China's Economic Boom Hits Home

Milwaukee Journal-Sentinel ^ | 12/28/03 | John Schmid and Rick Romell

[ninenot]

Please use your bump-lists. I left the sidebars in because they contain some very good links to very useful graphs.

Contrary to its usual style, the Journal-Sentinel did some good homework here and seems to have a grip on the facts.

[waterstraat]

We are probably witnessing the greatest economic boom in the history of the world because of free trade. We are also witnessing the reversal of american and european power to asia, with the asian peoples being better off since all those jobs and factories are now transfering to asia.

[PokeyJoe]

The US went through a very similar economic adjusgement in the late 50s through the early 80s with Japan.

I think it's about time to learn Mexican. (Spanish in Yankee lingo)

Nothing changes under the sun. Pretty soon, even Mexican will complain about Chinese taking THEIR jobs. Won't that be a hoot?

[ninenot]

"Free Trade" does not cause economic booms.

Demand causes booms, unless every textbook on the topic is dead-wrong.

Demand is generated by two things: population (that is, the number of people) and available cash.

Since US factory workers will soon have no cash, the recession which your post seems to ignore (that's 2000-present in the manufacturing sector) will continue and get worse.

[ninenot]

In the period (roughly) 1950-1980, the percentage of GDP which was manufacturing-sector in the USA went from 27% to 22%. That was an adjustment which would have continued its slope had Reagan, a very sensible President, not have imposed import controls on Japanese items.

The Japanese, also being quite savvy, set up auto plants in the USA which provided assembly and some local procurement of OEM parts.

Then mfg. % of GDP stabilized around 20% until the late '90's, when the Clinton/Gingrich/Fortune 100 group took over and the gates opened.

Manufacturing (2001, latest numbers available) is now about 14% of GDP (the CIA 'factbook' places it at 18% in 2003, which may or may not be accurate.) However, for the VERY FIRST TIME since 1947, manufacturing's dollar sales (constant dollars) went down--in that year, by 6.6%, or about $100bn.

BTW, the Mexicans have already lost a significant number of jobs to the Chinese. Why do you think the GWB administration is playing with 'universal legalization?' Vincente Fox knows the score, too, and can't keep his population happy with Fortune 100 firms closing plants in Mexico.

[waterstraat]

The asian world is in the biggest economic boom in the history of the world. Make no mistake about it. You are also witnessing the greatest power shift(from america/europe to asia) in the history of the world.

[A. Pole]

She spends her evenings in the factory dormitory in the smoggy industrial boomtown of Dongguan, sharing a room with five other migrants from the inner provinces and reading romance novels. Starting at 8:30 a.m., she works in a crowded concrete complex of 600 workers that clangs at capacity. Not counting breaks to eat, she puts in 10-hour days, six days a week, helping build kitchen appliances sold in U.S. stores under the Nesco brand. She makes 27 cents an hour.
[...]
Deng's post-reform nation has lifted a phenomenal 400 million people out of poverty, the World Bank estimates. "This," said former U.S. Trade Representative Carla Hills, "is the fastest change in human history."
[...]
According to Beijing's economic master plan, China will double its $1.236 trillion-a-year economy in the coming decade. In the following 10 years, it will double it again, Cheng said. By then, China will attain an affluent, or xiaokong, society after more than a century of famine, civil war, Leninism and occupation. Cheng knows the "20-year strategy" sounds like daydreams outside of Asia

It is great that the largest nation in the world has chance to move out of poverty in 20 years! But while this is going to happen, United States need to have the "economic master plan"/wise national policy too. Blaming unions, lazy workers, welfare/safety net, regulations and public schools is not enough.

Waiting for the "free market" to make a correction will be way too expensive - the trade can be balanced by the unregulated market through the collapse of US dollar to the level that will make Chinese imports too expensive. It is not feasible socially and politically.

A mad cow problem is a good ilustration of the folly of free market fundamentalism. Freemarketeers preferred voluntary "ban" on feeding cows with carrion over mandating natural the vegetarian diet. Free market will intervene in the end but in a destructive way.

[Glenn]

Two words worry me about all this: unintended consequences.

One wrong move and we might all wind up scrambling for hard scrabble land on which to grow a subsistance crop.

[A. Pole]

One wrong move and we might all wind up scrambling for hard scrabble land on which to grow a subsistance crop.

Most of Americans live in the cities and do not know how to farm. This is not XIX century when the government was distributing plots of Indian land for free and when majority of population were farmers. At that time each family could subsist without worrying how to pay the bills.

[hedgetrimmer]

What the world is witnessing is NOT free trade. It is manipulation of trade by global socialists and the UN. China is considered a "least developed country" by the UN. They decided in Brussels in 2001 that least developed countries (lcds) should get preferential trade rules and aid from the United States to build their infrastructure and "decrease poverty". Everything that is happening in China is not because they are trading freely, but because the deck has been stacked by the WTO and the UN in their favor.

In the meantime, the US does not get the preferential rules, must give away tax dollars for "poverty eradication" under WTO rules and the Amercian citizen has lost his voice in government because the WTO now makes trade rules instead of elected representatives in government. There is nothing "free" about these events at all.

[sam_paine]

All Zhao Rong's things fit in a duffel, which she stores on her bed with her stuffed bear. This is her personal space, behind the linen sheet that covers each bunk like a curtain....If Zhao Rong has dreams, she keeps them to herself. Asked about her ambitions, she said she doesn't think about her future. Asked whether she wants to have a family, she shrugged. Asked whether she was happy with her job, she said, "It's OK."

I suspect that even the chinese culture of duty to family will not overcome this despair. If the entire wealth and power of the world was to completely shift to China tomorrow, would Zhao Rong keep her nose to the grindstone?

While I don't think the future of American economic dominance is rosy, I also don't think the future of China is destined for unabated progress without some bearing failures in the wheels of superheated progress along the way.

[maui_hawaii]

Pretty soon, even Mexican will complain about Chinese taking THEIR jobs.

If you would have posted that about 3 or 4 years ago your "pretty soon" would be correct.

Maybe you should ammend your statement to make it past tense instead of future tense.

[maui_hawaii]

"maui ponders what waterstraat has been smoking..."

[waterstraat]

?

[maui_hawaii]

If it were not for some other factors (artificial ones), China would be about as cost effective as Mexico...only farther away.

[Redcloak]

Perhaps a good "5-year plan" is on order, eh Comrade?

[maui_hawaii]

We are also witnessing the reversal of american and european power to asia, with the asian peoples being better off since all those jobs and factories are now transfering to asia.

The asian world is in the biggest economic boom in the history of the world. Make no mistake about it. You are also witnessing the greatest power shift(from america/europe to asia) in the history of the world.

Where did that come from? You gotta be smoking something....

[maui_hawaii]

Nah, just a better strategy.

[waterstraat]

If the entire wealth and power of the world was to completely shift to China tomorrow, would Zhao Rong keep her nose to the grindstone?

Probably.

It is not the intention of the communist chinese leaders to have their citizens work less, to become rich, fat, and to spend money on consumer items. The intention of the communist leaders is to make red china become very powerful militarily and economically, so it will be the most powerful nation in the world.

The communist chinese leaders are not getting american high tech, american knowhow, american jobs, american dollars, and american manufacturing just so they can have its people play video games at home.

The chinese communist leaders dont care about removing Zhao Rong's nose from the grindstone.