Any complete understanding of the Coming China Wars must begin with this observation: China’s hyper-rate of economic growth is export driven; and the ability of the Chinese to conquer one export market after another, often in blitzkrieg fashion, derives from their ability to set the so-called China Price.
The China Price refers to the fact that Chinese manufacturers can undercut significantly the prices offered by foreign competitors over a mind-bogglingly wide range of products and services. Today, as a result of the China Price, China produces more than 70% of the world’s DVDs and toys; more than half of its bikes, cameras, shoes, and telephones; and more than a third of its air conditioners, color TVs, computer monitors, luggage, and microwave ovens. The country also has established dominant market positions in everything from furniture, refrigerators, and washing machines to jeans and underwear (yes, boxers and briefs).
Given China’s demonstrated ability to conquer one export market after another, the obvious question is this: How has China been able to emerge as the world’s “factory floor”? The answer lies in China’s primary “weapon of mass production”—the China Price. The nine major economic “drivers” of the China Price are as follows:
- Low-wage, high-quality work by a highly disciplined, educated, and nonunion work force
- Minimal worker health and safety regulations
- Lax environmental regulations and enforcement
- The supercharging, catalytic role of foreign direct investment (FDI)
- A highly efficient form of industrial organization known as “network clustering”
- An elaborate, government-sanctioned system of counterfeiting and piracy
- A chronically undervalued, “beggar thy neighbor” currency
- Massive government subsidies to numerous targeted industries
- “Great Wall” protectionist trade barriers, particularly for “infant industries”
In analyzing the nine key economic drivers, I show you that only one—network clustering—is truly legitimate from the perspective of a global economic system that is supposed to be based on free and fair trade. Each of the other eight China Price drivers violate one or more of the many “rules of the trading road” that have been established by organizations such as the World Trade Organization and treaties such as the General Agreement on Tariffs and Trade or that are embodied in international labor and environmental standards.
The broader point that should emerge from the foundation chapter is that by engaging in a comprehensive set of unfair trade policies and by wielding its primary “weapon of mass production,” the China Price, China is enjoying unprecedented rates of export-driven economic growth—and thereby trouncing the competition in global markets. In the process, China is effectively sowing the economic seeds of the Coming China Wars with the rest of the world. And, in the worst “wars from within” scenario, China is also setting itself up for its own environmental, political, and social destruction.
Analizar las fortalezas y debilidades chinas es de importancia para el resto, en nuestro caso para América y Europa. Circunstancialmente, o no tanto, en estos días, en la Comunidad Valenciana, un informe de AVIA, asociación del sector automotriz valenciano, recomienda establecer alianzas y relocalizar parte de la industria en Europa del Este, México o Asia.
El informe es de gran interés, y volverá a ser materia de reflexión, tanto desde el punto de vista industrial, como desde el punto de vista social y educativo.