Why We Need to Embrace China Now
| Published March 3, 2008
China's ability to manufacture products at low costs has been the subject of debate for quite some time in this country. The fact is that because of this ability, the profits realized by U.S. companies has been startling, and even if the manufacturing cost of a set of Chinese-made MP3 earbuds doubles in the next decade, they will never be manufactured in the U.S. Whether a set costs $7 or $14 to make over there, the retail cost over here will always more than make the margin.
In his article, “China Makes, The World Takes” (July/August 2007, The Atlantic), James Fallows points out that China helps prop up the U.S. economy to the tune of a trillion dollars in stocks and bonds. This has in turn helped keep our interest rates down, and has slowed the decline of the dollar, helping consumers consume. But eventually China is going to need to build an infrastructure to support its growing industrial class with schools, rail systems, roads, and all the institutions Americans take for granted. This means that, sooner or later, we should expect China to call in its marker.
Unless we embrace China (and the rest of the world) with a full partnership to make sure its juggernaut benefits us all, we could be left with a devastating economic headache. We helped push a socialist regime toward capitalism; now it's time to help them shine at it.
The problem is, the experiment in China is happening at a lightning pace. They are beginning to consume so much, that unless we befriend them, we are in danger of being left holding the bag as environmental and economic disaster wreaks havoc on us all. Instead, we should bury our conceit and revamp our approach so we can export our technology, sell China our engineering services, share our integrated culture, and help the country through its growing pains.
We need to begin by turning back the clock on outdated and disingenuous government subsidies paid to the petroleum industry and open the energy market completely. Our president insists that pushing fuel efficiency would injure the economy. This means Detroit can ignore calls for more efficient vehicles instead of developing the 45-mpg automobile as the standard. At the same time, the Chinese government has required fuel-efficiency standards that many American cars can't possibly meet. Guess who wins that market of 1.3 billion people? Not us.
And rather than take a protectionist and righteous stance, we need to embrace the Chinese, put progressive political pressure on them, and tie removal of tariffs and export subsidies of its products to its admittedly troubling human-rights record.
The fact remains that China's insatiable appetite for energy and agricultural resources are having a devastating effect on the environment. And for all the headaches (lead paint in toys, shipping logistics, IP hijacking, cultural potholes), the benefits to U.S. consumers and U.S. companies who do business in the East far outweigh the pain points.
The faster we create a truly free energy market, the faster we push for a more open Chinese society, the faster we can develop and sell China the clean technology it will need to save itself. As a result, we'll all get to enjoy a healthier environment and a more robust global economy.
Jonathan Gourlay is the features editor for DE. You can send e-mail about this commentary to DE-Editors@deskeng.com.