China's rising star challenges America
By Keith Bradsher The New York Times
WEDNESDAY, JUNE 29, 2005
GUANGZHOU, China Behind the headlines over the past week about big Chinese bids
for American companies and China's debut as a car exporter lies a much broader
challenge to a half-century of American economic and political ascendance, a
challenge that goes beyond the one that came from Japan nearly a generation
ago.
Chinese manufacturing companies are building wealth at a remarkable rate and
using some of that money to buy assets abroad. And China has been scouring the
world to acquire energy resources, with the bid to buy Unocal, the American oil
company, only the latest overture.
Fierce domestic competition and a faster accumulation of financial assets are
laying the groundwork for the arc of China's rise to be far greater than
Japan's.
"It's going to be like the Arabs in the '70s and the Japanese in the '80s - we
were worried they'd buy everything," said William Belchere, the chief Asia
economist for Macquarie Securities in Hong Kong. But by comparison with those
challenges, which faded, Belchere said, China in the longer term will be "a
much bigger force."
China's economy has risen rapidly with foreign expertise and investment. The
Guangzhou airport has a terminal designed by an American company, boarding
gates supplied by a Danish company and an air-traffic control tower engineered
by a company from Singapore.
The resulting bilateral corporate tango - in contrast to the confrontations
reminiscent of the 1980s and early 1990s, when Japanese capital poured into the
United States - means that China has many American corporate comrades who have
a stake in helping generate its growth.
China, say economists and Asia experts, does not face some of the inherent
limitations that ultimately stymied Japan and led to economic stagnation there
over the past 14 years.
With its huge population, China is developing a large and diverse economy,
creating for its domestic market an almost Darwinian competition that produces
extremely low-cost companies ready to export inexpensive goods around the
globe.
"The economy is much more flexible, adaptable than Japan's," said Liang Hong,
an economist in Hong Kong for Goldman Sachs. "Being a continental economy is an
advantage, because it has competition within."
But China is still at an earlier stage of economic development than Japan was
when its economic rise became a national obsession in the United States. In the
1980s, Japanese companies claimed a sizable chunk of the American car market
and purchased Rockefeller Center in New York and the Pebble Beach golf course
in California.
The bid last week by China National Offshore Oil for Unocal has raised worries
among some politicians in Washington. That $18.5 billion bid comes as America's
trade deficit with China is ratcheting ever higher and the dollar is getting
support from rising inflows of Chinese capital, which also help support low
interest rates.
More disconcerting to others in Washington is China's growing ability to
finance any political and military ambitions. China has a fleet of
intercontinental ballistic missiles with nuclear warheads that intelligence
experts describe as already capable of hitting not just Hawaii but also,
probably, California. Beijing also remains chilly to American entreaties to put
more pressure on North Korea to abandon its nuclear weapons program.
In contrast, Japan's military dependence on the United States made it more
willing to accept a steep appreciation in the yen in 1985 that hobbled Japanese
exporters. So far, China has put off the Bush administration's demands to let
its yuan appreciate.
But China's economic rise also faces many obstacles. Its banks have huge
portfolios of nonperforming loans that have not yet become a crippling problem,
because of rapid economic growth, but that could, as in Japan, make a recession
someday even harder to combat.
China also has a one-party political system that has not changed nearly as
quickly as its economy over the past quarter-century and a population that will
soon start to age rapidly, reflecting its "one-child" family planning policy.
The Asian Development Bank forecasts that between 2015 and 2030, China's labor
force will drop to 813 million from 842 million as India's expands.
Still, China's population is more than four times that of the United States and
10 times the population of Japan. China has as many people as the entire
industrialized world combined, earning wages that despite recent increases are
less than one-tenth of Western wages.
Liang said that China's average tariff on imported goods, 10.4 percent last
year, was considerably lower than Japan's or South Korea's at the same stage in
their economic development and showed that Chinese companies were used to
competing with foreign rivals.
The big question is how smoothly China will make the transition from central
planning to capitalism.
One of the best places to see the scope of China's challenge to the West,
including China's economic strengths and its political weaknesses, is here in
Guangzhou, a city of 12.2 million people.
Last Friday, the first 150 Chinese-made cars intended for export to the rest of
the world rolled onto a ship here, bound for Europe. The cars, made at a
gleaming new Honda Motor factory on the outskirts of this sprawling city near
Hong Kong, signal the latest move by China to follow Japan and South Korea in
building itself into a global competitor in one of the cornerstones of the
industrial economy.
At the Honda factory, a tall fence of yellow wire mesh encloses a long section
of the assembly line, where white robots poke and crane their long,
vulture-like heads into gray, half-completed car bodies to perform 2,100 of the
3,000 welds needed to assemble each car.
Workers in white uniforms and gray caps complete the rest of the welds, working
as quickly as workers in American factories but earning roughly $1.50 an hour
in wages and benefits, compared with $55 an hour for General Motors and Ford
factories in the United States.
As GM and Ford struggle with high health care costs for unionized work forces
with an average age of nearly 50 in the United States, most of the Honda
workers here appear to be in their 20s. They are unlikely to go to the doctor
often, and when they do, doctors here charge less than $5 for an office visit
or for administering a few stitches.
At a long hall in central Guangzhou, it quickly becomes apparent why the Honda
workers are young and the pay is low. Rows of young men and women sit in
plastic chairs, watching two huge television screens covered with Chinese
characters and numbers.
While it resembles an off-track betting parlor in Hong Kong, 160 kilometers or
100 miles down the Pearl River, this is really the city's main, government-run
employment center.
Some of the employers are hiring dozens of workers at a time, but one of the
columns on each screen shows a requirement that would be illegal to list in the
United States: the age range for acceptable applicants, most often 20 to 35.
The official average unemployment rate in China's cities is 4.2 percent. But
that excludes China's vast army of rural adults with little or no work, an army
estimated to be as large as 150 million people. Millions move to the cities
each year, an immense migration that slowed increases in Chinese industrial
wages until the past year or two, when the Chinese economy has grown so rapidly
that employers have begun bidding up workers' wages anyway.
The plight of these migrants seems to be improving, and as it improves, they
may become even more attractive job applicants for multinationals looking
around the globe for workers.
"People who came here looking for jobs used to be dirty and wearing bad
clothes, but now they are coming in suits and ties," said Zhang Jieming, the
director of the Guangzhou Bureau of Labor and Social Security.
[Non-text portions of this message have been removed]
***************************************************************************
Berdikusi dg Santun & Elegan, dg Semangat Persahabatan. Menuju Indonesia yg
Lebih Baik, in Commonality & Shared Destiny. www.ppi-india.org
***************************************************************************
__________________________________________________________________________
Mohon Perhatian:
1. Harap tdk. memposting/reply yg menyinggung SARA (kecuali sbg otokritik)
2. Pesan yg akan direply harap dihapus, kecuali yg akan dikomentari.
3. Lihat arsip sebelumnya, www.ppi-india.da.ru;
4. Satu email perhari: [EMAIL PROTECTED]
5. No-email/web only: [EMAIL PROTECTED]
6. kembali menerima email: [EMAIL PROTECTED]
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/ppiindia/
<*> To unsubscribe from this group, send an email to:
[EMAIL PROTECTED]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
