so much of what made the US great offshore?

Written by Kevin O’Donnell, fundamentalist, at thread collaborative. To read more on similar subjects, please visit his web site here. Also, check out his previous posts in this series - Introduction, Buy Better Clothes, What’s the Big Deal With Portland, Green Facades, Cotton: The Fabric of Our Lives, Tool Sharing, Fog Catching, Energy Conservation, Cradle to Cradle Protocol, DIY Culture, Buy Local, Certifications, Polar Doomsay Vault, and Greenwashing.