China's Economic Boom Hits Home

Luo Ge Bei, China - At 17, Lu Zhao Rong packed her teddy bear and a few clothes and left this rice-farming hamlet - a mountain village with no mail delivery and no jobs. "My schoolmates and I went together," she said.

The willowy teen might as well have marched as part of an army - a soldier among the estimated 150 million migrant workers who have left China's vast impoverished rural interior in the last two decades searching for entry-level pay.

This huge unrooted labor force - equal to more than half the population of the United States - has been absorbed easily by China's manufacturing juggernaut. And by all accounts, there is room for many more like Zhao Rong.

From America's manufacturing heartland to Japan's rust belt and Mexico's maquiladora workshops, industrial laborers - and the companies that employ them - will feel "tremendous pressure in the next 10 to 15 years" from the force of China's ascendancy, Dong Tao, Asian economist for Credit Suisse First Boston, testified this fall before a U.S. congressional panel.

China's seemingly recession-proof economy, according to Beijing's government and experts at the World Bank, is on course to add another 20 million low-paying, entry-level factory jobs every year, year after year, at least through 2020.

Even cautious ministers in Beijing speak matter-of-factly about lifting hundreds of millions out of poverty over the next two decades, creating the largest and fastest internal migration in modern history and luring manufacturers from around the world with cheap labor for decades to come.

Halfway around the world in Wisconsin, in the Lake Michigan shoreline city of Algoma, sits another Nesco factory. This one is silent.

Don Heider walks through dusty shafts of light in the plant. He ran it for a while, and he designed some of its tooling before that. The rambling structure covers 88,000 square feet, and Heider can discuss its features in detail.

Here's where the furnace was. That's the old enameling booth. Over this way, the machine shop. Down that ramp is the fabrication area, where huge presses, some nearly two stories tall, shaped sheets of steel into pans for the electric cooking pot known as the Nesco Roaster.

It was a busy place. Now, it's empty except for a handful of workers cutting scrap with torches. Heider was once the plant manager; his responsibility in these last days was to close and secure the factory.

Tossed on global sea

Folks don't come much more rooted in Wisconsin than Drumm, who runs The Metal Ware Corp., maker of the Nesco Roaster and other appliances. A century and a half ago, his great-grandfather settled in Manitowoc, and that's where Drumm remains today.

But China is his manufacturing base. That's where the roaster is made now. These days, four China-based factories work under contract for him to make appliances.

Metal Ware is a speck of dust in the global economy, but the winds that blew that speck to China are the same forces - frighteningly powerful forces, in Drumm's view - that are sending the U.S. trade deficit soaring, decimating jobs across the Midwest and slashing prices at places such as Wal-Mart.

The effects are widespread, from furniture companies heading overseas to tool-makers being driven out of business to suppliers of all sorts being forced to cut prices and jobs amid growing global competition.

China isn't content to dominate DVD players, hiking boots, textiles and TV sets. Beijing is nurturing its stable of next-generation industries to mass-produce software, semiconductors and automobiles. Metal Ware, a small Wisconsin business, is a microcosm of how that national effort is playing out on two sides of the world.

In a modestly furnished conference room at Metal Ware's headquarters in Two Rivers, Drumm, 75, perches on the edge of his chair, fidgets often, and talks about "the hollow pit" that he gets in his stomach when he thinks of how abruptly his company's fortunes changed.

As recently as 1999, Drumm had two factories in Wisconsin humming two and three shifts a day. He plowed profits back into the company that his father and other businessmen acquired in 1931.

His signature product was as all-American as Thanksgiving Day - the roaster - the humble appliance of Drumm's Depression-era boyhood. He spent two decades building a thriving coast-to-coast market for the kettle-like appliance.

It's a "Midwest product," Drumm said, that took off in the '30s with rural electrification and sold well for decades. Metal Ware acquired the Nesco name and tooling in 1981, and in the following 15 years, sales multiplied more than fivefold.

Drumm responded with new machinery and assembly lines at the flagship Two Rivers plant. And he spent $400,000 at the Algoma plant to install a computerized controls for guns that sprayed the roaster pans with enamel at glass-melting temperatures.

Knockoff punch

Precisely because Metal Ware was successful, competitors in China saw an opportunity; Drumm began to see perfect Nesco replicas at half the price.

It started at the International Housewares Show in Chicago in 1998. Usually these trade fairs were a good time to build business contacts; in years past, Drumm rubbed elbows with Wal-Mart founder Sam Walton.

This time was different. Drumm was tipped off that a Korean exhibitor was offering a cheaper product very similar to his prized Metal Ware roaster. Drumm checked it out. It wasn't just similar; it was a perfect duplicate.

In fact, recalled former Metal Ware executive Jim Polzin, who then ran the Algoma factory, the Korean knockoff even mirrored minor defects that were showing up in the Wisconsin pans because the dies in Algoma were being run almost continuously to meet demand.

But the Nesco Roaster wasn't covered by patents, and the Korean firm wasn't violating any trademark laws. Drumm was angry, but he cut a deal with his upstart competitor. The two would join forces. The Korean company would continue manufacturing roasters and Metal Ware would sell them, as well as its own Wisconsin-made roasters, at less than the original price.

Within a year, however, sales were plunging in the face of brand-new competition from still cheaper Chinese models.

Facing business failure, Drumm felt he had no choice but to scrap the Korean arrangement and abdicate roaster production. Polzin was dispatched to China for six weeks, hunting for factories capable of making the roaster. He visited about 15 plants. Getting in was no problem; everyone wanted the business.

Polzin was surprised by the efficiency and modern equipment he saw. He captured what he found on 10 to 12 hours of videotape, which he edited to 45 minutes for presentation to Drumm.

In 2001, all roaster production went to China. In capitulating, Drumm tore up his lifelong strategy that "insured keeping more work in Wisconsin," according to a 1999 company document.

"How can you compete with $70 a month, plus room and board, compared to my employees who make that in less than a day?"

Drumm bristled with exasperation. "What they are making now is what I was making when I started work in 1943: 25 cents an hour."

Metal Ware employed 250 at its peak in 2000. Today, Drumm keeps on about 90, a little more than half in management and the rest in the Two Rivers factory. The Algoma factory is shut, and most of the Two Rivers shop stands idle.

The once-slumping sales of the roaster, however, are soaring - up 150% in unit volume since 1999. But there's a catch. Revenue is up only 5%.

The reason: Thanks to low-cost Chinese manufacturing and relentless market competition, prices have plunged. A non-stick roaster that four years ago sold for about $80 now sells for just under $40.

"And the politician says that's great for the consumer," Drumm said. But if the consumer doesn't have a job, "How can he buy it?"

Some economists would say Drumm's pessimism is wrong, that the U.S. economy is simply evolving, as it always does. They have faith that Yankee ingenuity can invent new work to replace the more than 2,250 manufacturing jobs that were lost on average each day in the past 40 months.

Fast-growing giant

The rise of China coincides with what economists clinically call "I.T.-enabled global labor arbitrage," as if jobs can be swapped across borders like securities on a dealing desk.

George Koo, a Chinese-born business consultant in San Jose, Calif., with the Deloitte & Touche advisory firm, spoke with Confucian simplicity about the borderless global economy. "As naturally as water flows downhill," he said, "products are made by the lowest-cost producer. It's just simple economics."

But the velocity and magnitude of China's emergence has caught the United States and other mature economies off guard. It was only 25 years ago this month that former Communist Party boss Deng Xiaoping launched a "second revolution" that purged the country of the Leninist trappings of its 1949 revolution, in favor of free trade, open markets and economic modernization.

It was also 25 years ago this month that Jimmy Carter normalized diplomatic relations with China, ending decades of isolation and opening the way for China's eventual 2001 entry into the World Trade Organization and the unimpeded flow of China's exports.

In a mere quarter-century, China transformed itself from an impoverished and closed agricultural society to a globally integrated industrial powerhouse.

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."

The raw statistics inspire awe. The U.S. Central Intelligence Agency, which uses one of several yardsticks to measure output, ranks China as the world's second-biggest economy, behind America and ahead of Japan. Economists have begun to speak of a bipolar economic world order, jointly powered by the United States and China - an ironic pairing considering how tensely U.S.-China ties are managed.

The Middle Kingdom - a name used for centuries to reflect China's perception of itself as the hub of the global community - has become the world's factory floor.

It ranks as the biggest supplier of consumer electronics, computer hardware and steel, having outstripped Mexico and Japan. Chinese factories turn out 38% of the world's mobile phones, half the world's cameras and half of its shoes. They assemble 40% of all laptops after making none three years ago.

Only 10 years have gone by since Congress grudgingly approved the 1993 North American Free Trade Agreement with Mexico and Canada. Already China has emerged as a more fearsome competitor than either NAFTA partner.

Last year, China surpassed Japan as the No. 3 exporter of manufactured goods to the United States. This year it knocked Mexico out of the No. 2 spot. According to Federal Reserve Bank statistics, average Chinese hourly wages are less than a third of earnings in Mexico.

Assuming it grows at its current pace, mainland China will supplant Canada as America's leading supplier of manufactured goods by 2006, said Edward Gresser, trade analyst at the Progressive Policy Institute in Washington.

If you count Hong Kong, Taiwan and Macao - three thriving economies that inextricably are linked into China's tightly knit economic bloc - "greater China" will surpass Canada by 2005, he figures.

'Tip of the iceberg'

America's economy churns constantly. And while it has lost nearly 3 million manufacturing jobs in the last few years, the long-term record until now is one of consistent job creation.

That's why the manufacturing downturn that began in 2000 has confounded policy analysts from Madison to Washington.

The economy churns differently these days. Since the Berlin Wall fell more than a decade ago, international trade barriers have been falling like dominoes. And since the latter '90s, the Internet has enabled a new business model for companies to outsource virtually everything. Further, in 2001, China joined the World Trade Organization, the 146-nation body that is dismantling the barriers of global trade.

Trying to calculate China's direct impact on U.S. factory jobs, some labor economists use a theoretical formula. The labor-oriented Economic Policy Institute in Washington estimates that Americans lost 344,000 jobs because of Chinese imports. And institute economist Robert Scott calls it "the tip of the iceberg."

"The job losses are having tremendous downward pressure on wages throughout the economy and prompting firms to threaten to close plants, which they are using to force down wages and having a chilling effect on wages in service industries," Scott said.

China's impact on jobs is bigger than other trading partners, he said. "It's bigger than Japan; it's bigger than NAFTA; it's bigger than Europe."

Manitowoc County, home to Two Rivers, remains more vulnerable to an economic retrenchment than most of the Midwest, said Dan Pawlitzke, the city's economic development supervisor.

Factory work for decades has employed nearly 40% of the county's work force, he said - about triple the national average. In neighboring Sheboygan County, the rate is even higher.

"Forty percent, that's one of the highest in the U.S.," Pawlitzke said. "And what worries me about China is what would happen, God forbid, if we ever fell back to the national average. We'd lose about 27 percent of our work force. Can you imagine what sort of a depression that would cause?"

Where Metal Ware made its roasters, globalization already has hit hard. Earlier this year, consumer-products giant Newell Rubbermaid closed its Mirro Co. cookware factory in Manitowoc, just a quarter-mile from Two Rivers' boundary. The move cost about 900 jobs. Mirro relies heavily on a Chinese manufacturing base, and it also plans to build a factory in Mexico.

The Paragon Electric Co., which invented defrosters for refrigerators, abandoned its Two Rivers plant in the late '90s and moved the jobs to Mexico. Smaller employers have been hit, too. Crescent Woolen Mills Co., which makes high-quality yarn in Two Rivers, has seen sales drop more than 60% and employment shrink from 100 to about 30 as textile and apparel customers move offshore.

Greg Buckley, city manager of Two Rivers, acknowledges such competitive pressures will continue to change his industrial town of 12,649. Buckley worries that Two Rivers is ill-prepared for the transition to a still undefined post-manufacturing economy.

"Our town is not ready for the paradigm shift," Buckley concedes over lunch in the art deco Cafe Alkamye. "This traditionally has been a town that made things. There's still an expectation that durable-goods manufacturing will be our salvation. They want to see another factory."

China, new and old

Those searching for the drivers of China's renaissance can find a catalog of successes: growing managerial sophistication, impressive strides in productivity and automation, an astonishingly high savings rate - 40% of income - a booming middle class, and technology incubators at its universities.

Without mobilizing Zhao Rong and millions of itinerant peasants, however, Asia's "sleeping giant," to use Napoleon Bonaparte's expression, still might be slumbering.

"Let him sleep," Napoleon is said to have warned of China, "for when he wakes he will move the world."

Wide-awake "New China" thrives around coastal cities such as Shanghai, Shenzhen and Dongguan, which are lodestars of manufacturing.

But "Old China," in the rural interior, slumbers peacefully with an agricultural society out of the 18th century. And that provides plenty of incentives for young people to leave.

At Zhao Rong's family farm, seeding is done by hand and harvesting by sickle. Even grandmothers balance bales on yokes on their shoulders to transport grain. Barefoot women scrape the soil with garden hoes. The Lu farm, like others in the small village of Luo Ge Bei, has no car, no tractor, no refrigerator, no heat, no medical insurance and no glass in the windows of their single-room dwellings. They do have electricity, a TV and a telephone.

Zhao Rong's decision to leave was predetermined. "My father went to work in a factory in 1994," the soft-spoken teenager said through a translator.

Her dad, Lu Zhao Chuan, works in the city of Nanhai, where he shares a bunk in a factory dorm. Back at the farm, Zhao Rong's mother, Long Yue Ying, said her husband sends home 600 yuan (about $72) each month and that he gets back to visit twice a year.

Unless they sell their lone pig, the Lu family farm has no income except what Zhao Rong and her father send home. The tiny quarter-acre family farm, with its plot of rice and gaggle of skinny chickens, leaves nothing for extra income.

State-run television, meanwhile, publicizes an El Dorado of opportunity in the coastal cities. Lu Xiao Fei, who lives on the other side of a mud path from Zhao Rong's family, said that television reports prompted both his son and daughter to join the rural exodus.

In the fields, Xie A Wei is threshing green and yellow rice stalks with his wife. Pausing to take stock, he says his ancient region copes well with the nation's breakneck industrial revolution. "Every family sends members to the cities," he said.

In his native Cantonese, Xie A Wei endorsed Beijing's master plan to engineer a new society.

"We know about the WTO. It frees us to export and import. We have no limits," he said.

But China's landmark WTO agreement, which took 15 years to negotiate, also poses a direct threat to the 329 million peasant farmers. It knocks down customs barriers to imported grains from mechanized high-volume growers in North America and Europe.

The weathered farmer nods and smiles. "We don't worry about that, because the Chinese aren't worriers."

Zhao Rong's two sisters also think about leaving one day. But for now, Yan Quing, 20, helps her mother. And Xiao Ying, 14, must finish her compulsory nine years of school - a goal that only 70% of the country attains. If the family all works, they will be able to send their 12-year-old brother, Hao Ming, to college one day. In a culture that values male offspring over female, it's a goal the whole family appears to share.

All part of plan

Much of China's economic approach owes to the work of the Development Research Council in Beijing, a policy think-tank that reports directly to the federal cabinet. The elite DRC inherited the faceless headquarters of the foreign ministry, which moved to bigger quarters in 1997 as China assumed a bigger international role.

Cheng Guo-Qiang, director of WTO and agricultural policy at the council, explained that Beijing plans to preserve its cheap-wage advantage for generations to come with something called the "step-development" theory. Like "The Grapes of Wrath" writ large, it comes down to simple math in the nation with the world's largest labor force.

"Every year, 20 million to 30 million people can move into the urban areas and employers would still keep their low labor costs," Cheng said.

In fact, even if all of China's current industrial workers quit at the same time, employers theoretically could replace every one of them and still have a surplus of rural labor. Nicholas Lardy at the Institute for International Economics, one of Washington's most respected China analysts, concurs that surplus labor so outnumbers demand that "entry-level unskilled wages have been stagnant."

Still, future migration seems all but inevitable. A farmer's average wage, for those who make money, is $100 per year. That makes those factory jobs very appealing: The average urban manufacturing job pays 10 times that amount.

Wages are climbing briskly in the digital industries and on the upper rungs of the income ladder, although they remain well below equivalent pay in mature economies such as Europe or the United States.

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. But he points out that China already doubled and redoubled its gross domestic product in the previous two decades.

He even expects with casual confidence that China will become the world's No. 1 exporter in the next decade, overtaking Germany, Japan and the United States, one at a time.

'Dorm life'

A joke circulates in the big sterile halls where Zhao Rong assembles Nesco housewares: "The Americans watch TV. The Chinese build the TVs."

John Kwok, the man who built the factory where Zhao Rong works, relates the saying. To his workers, it means that Americans allow themselves more leisure than the Chinese would dare.

That start-up spirit defines Kwok's sprawl of factories, offices and warehouses. Overtime is a daily standard. Some applicants refuse job offers without assurances of overtime.

In hall after hall, there's not a single piece of idle machinery. Cascades of orange metalworking sparks fly off milling machines. The din forces Kwok to speak loudly:

"In the U.S., protective goggles are required," he yells, gesturing at his workers without eyewear. "Over here, we don't."

The boyish-looking Kwok, 56, is a pioneering hustler in the Wild West of the Far East.

In 1980, he joined the first wave of entrepreneurs into mainland China. He witnessed the manic quarter-century boom from a factory that he rented to make appliances under contract for other brands.

Before China opened itself to the outside world, Kwok was running a similar factory in Hong Kong. But Hong Kong's labor costs were on the rise. "It took months to hire people in Hong Kong, and it's very expensive," he said. "When China began to open the door in 1979, who came in first? The Hong Kong people. Why? Because in Hong Kong, there's a lack of labor."

Like many in Hong Kong and Taiwan, Kwok was born in mainland China. He hails from the southernmost province of Guangdong, where Deng designated some cities as special economic zones. Kwok knew firsthand that the mainland swarmed with motivated workers who could be trained within a week.

"It's easy to get labor," Kwok said. Chalk signs hung on factory gates in the region advertise openings as they come up. Applicants toting suitcases can walk in off the street.

After Kwok outgrew his first factory, provincial officials helped him build a much bigger compound by liberally dispensing business licenses and construction permits. Kwok also won tax breaks on earnings and export fees. And he still can commute back to Hong Kong in less than two hours in his silver executive-class Mercedes.

Teenage women find work easily in electrical and technology trades because, in Chinese factories, they are known for having nimble, patient fingers, just as young men are in demand for metal fabrication because of its physical demands. Zhao Rong, like all others, wears a trim blue Panint uniform with colored sleeve stripes that designate her department.

From the minimum age of 16 and up, rows of predominantly young women solder circuit boards or sit on conveyor-belt lines. At Panint, they make computer peripherals, industrial tools, facial massagers and pasta makers - almost anything that can appear with a brand label.

China may have launched its world-changing boom with sweatshops that exploit children, don't pay benefits and ignore high rates of occupational injury. But the latest generation of foreign-owned companies are held to a higher standard, Kwok and others say.

Scores of Panint workers are educated engineers and supervisors who live in the "manager apartments." In the complex's administrative building, Kwok shows a long room of wood cubicles, each with an electrical engineer to insure that products will work safely. Some international technology companies nearby boast health club memberships and other amenities because their American staff gets similar perks.

Kwok and others describe the modern migrant experience as the Cantonese equivalent of college life in an American dormitory. Although, in China, everyone sends money back to their families, Kwok said.

Employers cover meals, housing and a local head-tax that is used to fund a rudimentary health plan. For breakfast, lunch and dinner, a cafeteria occupies the bottom floor of the five-story dorm. Hundreds grab metal plates and line up for steamed rice, vegetables and Cantonese pork.

Up the dimly lighted, whitewashed stairwells are four floors of shoebox rooms: two floors for men and two for women. Incense hangs in the air, and colorful laundry hangs everywhere.

Rooms lack desks, dressers and closets. 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.

And the thin mattresses on the bunks are better than the unfinished wooden floors on which Zhao Rong slept with her family in their mountain village.

Working at the factory, Zhao Rong isn't tethered to farm chores and can visit the pulsating downtown on Sundays. Her dorm mates hail from across China and travel for days by bus to live here. The recreation room across the asphalt courtyard has a ping-pong table and music system.

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."

A growing middle class

Scott Kronick is fond of saying "the American Dream is alive and well and exists in China."

An American who founded the No. 1 public relations firm in China eight years ago, Kronick has studied demographic mood surveys and Chinese consumer attitudes since launching the Beijing office for Ogilvy Public Relations Worldwide.

A sort of Horatio Alger culture has blossomed in little more than a decade with the emergence of a comfortable middle class.

"People who never dreamed of owning a car and house eight years ago now can have both now," Kronick said.

Lardy, the China analyst, says the middle class, which thrives in the cities and their manufacturing precincts, is more than 200 million - a newly affluent segment of xiaokong society that rapidly is approaching the size of the entire U.S. population.

Surveys show that most folks expect to enjoy a happier, healthier life than their parents. Political analysts in Beijing and Washington believe the Chinese, who protested slow political reform in the 1989 Tiananmen Square massacre, are willing to tolerate an authoritarian, one-party government as long as the "communists" maintain the national optimism.

The technology boom of the late '90s never petered out here. Universities never stopped incubating technology firms for listings on the Shanghai and Shenzhen stock exchanges. Starbucks shops abound, and so do bookstores with the latest Harry Potter novels and shelves of faddish management treatises translated from the American originals.

The optimism is infectious. First-time business travelers speak of dazzling opportunities in the East. That's of little surprise. Average manufacturing earnings grow three times faster than the overall pace of the economy, which already moves at an annual 9% clip, according to a study by Rockwell Automation.

"It's totally inspiring to be around these people," Kronick said. "People are upbeat, ambitious and can feel the energy."

Pearl River Delta

The tangle of inland waterways - akin in size to the Texas panhandle, and formerly full of fishing villages - now harbors China's greatest locus of industry as well as the world's busiest cluster of deep-water shipping ports.

Starting from the pulsating twin cities of Shenzhen and Hong Kong, hours of industrial haze and generic factory blocs radiate outward along the delta highways with hardly a glimpse of the ancient green rice fields that used to cover the fertile region.

Zhao Rong works in the delta city of Dongguan, best known for its exponential pace of sprawl. She is one of 4 million migrant workers in the city's 21,200 factories.

According to the city's Development Planning Bureau, Dongguan's output surged 18.4% last year, twice the national average.

Nesco ovens from Zhao Rong's factory helped Dongguan's municipal exports surge 25% to $23.7 billion in 2002.This one city alone makes 37% of the world's disc drives and many of its scanners, monitors and printers. The export trade is counted in 40-foot steel containers, and Kwok said his plant alone has been known to fill and ship as many as 30 containers in a single week.

Non-Chinese keep pouring investment into Dongguan. The country's reputation for kickbacks, payoffs and petty corruption hardly deters them. Last year alone, the city pulled in a breathtaking $21.4 billion from abroad, city records show. That torrent of capital helped the nation garner more direct foreign investment than any other country in a single year - $52.7 billion - pulling China ahead of the United States for the first time.

"China desperately needs to feed its people and grow its economy," said Robert Kapp, president of the Washington-based U.S.-China Business Council.

Anger, and closure

The television at the Wisconsin home of Dan "Dusty" Moore was showing a John Wayne movie as he sat in his living room at noon. Moore is a bitter man.

The United States, in his opinion, is going to hell. Greed rules. Fools run corporations and the government. Insurance companies manipulate things behind the scenes.

He's felt this way for a while, and losing his job at Metal Ware's Algoma factory has done nothing but reinforce his perspective.

He reacted angrily later when told that workers at Metal Ware's Chinese plants typically earn 27 cents an hour.

"I thought they were making a buck an hour at least. Twenty-seven cents an hour. Who's making all the money?"

It "makes me want to overthrow this government and give it back to America," he said.

Laid off in February 2002, Moore restored old cars in a friend's garage for about a year. Then the friend decided to do something else, and Moore was out of work again. His employment prospects aren't bright.

He has a high school education, no technical training and a partly disabled right hand, the result of an industrial accident 11 years ago. The idea of studying for a new career at this stage in life strikes him as ridiculous.

Moore isn't starving. His house in Algoma is paid for, and his wife works. But the loss of the $10 to $11 an hour he was making with Metal Ware has pinched the household finances. His savings have been drained by insurance bills that Moore calculates at $14,000 a year.

"I've got to get a job that pays 20 bucks an hour just to pay my insurance," he said. "I'm going to have a T-shirt made that says USA on it and then 'Made in China' underneath it."

At Algoma's Metal Ware factory, Heider moved toward wrapping up the shutdown and wondered about the future - the country's and his own.

He's 49 years old, and for the last 30 he's been a tool-and-die-maker. It's pretty much all he's ever done.

But the more that companies such as Metal Ware reduce production here, the less they need toolmakers. Heider already has seen this. He used to work for a firm that made tooling for Mirro Co. and its now-closed plant in Manitowoc. The shop also made tooling for Regal Ware Inc. and the West Bend Co., both of which shrunk amid overseas competition.

Now he doubts he'll last until retirement in his field, and he doubts the manufacturing jobs the country has lost in the last few years will ever come back.

He walked through the factory, past a sign that said, "If You're Not Proud of It, Don't Ship It." The place looked ghostly.

"You think about everybody you worked with," Heider said. "You think about what you did over the years, what happened here. But there isn't much use to that."

He said the company would try to sell what machinery is left, but he isn't optimistic about the prospects.

"There's no market for it," he said. "Nobody wants this stuff. This stuff is a dime a dozen now."

As Heider spoke, his job was just about finished. Soon, no one would be working here, not even at shutting the place down.

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.

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.

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.

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.

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.

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....

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.

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