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Sep 20

Will China re-evaluate its currency fix America’s employment problems?

Written by guest on Monday, September 20th, 2010 at 5:54 am
Filed under:-mini-posts, economy, Opinion | Tags:, , ,
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This week has been contentious week between China and the US. Timothy Geithner came out and blasted at China for undervaluing its currency which hurts American Jobs. Leading the charge, NY times has been the loudspeaker of this Anti-China effort.

http://www.nytimes.com/2010/09/18/opinion/18sat1.html?ref=editorials

http://www.nytimes.com/2010/09/19/weekinreview/19chan.html?ref=world

Yes it is true that there’s a really high trade deficit from US to China. However, it is easy to point to China as the scapegoat in an election year to point the problem on others. However, does currency re-evaluation would fix the problem? According to history, no. Remember the plaza accords when US complained to Japan about their trade deficit problems? After Japan ‘re-evaulated’ its currency to the US, the trade deficit was not eliminated. In 1986, trade deficit was 55 billion, 1987-56 billion, 1988 51 billion, 1989 49 billion, 1991 41 billion, 1992 49 billion, 1993 59 billion, 1994 65 billion. While trade deficit did decrease in the short term, but was increased in the long term. Talking about currency re-evaluation, China changed its currency from around $1 = $8 rmb, to $6.8 rmb. Did trade went down? No.

The problem with trade deficit in US should not solely blamed on China, rather the problem lies in US companies abroad. Would starting a trade war with China by putting up tariffs an answer? No, other countries would simply pick up the trade surpluses that China once have. Take the clothes export business for example. Made in China exports from Textiles was 70% of its imports in 2005. After the RMB evaluation in 2006, imports from Chinese textiles dropped to around 40% in 2009. However, many other countries like India, Vietnam and Bangladesh picked up what China left off. You barely see the jobs in the textile industry came back to the US.

Other countries like Japan and Germany have trade surpluses despite being a developed country. US can follow their example but corporate interests simply won’t allow it. Creating jobs here means telling many of the Multinationals not to export our jobs and forcing them back to creating the factories here and allow the US middle class to have a decent wage.


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63 Responses to “Will China re-evaluate its currency fix America’s employment problems?”

  1. mike Says:

    “Timothy Geithner came out and blasted at China for undervaluing its currency which hurts American Jobs”

    Since when is it China’s responsibility to help out the US? The Americans should be focusing on the Service sector employment, not sweatshops.

    The reason China adjusted their currency (rightly so) was a domestic issue, not because they pitied the US: since the Chinese economy is overheating, one way to slow it down is to let the Yuan appreciate. Exports will go down across the board, and the GDP will calm down. That simple.

  2. TonyP4 Says:

    The Yuan has been appreciated at least 20% since 2005 from my memory of the 1 to 8 to current 1 to 6 and changes. The major products of two countries are not competitive to each other with agriculture, high tech in US and low-cost consumer products assembled in China.

    $20 per hour wage can never compete with $2 per hour in most cases. So banning China will not create jobs as they will come from other low-cost countries such as India and Vietnam, unless we want to pay $50 for a toaster made in USA.

    As opposed to general belief, it will hurt US more when the Yuan appreciates as the US consumers have to pay more. The worst case is China would dump the US Treasury ( kill the goose that lays golden eggs).

    Why we do all these dumb things? Our politicians/leaders cannot solve the basic problem of our economic mess but it is convenient to find some one to blame for.

  3. pug_ster Says:

    I recall that a few months ago I watched the movie called “The Corporation” http://www.imdb.com/title/tt0379225/ It is an interesting movie which portrays that corporations ‘run amock’ serves only for its interest, not the people, not the country, not human rights, and not the environment. Right now, most powerful corporations are running our Lobbyists and sucking our government dry like a parasite to a host. China is the perfect scapegoat and China don’t want these same parasitic corporations run China’s government.

    Talking about China’s investment. I recall that Schwarzenegger came to China looking to get Chinese money to invest in America to create American jobs. Why not they let them do that? Yet the American government stopped many Chinese companies from buying into American companies. America has been benefiting from China rise. They got virtual no interest loans to from China and they were able to buy China’s goods, and funded the 2 stupid wars. Now the US is trying to bite the hand that is trying to feed them.

  4. No99 Says:

    It’s going to sound a little cold, but part of the reason why there is an economic crisis in the US is because many businesses are simply cleaning out the house. I think a lot of people should try to put themselves in the shoes of a business owner or employer of some sorts. There’s going to be ups and downs, and when it’s that time to slow down, a company will need to let go people in order to both save money and think long term. Not everyone is laid off or fired though. The ones who get to stay aren’t always the ones who kiss up to the boss. Sometimes that happens, but often it’s those who have a record of willing to learn, adapt to changes and varied with skills. Depending on what’s necessary, sometimes it is better to be in the middle of the ladder. A manager, executive or VP has as much of a chance to be let go or cut downed in terms of salaries as a technician. I’m speaking in relative terms, because it always depend on the situation and what the bosses and executives think what’s best for them.

    The US can not afford to be protectionist or blame the other party(s) for their conditions. They really need to be more humble. Overtime, many jobs will move to where the market is, where the industries are, where the production is at, the manufacturing and resources. It’s not going to be only China that prospers but also many other places.

    America will just have to keep on competing, which it is capable of. It will have to work harder and possibly in the near future face the reality that they won’t be number one and need to work “with and/or under’ non-American heads. I’m making it more simple than it is, but I think it’s pretty much close to the truth when I say that Americans just need to be more humble and work harder.

    I think there are a lot of people that understands the situation. It’s really unfortunate when people don’t have jobs or enough money to pay for basic living expenses though. Doesn’t matter if it’s the US, China or anywhere.

  5. TonyP4 Says:

    The major problem of US economy is we’ve been living too long in higher living standard we cannot afford. Japan and China loan us too many ‘easy’ money. As the world is getting smaller, many jobs have been lost for ever. We cannot afford the two wars and be a world policeman.

  6. Allen Says:

    Hi guys – just saw this post. I recently wrote on this topic. It’s amazing to see how politicized economics (or for that matter science and religion in general) can be. Sigh…

  7. kui Says:

    霸道不是王道。 It is the way to go down. Constantly planing and launching military invasions and occupations, manipulating politics in other countries, overthrowning govenments and setting up puppet governments, imposing suctions and isolations, stationing its troop around globe……For a country that wants to dominant forever but doesnot want to exam itself or improve itself, America is on the wrong way. Finding a scapegoat and launching an economic war against one of its bankers is no solution. Bush or Obama are the same products of the same system, you get wars and America going downs from them.

  8. pug_ster Says:

    http://www.macuser.com/business/ipod_the_world_traveler.php

    Wen Jiabao mentioned today about how the deficit is totally skewed. In this $299 ipod for example, China manufacturer assembling this ipod made only $4 while US made $163. $136 went to the deficit.

  9. No99 Says:

    Part or most of this issue is finding a scapegoat, but part of it is kind of legit. Especially regarding the quality of goods, it could benefit both sides if China does appreciate its currency. However, I really don’t know how economics work so it’s hard for me to say who is on the wrong end.

  10. Allen Says:

    @pug_ster #8,

    A couple of articles people might want to read. From Wall Street Journal:

    China imports a huge quantity of parts from places like Japan and South Korea, but when those components are assembled into finished goods and shipped to the U.S., all the pieces count as Chinese exports, inflating the U.S. trade imbalance with its most polarizing trade partner.

    A study by the Sloan Foundation in 2007, for example, found that only $4 of an iPod that costs $150 to produce is made in China, even though the final assembly and export occurs in China. The remaining $146 represents parts imported to China. If only the value added by manufacturers in China were counted, the real U.S.-China trade deficit would be as much as 30% lower than last year’s gap of at $226.8 billion, according to a number of economists.

    At the same time, the U.S. trade deficit with Japan would have been 25% higher than the $44.8 billion reported last year, because many goods that China and others export to the U.S. contain parts purchased in Japan.

    The current method of calculating trade data is a headache for senior trade officials like Mr. Lamy. “It makes everything appear more volatile,” he said recently in Brussels. “That creates a political problem.”

    From UCLA:

    Overcounting China exports: Many of China’s exports are actually produced by foreign-invested firms in China, among them many American companies, who then ship these products back to the U.S. for sale. In fact, in recent years, the majority of China’s exports, nearly 60% by value, have been produced by foreign-invested enterprise[10] but have been counted as Chinese exports, thus helping to drive up China’s export figures, even though the reality is that U.S. firms are selling to U.S. consumers. For example, Apple’s iPod is conceived, patented, and designed in the U.S., but is assembled in China by a Taiwanese firm using component parts from different parts of the world. China, however, only receives $3.70 from the wholesale price of $224. Most of the profits flow back to Apple even though the item is labeled “Made in China”[11] and gets counted as a Chinese export. Typically, about 20% of revenues from each mobile phone, and 30% from each computer made in China are returned to the original investors or patent owners in the U.S. and other countries.[12]

    Undercounting U.S. sales: Conversely, due to the same method of calculating exports, the sale of goods and service to the Chinese by U.S. foreign affiliates operating in China are not counted as U.S. exports to China. This figure totaled $86.5 billion in 2005 (latest available) and was 70% larger than U.S. exports in the same year.[13] If these figures were counted as U.S. “exports”, then the total amount of U.S. sales to China would look quite different and the trade imbalance would not be quite so large. Thus are the U.S.-exports side of the numbers in this bilateral trade relationship somewhat misleading and not reflective of the actual balance of commerce. If anything, the primary means by which U.S. firms sell goods services in China is via their foreign affiliates and not via exports, but this is almost never accounted for in the trade debate. Until a better more nuanced method of calculating becomes available, American politicians and citizens alike will have the opportunity to continue to use these somewhat inaccurate numbers to suit their own political ends.

    Above from one of my comments few months ago, so the articles linked are a few months old.

  11. auto hibride Says:

    Well he also plays China card. I think it is still a power and knows how to negotiate their position. China has a say in the world, and in relation with the U.S.. U.S. must understand that China is a superpower and be counted.

  12. scl Says:

    Since multinational corporations benefit from the current trade arrangement most, and they are the real policy makers of the U.S. government (congress is just for show, in case you haven’t noticed.), a trade war between U.S. and China is unlikely to begin with.

  13. No99 Says:

    It’s just a pet peeve of mine to point this out, not related to the post per se. Sometimes, I don’t know why pundits keep saying the American century. It was more like American super hegemony was like a decade or two. The Europeans, particularly the British, were pretty much the only ones who truly had their grip on the world for a century or so.

    It’s just something I want to say, countering American arrogance, that’s all.

    Back to the point I hope. I think one thing people sometimes forget to say is how much is this complaint from the US going to matter if people lose confidence in the American dollar? It’s not that crazy to think that in the near future, another type of currency will become the world’s money. It might not be the Euro or RMB, but I have read about another type of currency unit not tied to any particular country or region.

    I’m going to make the guess, that maybe in a few decades, before 2050, wealth might be relative and more substantial. Like, what’s going to count is not how much paper money or digital values a country has how creative their products and services are. It’s like that now, but it will be even more profound in the future. Innovation is fluid, which means as long as countries keep on developing, competing and maintain a strong network, sooner or later, the quality of services and ideas of a 100 professionals in Haiti ,for example, should be roughly the same as a 100 Chinese professionals and a 100 American professionals. Kind of funny to think about, because it’s going to be so borderless and well-developed in the future that what’s going to matter more is how many people you have. Population, once again, will determine a society’s wealth.

    Hope I didn’t lose anybody there. If it’s too confusing, please let me know. My mind tends to run on.

  14. Allen Says:

    I just wnat to clarify on #10:

    #10 deals with trade deficit numbers and how that can be so misrepresentative when we try to gage multilateral trade in terms of bilateral numbers.

    Sometimes people also talk about America’s currency deficit – or China’s currency surplus. That number reflects not just trade deficit (and hence all the headache described in #10), but in additoin, also the net flow of foreign direct investment into China. When GE or IBM decides to open a plant in China, that investment into China will cause a Chinese currency surplus. When GE or IBM then ships goods made in that plant to U.S., that trade gets counted toward China’s currency when the money paid is converted to Yuan and re-invested in China, even though the money is completely made by a U.S. company and the profit goes directly to the U.S. company.

    I plan to write a post detailing these issues soon.

  15. S.K. Cheung Says:

    It does seem that attributing the entire cost of a product to the manufacturing nation is an over-simplification. It is the most obvious way to measure trade balance (or imbalance), but that doesn’t make it necessarily the best representation of “reality”. That said, its simplicity would seem to make it less susceptible to a “fudging” of the numbers.

    I don’t know if the iPod example is representative of the ratio of manufacturing cost to raw material cost of most of China’s other exports. Perhaps it is a particularly skewed example, or perhaps not. If it is, then whilst she incurs a significant trade surplus with the US using over-simplified numbers, she should simultaneously incur a significant trade deficit with (as listed in the example) countries like Japan and South Korea, if we were to measure trade by counting manufacturing cost and raw material cost as separate line items. Is that in fact the case? And does the case still hold when considering all of China’s end-product exports and raw material imports, rather than just iPods and computer chips?

    It would seem that, while China “makes” many many things that are sold beyond her borders, she is the “creator” of a relatively small fraction thereof. Quite appropriately, the revenue from these products goes to the “creators”. However, these “creators” also incur expenses to the “makers” of those creations. Admittedly, the mark-up/profit margins charged at the point of sale should not be attributable to the manufacturing nation. But the production cost/import cost should be, at least in the over-simplistic model.

  16. No99 Says:

    My friend and I were talking about this recently.
    Well, this is something similar to what Jim Rogers said, as well as many others.

    For the American economy to pick up, either it starts making new things and/or go to commodities. Real stuff, such as agricultural products or minerals. It’s not just because of this Chinese currency battle, but many people have been saying that the US dollar itself is phony as well. There’s nothing backing it except trust, as well as it’s usage by many other countries as a reserve.

    I’ve been thinking the same thing too. Each country is different, but in the case of the US, they are pretty much stuck with either being more cosmopolitan, like keep on growing into a uber competitive, border-less economy and/or dwell into a more resource-driven sector than just services and manufacturing. It does have the advantage of decent land and climate where it can grow and raise almost every type of agricultural product and they do have many unexplored places for many different types of natural resources required in industries.

  17. TonyP4 Says:

    US will be in deep trouble when Middle East no longer accepts US dollar to trade their oil, or no foreign sucker after China is found to buy the US debts.

    US cannot manufacture cost effectively due to the high labor cost, high taxes and regulations.

  18. S.K. Cheung Says:

    It is a catch 22, it seems. Those same high labour costs provide for a half-decent standard of living for those providing said labour. Those regulations provide for some standards under which such labour occurs. And those who have lost jobs due to the poor cost-effectiveness of the US in comparison to other jurisdictions are hopefully assisted by the social safety net provided for by those high taxes. In other places, there are lower taxes but a more porous safety net; fewer regulations and possibly less desirable working conditions; and lower labour costs which provide for lower wages. Which one is better? That’s a tough call, and to each their own.

  19. TonyP4 Says:

    S.K., it is a global economy at work. Let the best country offers the best service win. Using IPod as an example, US provides technology, China provides manufacturing, and commodities/parts from many countries. Apple offers a decent product at affordable prices, and the consumers in all countries benefit.

    When US reaches a higher living standard, they have to let some industries go and concentrate their effort in other industries to keep their edges. However, we have not provided training for the next generation for these jobs. In addition, we try to keep a higher living standard and the two wars that we cannot afford.

  20. Steve Says:

    @ TonyP4: Tony, using your example of an iPod, couldn’t you also say that China provides an opportunity for a company to work their employees in 12 hour shifts, continually on their feet with no opportunity to talk with their fellow employees and few breaks, all for low wages, no medical insurance or benefits so a billionaire in Taiwan and another billionaire in the Silicon Valley can make even more money? Is that really the ‘best service’? Reality is reality and I’m not disputing that, but you can only compare countries if you do it on a level playing field and that’s not how the world economy works. The communist revolution was all about eliminating foreign exploitation of Chinese yet what is actually happening over there is both foreign and domestic exploitation of normal Chinese workers. Given the choice, most people would rather be exploited than unemployed, but most people would also rather have increased benefits and be treated similar to their co-workers in other parts of the world. Hence all the strikes in these factories.

    Trying to paint it as a matter of lower wages and nothing else is disingenuous. You have to take into account benefits, labor and overtime laws, OSHA style enforcement or lack of it, corruption, etc. It’s not as black and white as you try to paint it.

  21. TonyP4 Says:

    Steve, you bring up a good point. However, we’ve to start from the bottom and obey the supply and demand law. If there is a better job, quit your current job. It seems better to be ‘exploited’ than go starving. As uncle Deng said, we have to let some to get rich. If the same job goes to Mexico, we have one more in China goes starving.

    Look back at the old days when most did not have jobs, they just starved to death. I do not care what political system it is and it is bad if its citizens go starving for no good reason.

    Idealism is idealism, and food is food.

  22. TonyP4 Says:

    From my last post (as I cannot edit).

    Idealism is idealism, and food is food. One satisfies the mind of an intellect, the one the stomach of a worker.

  23. S.K. Cheung Says:

    Hi Tony #19:
    speaking of the US letting some industries go, i saw the video of Stephen Colbert in character at the Congressional hearings on migrant farm workers. It was quite hilarious. In that case, it’s about jobs that Americans won’t do domestically. But even then, it comes down to pay and working conditions. If farm workers were paid 10X as much, for argument’s sake, and had hourly iced tea breaks to help cope with the hot sun, who knows, suddenly there might be Americans vying for those jobs again. Likewise, globally, I don’t think there are industries that Americans would categorically find to be beneath them; it’s more likely that those are things where entrepreneurs can’t make money and/or workers can’t make a decent living, which leads Americans to abandon them. But Americans abandon them by choice, whereas people in other countries might pick up the slack by necessity. I’m not sure I would view that as a “victory” for those countries. And I’m definitely not sure that the people toiling in those low-paying jobs in lousy conditions would consider it much of a “victory” either.

    I agree that, as a first step, it might be better to be exploited than to go hungry. But as a second, or third, or fourth step, someone should help curb said exploitation with higher wages and better regulations. And if that’s not the Chinese government’s job, I’m not sure who you would nominate instead. I think Deng said some have to get rich “first”; I wonder how long he intended to keep the others waiting.

  24. Allen Says:

    I don’t understand this talk about “exploitation.”

    What is exploitation? Am I exploited when I make low 6 figs but the CEO of my company is making multiple millions per year? Is paying a Walmart worker minimum wage exploitation? Does a young couple’s buying a 1400 sq ft. house for over $1 million in the Silicon Valley from an old couple who bought the same house for less than $200k in the 1990′s exploitation? Is my buying a Chinese painting for US $5 during my last trip to China exploitation of the Chinese artist? Is my paying $5 to the street musician on Venice Beach last month when I was in L.A. an exploitation?

    Now I agree that Chinese workers get paid too little relative to American CEO’s. But why?

    Is business per se exploitation? Is globalization per se exploitation?

  25. HKer Says:

    Folks,

    I am a regular at my neighborhood mom & pop (literally) blue collar food stall with their only 11 y.o. daughter doing her homework at a corner table every evening. It’s a nice loving family, with beautiful hopes and dreams. I know, I talk to them, and I believe they will continue to be happy – even if they’ll never be rich. Another regular there is a 4 foot tall, physically challenged 47 y.o. beggar. He’s a wonderful, friendly, generous fellow. He makes about on average 40 Us dollars a day from panhandling. One time he offered me a cigarette, and I said I have my own, to which he said his brand was more expensive than mine, so, I accepted his offer. LOL. Those who have little are well known to be generous, resilient, calm, and are not so full if sh*t …. The middle-class and rich folks drive around in their stupid cars honking, angrily at pedestrians and other drivers, complain about every little thing, spouting their rights, chasing lofty dreams etc. These are the ones who suffer from strokes and whatnot at increasingly younger ages from prosperous year by prosperous year. I hate being poor, and I ain’t no commie, but the “poor” will always be with us, and we, the so-called educated folks need them more than we realize. They are the salt of the earth, the builders of nations, the providers of food and services. They are also the bullet shields, the factory and cannon fodders that make evil men powerful.

    Wow, I meant to write a joke not pontificate. Oh well, maybe I best leave it to the pros such as Louis CK here:

    http://www.maniacworld.com/we-have-white-people-problems.html

  26. HKer Says:

    Folks,

    I am a regular at my neighborhood mom & pop (literally) blue-collar food stall with their only 11 y.o. daughter doing her homework at a corner table every evening. It’s a nice loving family, with beautiful hopes and dreams. I know, I talk to them, and I believe they will continue to be happy – even if they may never become rich by american standards. Another regular there is a 4 foot tall, physically challenged 47 y.o. beggar. He’s a wonderful, friendly, generous fellow. He makes about on average 40 Us dollars a day from panhandling. One time he offered me a cigarette, and I said I have my own, to which he said his brand was more expensive than mine, so, I accepted his offer. LOL. Those who have little are well known to be generous, resilient, calm, and are not so full if sh*t …. The middle-class and rich folks drive around in their stupid cars honking angrily at pedestrians and other drivers, complain about every little thing, spouting their rights, chasing lofty dreams etc. These are the ones who suffer from strokes and whatnot at increasingly younger ages prosperous year by prosperous year. Please don’t get me wrong. I hate being poor, and I ain’t no advocate for communist ideology, but the “poor” will always be with us, and we, the so-called educated folks need them more than we realize. They are the salt of the earth, the builders of nations, the providers of food and services. They are also the bullet shields, the factory and cannon fodders that make evil men powerful.

    Wow, I meant to write a joke not pontificate. Oh well, maybe I best leave it to the pros such as Louis CK here for some guilt laden laughters:

    http://www.maniacworld.com/we-have-white-people-problems.html

  27. HKer Says:

    Ops, I double posted ! Sorry about that. Please delete post # 25

  28. No99 Says:

    I saw the Colbert report about migrant workers too. It is funny, and a little bit of cheesy on my part (maybe it’s just my personal tastes).

    On a slightly serious side, there’s three reasons regarding Americans and jobs. One, is it’s true that there’s a lot of labor-intensive jobs (not just in agriculture, but also many manufacturing and domestic service) they won’t do. The issue is partially due to salaries/compensation and partially to due with that condescending attitude, like it’s beneath them.
    The second reason is that there’s a lot of these jobs in which American citizens are not good at. Sometimes, they don’t want to or can’t put in the effort, or sometimes they don’t want to or can’t think quickly (you do have to use your brain at some point, like learning a new procedure, dealing with worst case scenarios and interacting with other people). This is something a lot of media pundits and politicians don’t want to talk about, because it spoils the image.
    Third, and this is not the American’s fault so they have a legitimate reason to complain, sometimes the citizens are discriminated against from pursuing these jobs. Some workplaces consists of one particular nationality, ethnic group or personal circle (friends, family, same religion, same school, something similar). so they just keep hiring within, and mainly give opportunities to anyone who is connected. It’s not nice, but that’s reality.

  29. S.K. Cheung Says:

    To Allen,
    you’re the lawyer, so you can tell us if there is an American legal definition of workplace “exploitation”. I’m not sure if anyone around here is qualified to tell us if there is a Chinese legal definition of workplace exploitation, and what might constitute as such.

    To me, in layman’s terms, it’s some combination of how long/hard you work, the conditions under which you work, the amount you get paid for your trouble, and what that amount can provide in terms of living standards. So without going any further, local cost of living is a factor which should deter direct comparisons between grunt workers in one country and CEO’s in another. Furthermore, I feel one can be “exploited” on the basis of any of those 4 factors individually, or by some combination thereof.

    A 6-figure salary, for instance, would be a hard sell as a case of “exploitation”. A comparison to the CEO also seems irrelevant, since we’re talking different positions with presumably different responsibilities and job descriptions. However, if a person of similar qualification to you, in the same position as you, working in the same capacity as you, with the same responsibilities as you, is making twice as much as you, then you may in fact be suffering exploitation. (As an aside, not an unheard of complaint among women in the workplace).

    THe Walmart worker may be suffering from “exploitation”, in a state-sanctioned fashion no less, if that minimum wage means he/she can’t put enough food on the table despite working full-time. THe equivalent of the Walmart guy in China would likely be the type of worker with whom I would wonder about exploitation.

    Housing prices isn’t exploitation; it’s market forces and inflation. Give or take a housing bubble I suppose. But it’s got nothing to do with worker exploitation. Neither does paying the street performer/busker, since he wasn’t your employee.

    The artist with the painting might be a bit trickier. There is still no employer/employee relationship. You’re buying a product that’s being sold for that price (though in the time honoured Chinese tradition, perhaps some haggling came before the transaction.) BUt perhaps the vendor should’ve paid more to the artist, and sold it for a higher price to you. You may have inadvertently supported the exploitation process; that said, the onus is still on the vendor who buys the finished product from the makers in order to re-sell them. It’s not as though, even if you insisted on paying double for the painting, that the extra coin would’ve trickled back down to the artist.

  30. HKer Says:

    ” this is not the American’s fault so they have a legitimate reason to complain, … It’s not nice, but that’s reality.”

    I’m sorry, No.99 – Are you talking about Americans in China or Americans in USA ?

    DAILY MAIL – Revealed: The maps that show the racial breakdown of America’s biggest cities
    By DAVID GARDNER
    Last updated at 6:25 PM on 26th September 2010

    Read more: http://www.dailymail.co.uk/news/article-1315078/Race-maps-America.html#ixzz10v78wdRf

  31. TonyP4 Says:

    Many good points. Never imagine so much interest after Steve’s post. Add mine here:

    * The reason Americans do not want those jobs is the generous welfare. If they work, they would lose the free health care, food stamp, housing subsidy… To solve it, just reduce them (but not to the extreme that if you do not work, you die). Encourage folks to work (if not force them to work) by giving them more benefits if they work.

    * The high percentage of single-parent families, partly due to teenager mothers. To solve it, reduce the benefits and have more education. All our education problems could be due to poor family education. Throwing money in education and/or starting with ‘up to the top’ will solve nothing as we’ve many experiences already.

    Many efforts are naive if not stupid. IBM pledges to help the poor kids in certain sectors to move to middle class, but how about kids from other sectors?

    * Migrant workers, legal or illegal. I do not have anything against them. I used to work in Federal Reserve Bank with an expired student visa. Without them, the nursing homes will not have enough help, no one will empty your garbage bins in your offices, and will leave produce unharvested…We need them until we can get those able and lazy Americans to work.

    Enforcing the border security cannot compete with punishing the employers for hiring illegals.

    * The world is getting smaller. Any job that can be solved via a phone line will be outsourced. Gone are the days the high-school dropout got a middle-class salary job in sweeping floor in some auto assembly plants. It is a fact unless you live in a cave for the last 10 years.

    Hence, we cannot keep all jobs. A $20 wage can never compete with a $2 wage. Period. It is possible to cut down 50% of trade with high tariffs and we will pay $50 for a toaster made in USA.

  32. TonyP4 Says:

    (Continued from my last post).

    When China grows richer, China takes care of the workers by doubling the wages, improves the working conditions by providing foot massage between breaks…, can they still compete with low-wages jobs? No, they have moved to the early success US once enjoyed. At that time, they need to move to the next phase of the industrial cycle by providing more knowledge required products like airplanes…

  33. Steve Says:

    “Marie Antoinette, the workers are starving. What shall we tell them?”

    “Ha ha, let them eat cake!”

    Allen, under your definition, either no one is exploited or everyone is exploited, with the possible exception of Bill Gates. I guess that eliminates the argument that China was exploited by the West before the revolution. Thanks for clearing that up.

  34. TonyP4 Says:

    “Mao, workers are starving.”

    “Let them die, so they will not starve any more.”

    “On the second thought, let them know their country is #1 in the world. So, spiritually they are fed well.”

  35. Allen Says:

    @Steve #33,

    I neither defined exploitation as all or nothing. I merely bring up circumstances that I know reasonable people here will disagree. Some will attribute to supply and demand, capitalism, market – while others will attribute to social inequity.

    As for China being exploited by the West before the revolution – do you mean to say the opium war and the subsequent impositions of the West on China by force is not exploitation?

    While I fail to see the relevance, why don’t you bring up American slavery, holocaust, Nankin also? I fail to see how they might touch on the issues I raised, but I am sure you do.

  36. TonyP4 Says:

    The Opium War(s) is/are caused by three imbalances. (1) The Brits did not have anything worth to trade for Chinese silk, porcelain… (2) Imbalance of military mights. (3) Imbalance of morality – pushing opium as a evil nation.

  37. No99 Says:

    HKer,

    My comment was more for Americans in the US. Actually, the US is a very diverse place, and there many areas where people are kind of segregated (by choice or history). I wanted to mention that the discrimination is more than just race, nationality or ethnic group, but also includes other subtle situations like family relationships, friendships, same alumni or religious background, etc. There are laws, but there are ways going around that and if you don’t depend on public funding, the government can’t really do anything against a business if it discriminates. The employees will call it selective screening, something which they believe is beneficial for their business.

  38. pug_ster Says:

    One of my Aunt is actually a legal migrant worker. It is not an easy job not because it is labor intensive, but you will be gone for an extensive amount of time. During the summertime she would take a bus to some farm in NJ or PA and work there for anywhere from 2 weeks to a month. She then be off for about 2-3 days and then off to another job. Of course you get room and board. During the winter she would fly down to Florida to work.

    It kind of suck, but for someone who have no skills old and don’t have a place, it is not so bad.

  39. HKer Says:

    No99

    Thanks for your response to ” this is not the American’s fault ”

    “Actually, the US is a very diverse place, and there many areas where people are kind of segregated (by choice or history).”

    Indeed, the DAILY MAIL racial breakdown of America’s biggest cities link I posted above shows that clearly.

    But regardless of regional, racial, social and political segregation and discrimination, THEY are ALL Americans, no?

  40. HKer Says:

    The simple definition for ” Leftists… claim that human development flourishes when individuals engage in cooperative, mutually respectful relations that can thrive only when excessive differences in status, power, and wealth are eliminated. According to leftists, a society without substantial equality will distort the development of not only deprived persons, but also those whose privileges undermine their motivation and sense of social responsibility. This suppression of human development, together with the resentment and conflict engendered by sharp class distinctions, will ultimately reduce the efficiency of the economy.”

    Is this why Obama is so hated domestically by the Conservatives?

  41. No99 Says:

    Hker,

    Well, that’s kind of one of the awkward things about national sentiment. Due partially to history and by choice, a lot of people do care quite a bit about these issues of separate identities (not just race but also whoever is in their circle). It’s easier to feel that way if you live in big country, that’s spread out. That’s kind of why some small countries (or small towns, suburbs or neighborhoods in big countries) are able to muster a better public gathering to take care of matters.

    On why Obama is hated so much, I can say a few things. One, he represents the other side, and in the world of politics, he is bound to get enemies. Two, and I’m not going to sugar coat the matter, some people just don’t like a black person holding a position of power. Three, he is viewed by some as someone not that strong, assertive or not “common” enough. I’ll explain the last part. One of my libertarian friends mention that, saying how a lot of people don’t see Obama as “American” enough. I ask him why. He said it’s partially because he seems too diplomatic, like he’s too calm and doesn’t seem to possess enough anger or force, not appearing to stand on the side of the American people. We both didn’t really agree with this reasoning, but that’s just how some people are. The other thing is that Obama is too foreign, in terms of his background and education. A lot of people still have certain stereotypes in their heads that they can’t get rid of. Like it’s hard for many to believe that a black man can be in power without sounding like a preacher. Some people think his youth, growing up in many places and being familiar with them, stands out too much from the experiences of many Americans. Again, my friend and I didn’t like this reasoning, but that’s how many people think.

    Anyways, that’s the nutty cases. There really are legitimate reasons why Obama isn’t like, by both conservatives and non-conservatives. Issues like how and where he is spending money to how the members of his cabinet seem to be handling things (it’s not necessary Obama’s fault, but then when the others do something questionable, the head does share some responsibility in one way or another).

  42. S.K. Cheung Says:

    I doubt that an all-or-nothing discussion of the presence or absence of “exploitation” the world over would be all that helpful. More likely, I would think, is that “exploitation” is present in many places, to varying degrees.

    So if there’s exploitation to some degree in many different places, does its presence in one place justify its existence in another? I would hope not. Does exploitation that occurred someplace else yesterday justify exploitation in the region of interest today, or tomorrow? Again, I would think not. Does that fact that exploitation has occurred in many different places in many different times suggest that it is something that is difficult to eradicate? Quite possibly. Does that mean people should dig around for excuses rather than at least acknowledging the problem? As usual, to each their own.

    If a societal structure was purely market-driven, it would probably result in a preponderance of exploitation. Businesses would demand more and more work, over longer and longer hours, for less and less remuneration. Businesses would spend less and less on the workplace environment and keep more and more for the bottom line. A new equilibrium might eventually be reached where workers can’t work any more, or any longer, for any less money, in any more dangerous circumstances, without affecting their physical and financial capacity to consume the products and services that they themselves are helping to make and sell. But it’s regulation, oversight, and laws, and people’s willingness to provide and enforce them, that help to distinguish one market-driven economy from another, in terms of where they stand on the spectrum of exploitation.

    Of course, exploitation doesn’t mean an absence of choice. Sadly, workers probably do choose to work in jobs where they are open to exploitation. Unfortunately, in some parts of the world, the alternative of that choice would be to not work at all. Though it is a choice, it isn’t much of one. And again, it’s with regulation, laws, and oversight, that society can at least try to provide more palatable choices. That said, anything induced by force would seem to me to be something that wasn’t by choice, and wouldn’t really qualify as exploitation, at least by my understanding of the word. I imagine the stuff that occurs in war deserves its own descriptor, but I don’t think “exploitation” fits that bill.

    To Tony:
    on the one hand, I agree that “reducing benefits” is a good motivator to entice people to try to achieve more, thereby reducing the need for, and their reliance on, said benefits. On the other hand, the fruit of this motivation is likely years, if not generations, away, while the people who need those benefits need them today. I’m not sure how you get around that chicken/egg conundrum. Maybe some grandfathering scheme. Or maybe some plan for implementing reduced benefits at some finite future date. But then the folks who most need these benefits may well be the same ones who live by the adage “why do today what you can put off until tomorrow”.

  43. Allen Says:

    @SKC #42,

    I enjoyed reading your comment.

    To me personally, I see a lot of exploitation within America’s capitalist society. Yes an engineering being paid low 6 figs while the CEO getting paid 100 million can be justified in terms of supply and demand (what else cannot), but I believe the difference in pay is less a reflection of differential in job demands than a fundamentally built-in injustice. Same goes with rising house prices (and government’s attempt to stabilize housing prices) – it’s an exploitation of young people today.

    But why do I say so? If we believe in the market, then the CEO is worth 100 million and the engineer has to be worth low 6 figs because if people don’t feel so, the engineers will all become CEO’s, raising the supply of CEOs, and hence lowering the salary of CEOs. If housing prices are exploitive, young people will refrain from buying houses, lowering the demand, and lowering the price of housing in general.

    I can’t articulate why I feel there is injustice but can also see how others might argue there is no injustice but market forces giving us a dosage of reality.

    The bottom line: there might be something about “exploitation” but without defining it better, it is merely a “conclusory” term. It states a position without providing any enlightening perspective – not unlike the “genocide” discussion we had a year or two ago…

  44. pug_ster Says:

    Looks like Democrats are going to get hammered coming this November. Obama and the Democrats are using cheap tactics to blame China on shipping the jobs overseas. I thought this article of how these candidates reflect that attitude.

    http://www.foreignpolicy.com/articles/2010/09/29/it_s_the_chinese_stupid

  45. S.K. Cheung Says:

    To Allen:
    I agree that terms need to be defined in order for them to be used gainfully in any discussion. To that end, I gave my definition of “exploitation” as a four-part condition in #29. So the problem isn’t simply coming up with a definition; it’s coming up with a definition that people can agree upon that is the tricky part. Admittedly, what I consider as “exploitation” may not fit the bill for you or the next guy, and vice versa. C’est la vie.

    CEO’s don’t get paid big bucks just because there are few of them, and hence supply/demand drives up their remuneration. CEO’s get paid big bucks because there are relatively few of them who are amply and ably qualified to produce the returns for their respective companies to justify the big paycheques. If you “flood the market” with “CEO’s”, you’re not going to drive down the salaries of CEO’s; you’ll merely create a lot of unemployed ones. Steve Jobs will still earn a big payday, and probably deserve it.

    You use “injustice”. Again, no need to get caught up in definitions, but I would use “inequity” to describe the wide gulf that exists in remuneration between “CEO’s” and grunt workers. I mean, can anyone’s work really be worth thousands of times more than another’s? I too find that difficult to believe. But if the people paying the bills feel they’re getting their money’s worth, then good for them.

    None of this talk about CEO’s, however, qualifies as having anything to do with “exploitation”, at least in my book. I’m not going to begrudge the high flyers…if someone is willing to give out such sweet deals, then good for those who are able to snag one. But exploitation does have everything to do with those on the other end of the ladder. That’s the case in Canada. No reason to think it’s any different in the US. And also no reason to pretend that it’s any different in China. While there is poverty in the US and Canada, there is POVERTY in China (and the caps isn’t to represent screaming a la Wahaha, but simply to illustrate a size difference akin to upper case vs lower). I don’t know if poverty and exploitation share a causal relationship; but I think there is an associative one. And CHina seems to have a pretty good helping of both. As I alluded to in #42, it remains to be seen whether CHina’s government is populated by people who are able and willing to provide and enforce rules, laws, and regulations so as to effect a reduction is such exploitation.

  46. TonyP4 Says:

    Great article. It confirms my beliefs with numbers.
    http://www.time.com/time/world/article/0,8599,2024090,00.html

    China is moving the value chain in leaps and bounds. Its middle class will be the best market for its products. China has woken up from the past 250 years of miseries.

  47. No99 Says:

    Lol, I think by 2040, if China’s economy does reach that height, the US currency isn’t going to matter too much, so it would probably be pointless to measure it in dollars.

    That article has a point. Other countries are getting stronger too, and cheap labor and other developments are available in other places.

    I really do think what’s important as stated in that article, is brainpower. On one hand, there’s are a lot of criticisms and problems regarding education, Academic maturity and intellectual property. Overtime, they will be fixed (relatively speaking), and let me emphasize the will be. The only thing that might stop that progression is pretty much either an armed conflict or any intense internal struggles.

    Also, the network of exchanges, between students, researchers, industries, and other areas between different countries with China is getting tighter each day. They might not like each other, but it’s getting to that point where you have no choice but to work out any issues together. Not only the economy, but other countries are another outlet where many Chinese can migrate to, prosper, laid down their roots, have families and contribute there. If you can’t make it in the homeland, the world is your oyster sort to speak. China has its people involved in almost everything you can think of.

    So, other than being one of the most important markets in the world, China is probably going to be one of the most important nations to push humanity forward in general.

    Assuming nothing catastrophic happens.

  48. TonyP4 Says:

    我人生前50年,短短的50年裡,
    已聽到2次全球經濟中心由西半球向東移的大趨勢論調;
    2次事隔25年,2次發聲皆來自美國。
    第一次差不多於1985年時達到高峰期,
    當時《Japan as No.1》的書籍剛出版,
    撰寫書籍者為一位哈佛大學教授;
    美國各大報紙紛紛發表社論,有的充滿畏懼,有的充滿憤怒。
    也就在那一年日本為了平衡對美貿易順差,壓力下簽署「廣場協議」;
    之後美歐聯手拉抬日圓,漲幅近三分之一,吃掉了日本大半外匯,
    日本正式進入泡沫經濟時代,也終結戰後最大繁榮期。
    現在事後看來,日本人真是癡傻!
    1988年還高興地抱著現金買下洛克斐勒大廈,甚至打主意入主紐約地標「World Center」。
    「歐元之父」諾貝爾經濟獎得主孟代爾去年9月接受香港鳳凰衛視專訪,
    明白點出當年「日本人做了愚 蠢的決定」;日本從此經濟消失20年;
    前10年泡沫經濟留下壞帳,1997年亞洲金融風暴,「Japan No.1」正式結束 神話;
    後10年經濟停滯,只靠出口微成長。
    現在美國人又來了!金融海嘯剛發生時,向全球賣出有毒金融產品的美國人曾短暫懺悔一下,但也就那麼一下。
    一年後美國人又大聲了,而且聲調、語氣、論述都複製1985年的版本。
    這 一次他們的對象,是中國。
    第一部曲,宣告並預言「中國即將統治世界」;

    第二部曲,高唱人民幣嚴重低估論,130名國會議員聯名指控中國操縱匯率;

    第三部曲,美元不聲不響地與其他國家貨幣競貶,
    由於美元仍居全球不可替代的國際貨幣地位,
    美元貶值等於美國人將他們的債務丟給包括中國、台灣等持有龐大美元資產的國家分攤。
    金融海嘯發生後,美國有一批學者積極研究日本消失的10年,
    很怕美國重蹈日本之路。
    這些美國學者當然不會有足夠的客觀性,願意把時間再往前推10年,看著勤奮的日本人是如何走上這條不歸路。
    美國沒料到中國這次變精明,他們也正研究日本消失的10年;
    北京請益西方孟代爾、史迪格里茲等經濟大師當國師。
    這一次中國官方早已吃了秤砣鐵了心,人民幣絕不上當,不會重蹈「廣場協議」陷阱。
    中國不向美國帶頭的國際壓力屈服,人民幣不會大幅升值,讓中國經濟從此也走上日本的不歸路。

    中國謹慎 不當傻子
    日本人隔海看著這場主角換人但戲碼熟悉的人民幣大會戰,感慨恐怕很深。
    日本民間是全球購買最多雷曼債券的受害國,事後他們沒有從美國得到一絲補償。
    日本唯一賴以出口稱霸全球的TOYOTA汽車,又因煞車出包在美國不斷被放大至政治層次;
    美國國會史上第一次出現一位外國CEO,至國會被質詢羞辱。
    世界上有沒有一個國家有權請雷曼CEO或馬多夫,至該國接受國會質詢或批評?
    日本人最親美也受害最深,但他們沒有一絲絲權力表達憤怒。

    中國小心謹慎地看待後金融海嘯的時代,最壞的已過去,
    因此全球一致行動的時代已結束;從此是各國角力的開始。
    中美不可能全面鬧翻,但也不可能為了換取對美貿易,中國再誤上賊船。
    從去年開始。中國官方幾乎駁回多數國企對美併購案,中國不想當個傻子,投資美國,再被當地工會套牢。
    一位了解中國核心政策的朋友告訴我,中國官方領導人的原語談話,
    「連自己多少斤兩都搞不清楚!被騙光了,還以為自己是贏家!」

    按照最新2010年新數據,西方至今仍佔全球經濟總額2/3;
    談亞洲崛起,不如正確地說亞洲只分了一杯羹。
    至於所謂「中國統治世界」,別跟著美國瞎鬧了!

    ;
    作者陳文茜為電視節目主持人 — 陳文茜不愧是李敖筆下的臺灣第一才女, 思想清晰, 文章簡潔。

    ——
    If you’ve not read the Time magazine in Post #46, please do and it will not disappoint. CNN does not have a good reputation on China, but this author is a good exception.

  49. silentchinese Says:

    I have a slightly different view:

    upward evaluation is not necessarily what china really doesn’t want.

    why the quadruple negative?

    let me re-phrase:
    upward evaluation is may be what china really wants.

    I can’t back this up with hard data, but it is more and more of my hunch.

    here is my hunch:

    who will upward (20%) revaluation really hurt?
    who will be able to mitigate?
    who will come out better?

    would jobs come back to US? no.
    would chronic US trade deficit go down? no
    will fossil fuel prices sky rocket? yes.
    who is more addicted to fossil fuel? US.
    will chinese labor wage continue to go up? yes.
    are chinese industries going up the value chain? yes.
    will chinese continue to be big savers? yes.
    will china continue its liberalization of yuan? yes.

  50. No99 Says:

    Actually, people shouldn’t fall too much for that hype of how American jobs were lost overseas, to China or another other country. A lot of the overseas jobs were created for that specific country and depended on the conditions of that specific company. It wouldn’t have been any potential job for someone in the States either way. I’m kind of saying that many jobs weren’t American to begin with.

    There’s still quite a lot of manufacturing and service jobs in the US. There’s also a lot of reasons why people get laid off or don’t get employed again in that occupation which may not be directly related to costs or competition from other countries. Like people can’t always blame others for “all” of their problems.

  51. TonyP4 Says:

    Another 20% appreciation will hurt a lot of manufacturing jobs in China. I do not have the exact figure, but I believe China’s cost advantage is about 5 to 10% over other competing countries like India and Mexico, and about 25% over US. My very rough estimates.

    Chinese will save less as a percentage of the income once they have better safety nets such as insurance and government entitlements to the poor and elderly.

    US did not have manufacturing problem in the 50s as it was very costly to transport finished products and raw materials. Now, the shipping cost is substantially reduced. Some service jobs can be off shored where there is a phone line connection.

    The time when a high school drop out getting a middle class job by sweeping the floor in a GM plant was gone. Some other jobs secured by unions are still there like installing your phone lines at home. There is no way to outsource this kind of job.

    $20 wage can never compete with $2. US needs to protect the products in higher value chain and lower its living standard. The leaders need to think outside 4 years for re-election. From the Time article, China has moved up the value chain and most likely will manage other countries who will take over the slavery jobs.

  52. silentchinese Says:

    @TonyP4

    Costs:
    China is competitive not just because of wages, it is the infrastructure and current supply chain.
    In some places in eastern china you can have 10-20 supplier of one item in one city. not anywhere else can match this.
    Tax Structure too has a dramatic affect.

    Savings:
    the often touted line of saftey net = less saving is, imho, humburg.
    1)The only way a country can grow in long term is productivity increase.
    2)productivity increase requires capital investments.
    3) Saving is what you need to have in order to re-invest.

    simple as that. and believe or not china will require “MORE” if not less capital investments in the future, if it is to be not stuck in “latin-America” mode and go on to an advanced industrialized country. because as it goes up the value chain the industries are more and more capital intensive. so china on a whole needs to save more. or else you have to import capital. either way this is not your standard mantra of “US save more” china “Spend more”.

    (Why households in US can not “save more”? because 70% of its economy is bloated by consumers, and rightnow the capital distribution structure is such at any savings is plowed into financial products that makes its returns more and more on …. financial products. If US households start to save more beofore it can realign its industrial economy, it will actually collapse its recovery… the credit card is maxed out. That’s also why most big Corporations are holding on wades of cash, trying to sit this one out. or else engage in BRICs markets so they can actually have a decent return.)

    why in 50s, times in US was great:
    because most industrialized economies, their productive capital was all either wipped out by US Bombers (Japan, Germany, France) or in terminal decline (GB) or still in war time mode (USSR). the Time were great in US because they were the only ones who can make stuff.
    the golden rule should really be, those who can make the stuff, make the rule.

  53. no99 Says:

    Another reason why the US did well economically from the 50s to 70s was because they had absorbed many ideas and skillful people from many places. Even today, people are still amazed at the quantity of projects we developed that was essentially a copy from Nazi Germany (highway systems, research and development programs, education curriculum, anti-smoking campaign, etc.) Basically, not only was the US making stuff, they were developing as well. The US before mid-20th century and after is quite different in many aspects. The American power overseas was mainly due to the fact that other powerful countries were in decline, except the Soviet Union. Real Hegemony was established pretty much in the 90s ,but was and is being quickly challenged.

  54. TonyP4 Says:

    @silentchinese.

    Wage is only one reason as the Time’s article described. Political stability is another and internal market potential is another but they are not mentioned in the article. That’s why social stability is important to maintain a competitive edge. Many countries like Vietnam and India have wage advantage over China and Mexico has the location and tariff advantage over China. China is still a winner in manufacturing so far.

    Either from Time’s article or another source, productivity will be improved with education and China pretty much has attained the goal of almost full education of 9 years.

    The saving is somewhat a culture. US has not been really depressed since the depression. College students learn how to max out the credit cards. China on the other hand has been in bad financial shape for the last 250 years but is getting better only in the last 30 years. Our parents and grand parents still have the tough experience in life.

    US has to save more (spending more is what the politicians want as they do not know how to fix our problem), and lower our living standard. It is what gets us in this recession. Folks making $30,000 for sure should not buy a $300,000 house. The old rule is 2 1/2, so he can only afford to buy a $75,000 house. Why should the Chinese listen to the US politicians to tell them to spend more?

    There are many reasons why US was great in 50-60. As no90 pointed out, it is the immigration policy too. Hope it will continue for the better. Immigrating an educated Indian or Chinese helps the US, but not the whole family who lives off the generous social entitlement system. I believe the natural resources and farm land per capita is the main reason. At one time, you can get the oil from the close surface in Texas. Once they know how to use machines for the good and level farm land, they’re on the way to become the supplier of food to the world.

    Making stuffs in low margins will not move the country a lot, but high value stuffs with good margins. That’s why US still is many times the average GDP per capita over China, but China has been catching up and moving up the value chain.

  55. no99 Says:

    The GDP per capita is one of those statistics that probably should be taken only half serious. It gives an general idea of how wealth may be distributed, on the other hand, there’s so many factors involved where it generally is hard to compare with other countries. The population, number of rich people (if for example, a country has a million people but only 4 individuals have billions of dollars, the rest make less than 2$ per week, I mean it can give off a skewed statistic regarding per capita), the living expenses, etc.

    Probably within the decade or two, there’s probably going to be another type of currency or monetary value people will use to determine real wealth rather than the US dollar. Something to think about.

    Economy in layman’s terms, really just means how active the place is and its value. In a way, if people were to adjust the numbers a bit, China could already be the world’s largest economy, by a stretch.

    If people can afford the same products and services with similar qualities, in essence, it probably wouldn’t matter a whole lot regarding how much people make and what the mean income is. In the end, it’s what is going to matter is how much one can obtain and afford rather than the numbers. Numbers are important but they do need to be seen with another perspective.

  56. TonyP4 Says:

    GDP is a good yardstick to measure the economy of a country, and GDP per capita for the wealth of its citizens (actually the one adjusted for buying power is better). China is #2 (or even #1 in the future) in economy, but if we live in polluted air and water, it will not help our living standard even our GDP per capita moves up to the top 30.

    China is a vast country. Most likely you cannot survive with about $4,000 or so US dollars a year in SH and BJ, but it could be quite comfortable to live in urban areas esp. you already own a house.

    There are exceptions but we cannot use exceptions as general arguments. Unless we have better currency for yardsticks, US currency is the only valid and common use for this purpose.

  57. no99 Says:

    You’re right Tony,

    For the time being, GDP, per capita, and the US dollar is what we can use to measure a country’s status, generally speaking.

    I’m actually optimistic (to a certain extent) when it comes to environmental problems. As long as nothing catastrophic happens, like a major war, recycling technology and more scientific research is kind of hinting there are ways to take care of these problems. We just have to try hard and work together with other countries. One example; a little over 5 years ago, there’s this company helping the US military which could extract water from the air. Basically, they’re using some type of salt and the process traps moisture, and I think it’s being applied in the desert (considering the armed conflicts going on there). I see some potential in that. There’s already experiments where people are trying to produce larger quantities of chemicals and minerals that could do the same thing as petroleum from algea and other small organisms, in effect, we could “grow” our resources. Lots of ideas beyond the nuclear option, which could help generate electricity for people, like turbines underwater which would be moved by the Earth’s gravity or that “artificial sun” project in which China is a large part of supposedly.

    So, there’s some shred of hope there.

  58. silentchinese Says:

    TonyP4 Says:

    “Wage is only one reason as the Time’s article described. Political stability is another and internal market potential is another but they are not mentioned in the article. ….”

    I think theorizing on the web will make on forget the picture on the ground.
    as a theoritical supply chain manager,
    I can ship a product cheaper from Chengdu to Long Beach then from New Delhi to Bangalore.
    I can go to one city in China and has a reasonable assurance that I can have the quanity, delivered, on time, at cost specified, and with bit more patience and vigliance has the quality too. In another word, I can have certainty.
    with India/Vietnam I have almost no certainty, and sometimes they do not have the industrial capacity/and/or capability to full-fill many of my orders. They just can’t do it.

    This has nothing to do with wage or internal market differential or social stability.

    This is what one has to do with economy of scale, infrastructure, and (increasingly) technical capability

    remember one competes with total cost.

  59. TonyP4 Says:

    No99, you’re right. However, sometimes what we’ve done to the ecology are not reversible. Some die for ever. It is human spirit to be optimistic esp. for the future.

    Silentchinese, you’re right too. However, most Chinese factories were initially invested via foreigners, Taiwanese and HKers. So, it needs social stability and potential local market (like cars from GM). Without these investment, we cannot have the scale of economy. It is a kind of chicken and egg concept. India suffers from poor governance (they could learn the concept of economic zone) and Vietnam is just like China 20 or so years ago but with a far smaller scale.

    On supply chain. When Nokia opened an assembly plant, it actually opened a factory park (or city) with parts made by different factories and most were not owned by Nokia. The cost of shipping these parts are substantially reduced. Similar to Apple in S. China. The disadvantage to Apple is other competitors can use the same parts for their own iPhones and IPads.

  60. no99 Says:

    Eventually, (like several hundred million/billion years later) the Earth will die, but we humans should do our part in making the best out of it.

  61. TonyP4 Says:

    Chinese bashers, here is a great article for you.

    http://blogs.forbes.com/shikhadalmia/2010/10/21/china-bashing-is-for-losers/

  62. no99 Says:

    Something you all might like.
    http://www.youtube.com/watch?v=2SyjtGiNCa0

  63. Marc Richard Says:

    Great conversation in these comments. The one thing that I’m quite excited to see this year is that China is taking responsibility for their pollution – something I never thought would happen.

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