Skip to comments.Two Cars and One View
Posted on 01/25/2004 5:35:32 AM PST by ninenot
Of all the sights he witnessed on an eight-day trip this month through fast-changing China, it was a new subcompact Chevy that gave veteran Congressman F. James Sensenbrenner Jr. the greatest reason to come home feeling disgruntled.
Chevrolet designed its zippy Spark solely for domestic Chinese buyers and builds it in its factories on the mainland. But no sooner did the Spark arrive in showrooms last year than a strikingly similar model called the Chery QQ appeared on the nation's crowded streets under the trademark of the rival Shanghai Automotive Industry Corp., an indigenous Chinese automaker.
To Sensenbrenner, a Republican from Menomonee Falls who is one of the most vocal congressional opponents of free trade with China, the Spark-QQ controversy only confirmed that Chinese companies flagrantly disregard American trademarks, software patents and intellectual property rights.
General Motors Corp., Chevrolet's parent company, is investigating the matter, a GM spokesman said. SAIC, one of the success stories in China's fast-growing auto market, denies it stole Chevy's design.
"If you didn't have the name tags on the car, you couldn't tell them apart," charged Sensenbrenner, who visited a GM plant in Shanghai. "It's such a knockoff that you can pull a door off of the Chevy Spark and it fits on the QQ - and it fits so well that the seals on the door hold. But there's no air bag on the QQ."
The two look-alike models also illustrate the narrow limits of Washington's influence over U.S.-China economic ties.
Ever since the administration of President George W. Bush's father more than a decade ago, the United States has kept pressure on China on the issue of product piracy. And yet, according to Sensenbrenner, who chairs the House Judiciary Committee, which oversees enforcement of patent rights, "The Chinese steal intellectual property right and left."
Political analysts in Washington concur that the U.S. has relatively restricted leverage over China on free trade and job issues. Reasons vary from China's authority as the emergent political anchor of Asia to its newfound influence as an industrial powerhouse and its role in financing America's surging debt and deficits.
China's export juggernaut has become a vexing political quandary in the industrial states of the Great Lakes and the Carolinas, which in turn represent some of the key battleground states in this election year. Elected officials frequently issue tough-sounding statements that charge China with unfair trade practices, analysts say, because they don't want to appear entirely powerless while their districts bleed jobs and voters lose both income and health insurance.
Sensenbrenner, who has a record as one of the most protectionist members of Congress when it comes to China, is seldom at a loss for words on the issue. But when asked in an interview what American politicians can do to preserve American jobs, he replied: "It is a very difficult question."
With China's entry into the World Trade Organization, which lowers trade barriers for its 146 member nations, "we let the horse out of the barn," the congressman said.
Imports of made-in-China electronics, auto parts and shoes have created the biggest trade deficit that the U.S. has ever accumulated with another nation. Manufacturers have eliminated more than 2,250 jobs in the U.S. on average each day throughout the last 41 months even as many of those same companies added work in low-wage nations such as China, India, Vietnam and Brazil.
For two decades Congress has voted consistently to keep trade ties with China wide open, Sensenbrenner said, because lawmakers heed the lobbyists who work for big multinational corporations that profit from China's vast market and its cheap labor.
"The large multinationals want very badly to open the Chinese market," he said.
Referring to Washington's political establishment, Sensenbrenner said: "They have not been representing the interest of the small- and medium-sized enterprises. Wisconsin is full of SME's and they are the ones being clobbered by trade with China."
Congress paid for Sensenbrenner's Jan. 5-12 tour of the mainland so that he could "complain" to the Chinese about a list of what he calls unfair trade practices. High on his list is trademark infringement. "I was over there to see how the Chinese could get away with stealing intellectual property without any consequences."
Sensenbrenner "seldom goes to China," according to his spokesman, Rajesh Bharwani. "Prior to this trip, he last went to China in 1997 or 1998 on a science trip because he was chairman of the House Science Committee at that time." Sensenbrenner traveled to neighboring Taiwan and Thailand last year to insist that local officials clamp down on music and movie piracy.
Sensenbrenner goaded the small-business community to remain vocal in pressing its case to Washington. American consumers can take action by minding where they spend their dollars, Sensenbrenner said.
"American consumers will have to recognize their responsibility. The more dollars we send to China, the more money they have to do their economic renovations," Sensenbrenner said.
As for government action, complaining is one of the remaining avenues of action for the U.S., Sensenbrenner said, while adding that American firms seldom file formal complaints with either the WTO, the global trade rules-making body, or the Beijing government.
"They are afraid of retaliation by communist officialdom there," he said. That leaves the Chinese authorities unaware of the extent of the problem, he said. "Their answer is: 'What's the problem? No one's complaining.' "
One of his biggest worries is that Chinese factory managers are pirating American software to make their plants as efficient as those in the U.S., Japan or Western Europe. And that makes software theft a Midwestern manufacturing issue, he said.
"If China's output becomes as productive as the rest of the world, there's going to be no manufacturing left in the rest of the world," Sensenbrenner said. In Mexico, long considered a low-cost rival to U.S. production, President Vicente Fox, "on his own volition, complained bitterly about the Chinese pirating jobs out of Mexico," the congressman said.
Beijing understands that trademark theft is a major problem, but lacks the courts, police and legal disincentives to shut it down, said John Holden, president of the National Committee on United States-China Relations, a non-partisan group that promotes Sino-U.S. dialogue.
"The Chinese cracked down on pirated DVD production in a big way recently," Holden said. "Guess what happened? A lot of it moved to Taiwan."
For many Midwest industries, however, trademark piracy remains a secondary irritant to the real competitive threat, which is the globalization of labor.
Analysts attribute China's ascent as an economic powerhouse to not only its inexhaustible supply of cheap labor, but also the high quality of its goods, the efficiency of its factories and the growing sophistication of its managers.
Against China's entry-level wages alone, U.S. workers can hardly compete.
"It's not just very hard to compete with 27 cents an hour. You cannot - you just cannot - compete with 27 cents an hour," Sensenbrenner said, referring to common Chinese factory pay.
It doesn't matter which party makes policy in Washington, Sensenbrenner said. In fact, the last seven presidential administrations have taken pains to avoid confrontation with China.
It came as little surprise to Sensenbrenner that Democratic presidential candidate Dick Gephardt took the most stridently protectionist stand to save jobs, winning key trade union endorsements. But the Missouri congressman dropped out of the race last week after a weak showing in the Iowa caucuses.
"Gephardt was the most protectionist in nature and he was the first to bite the dust," Sensenbrenner said.
Congress is hardly alone in conceding the limits of its authority.
No easy solutions
The U.S.-China Business Council, which acts as the premier trade group for Sino-U.S. trade, bluntly says the changes to the global economy are so unprecedented, deep and recent that they defy easy remedy.
"This is a large structural change," said Robert Kapp, president of the Washington-based lobby group.
"I don't have the answer to it," Kapp said. "I don't think Congress has the answer to it. I don't think the White House has the answer to this. And probably neither does Sensenbrenner."
As traditional labor-intensive work goes abroad, non-political observers argue that the answer lies in training U.S. workers for the digital economy.
"You don't want to stifle innovation," Holden said. "You encourage it to stay here. And you protect intellectual property rights. Stuff will get invented here and protected here because we can protect it. And that's a big advantage that we have."
Sensenbrenner paid a visit to Chinese central bankers to pressure them to unpeg their exchange rate, which China holds at a steady 8.28 yuan to the dollar. Echoing complaints heard across Washington, Sensenbrenner says the low exchange rate gives the Chinese an unfair trade advantage by putting a discount on their exports. Politicians have spent months calling on China to float its rate.
Outside of political Washington, however, the exchange-rate argument carries little weight. Few think it will make much of a difference because China will still keep its inexpensive production costs. China imports 60% of the raw materials it needs in its factories and a stronger yuan means that its raw material costs also will fall if its currency strengthens, meaning its factories can produce even more cheaply and offset the export costs.
The currency issue is a political sideshow, Kapp said.
The difficult truth, observers such as Kapp explain, is that America's economic role in the world has changed. Third World nations, long relegated to second-class status, are pulling themselves out of poverty by taking the jobs that advanced economies such as the U.S. once dominated.
"I have got companies that say we're doing this work overseas because those workers are more highly motivated, that they are more productive," Kapp said. "I was actually quite sobered and shocked to hear someone say this to me."
Such comments by U.S. entrepreneurs breach a taboo in the U.S., Kapp said, where workers tend to believe that no other workers are as diligent and motivated as they are and that they suffer mainly "just because the playing field isn't level."
"China is a reminder that the supremacy of the U.S. after World War II, which the 60-year-olds of the policy-making establishment grew up in as kids, is turning out to have been a moment in time that is not permanent," Kapp said.
Call it madness, call it treason .... you won't be wrong either way.
"The foreign students invariably will go back to their countries with genuine educations"
That could be, but it's not a guarantee. More likely it will be a prof returning with gifts to the country of his ancestors. US univ and colleges have become diploma mills in essence. Cash flow pressure drives grading. I've seen 1000s of BS resumes and less from PhDs. Most of them look like they were written by FReepers doing a parody of DU job seekers. The importent part regarding grads is that the bulk of the PhDs don't match expected capacity promised by the credential.
It's the person that matters and the US still leads in innovation. That's why we're copied.
OK. Ask me.
I drove a 1984 Thunderbird for 250,000 miles and then the odometer broke. I might be still driving it except for a lady who turned around to scold her kids and rear-ended/totaled me.
Exaggerators like you chafe me just a little.
And if they have ANY intelligence, it won't be in tool-and-die or machining.
While I agree with the tenor and conclusion of your post, it's also been demonstrated (multiple above posts) that that "upper 5%" in India and China are cheats, liars, and scoundrels.
Frankly, I am not too worried about competing with them in the long run.
There you go again.
Look. Your claim that their "average" college student is brighter than our "average" student is defensible based on your testimony that only the top 5% of chilluns get into college over there.
I'll accept that.
But you just can NOT claim that motivation is a co-inhabitor with IQ.
Some of the very brightest people I know are absolutely slothful--they get away with it because they have the conclusions before most people understand the second predicate...
Yes, there's no doubt they must perform once here and they do well. I never intended to intimate that they were not very bright peoples, of course.
Speaking of genuine educations I ran across an interesting article from The Tribune, December 1, 2003, Chandigarh, India
"Competitive exam mania, It's the quality of education that suffers," by Pratap Bhanu Mehta
There's no mention of cheating here but it describes a real problem as indicated by the title. Those who do write about cheating mention the "competitive exam mania" as the likely reason that some do cheat.
On criticizing the "competitive exam mania" the author opines, "It is not surprising that even distinguished institutions like the IIMs and the IITs , with all the wealth of talent they receive, are not able to define their respective fields of knowledge; they are recognised as reliable suppliers of particular types of students, but not as sites of innovation."
Oh.. this suggests that India's education would not exactly be perfect even with zero cheating on exams. I bet we could fix all our problems before they (and, especially, China!) could fix their problems if we could turn this into a 1960s moon landing-style program inspired by this technology "sputnik" scare.
Conservatives also tend to be people who study history. History has shown that the winners of every major war and most minor ones for the past 150 years have been the countries that had superior industrial production. Our own history shows this fact. The South was a vocal proponent of free trade and believed that British and French manufactured goods were better and cheaper during peace time and would still be available during war time. What they found is that free-trade theory has little value when the lead starts flying. One of the reasons that the South lost the War Between the States was an inability to produce needed goods.
History also shows that our Founding Fathers understood the value of having manufacturing within our own country. They used the tariff as a means of revenue collection in part because they wanted to encourage American manufacturing. They also liked confining the power of the tax man to the end of the dock.
Paper-pushers who believe that we will never face a war again and that therefore we don't need domestic manufacturing are as deluded as everyone else who has ever believed in "peace in our time." A supposedly conservative or pro-business attitude doesn't make this folly any less foolish.
Beyond that point, I disagree with your assessment of the differences between American and Indian students. I've known many students from all over the world. They have been sharp guy and gals who work hard, but they are no better than the Americans against whom they are competing. They may seem a little better on average because our average is reduced somewhat by our weakest students, but they aren't the head of every class.
Good point. And South liked cheap labor too :)
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