Perspectives on China

Shaun Rein has written a book with the title “The End of Cheap China.” Yet here are his words from an online Q&A:

China manufacturing is not going to lose its dominance.  We have seen instances of firms moving to other locations such as Indonesia and it didn’t work out.  China’s skilled workers are more numerous and better than in other countries.  Relocating all manufacturing out of China is not really an alternative for many companies.

. . . kinda seems to undermine what you were thinking when you read that book title, doesn’t it?

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Separately, an online post attributed to “Davidson” includes this interesting perspective:

While the US has been embracing “Lean”, China has been building its wealth and a middle class without the costs of environmental protection of water, air, food and other key societal needs. Not addressing the impact of pollution has permitted Chinese based manufacturing to underprice its true costs of production.

There have been a series of articles the past several months which indicate that China will tract the US in its efforts to deal with the typical pollution as demanded by its growing middle class-see WSJ excerpt below. The wealth created from years of pollution has now begun to create its own backlash. The history of an emerging middle classes globally is always the same.

Once one has wealth enough to afford a modest home, a car and other accoutrements of success, one turns to improve one’s environment, i.e. the air one breathes, the water one drinks and etc.

It’s an interesting thing to think about, esp. when you put it into context — many, many companies have moved production from the U.S. to China. In the U.S., they had to worry about the re-internalization of “external” costs — i.e., they were NOT ALLOWED TO POLLUTE.

In China, poisoning the populace has been A-OK with the Communist Central Committee. Yes, the Communists. These are the people who RUN that country, even though the U.S. media shies away from reporting this.

According to “Davidson,” this pollute-at-will advantage — owned by China — is going to dissipate.

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EleBlog take:

(a) You have to read the entire interview with Rein to get the flavor of what he is saying. It would really appear that the title is bogus. Here, for example, is his take on the reported low rates of personal consumption in China:

One misconception is that China’s economy has very low levels of  consumption versus investment. Incomes and spending is far higher than official figures suggest.  Personal income tax rates in China are relatively high with a top rate at 45 percent.  What you often see is consumption spending through company expenses.  And if you are an entrepreneur in China, consumption is often allowed through the business -  house, cars, vacation and health clubs are a 100 percent tax right-off.  The low private consumption figure in China partly reflects existing accounting and tax laws.

It doesn’t sound like “the end” of anything . . . except maybe the credibility of the author and whoever else slapped that title on his book!

(b) None of us outside China can have any real idea of what’s going to happen there — about anything, including pollution and/or the amount of Copper stored in warehouses.

However, it’s clear that we can say this: Companies that moved manufacturing from the U.S. to China were doing more than opting for SLAVE LABOR (and that’s what it is). They were enjoying the “Freedom” in a Communist dictatorship — to pollute at will.

Maybe instead of worrying only about moving manufacturing jobs back to the U.S. — which would be really helpful — it’s time to look into exactly what kind of men and women we have serving as board members, CEOs, and other key management positions at these companies.

A preliminary assessment might be that they ought to be investigated and tried on crimes against humanity, along with members of the Chinese Communist Central Committee.


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