By Larry P. Horist
As I travel the social circuit in the United States,
I hear a lot of criticism of China in terms of the
working standards and environments. Criticisms fall
into three major categories: low wages; workplace
conditions and environment; and the impact of
Chinese-based business on the American worker.
As a fast emerging nation, China does not
always meet the business and occupational
standards the U.S. has come to accept in the
latter half of the 20th Century. However, the reality
is greatly distorted in the U.S. public psyche.
First, the wage issue. Chinese wages do fall far
below American standards, and the poverty rate
in China well exceeds that of western industrial
nations. However, no country on earth is moving
faster to bring a higher standard of living to the
general public than China. Every 5 to 7 years,
the number of people moving from poverty to
the middle class in China is about 250 to 300
million people – approximating the total
population of the United States.
We should not overlook the relationship between
wages and prices. While our inflated cost
structure necessitates high incomes to match
high prices, the Chinese low wages should be
viewed in relationship to the Chinese cost
structure. A bushel of corn can be had for 12
cents and a custom made suit for under $90
Even in western China, where annual income
can be measured in hundreds of U.S dollars,
analysts often overlook the significant impact of
bartering, where commodities, not cash, play a
major role as the medium of exchange.
Do not misunderstand. There is sufficient
poverty in China to warrant the attention of the
world. This should not be ignored as American
businesses play an increasing larger role in
China.
This brings me to the second
point - working conditions.
Rather than criticizing the American companies that
drive stakes in China, we should view them as an
enormously positive force for good. With some
exceptions, American enterprises are leading the way
in providing higher salaries, better benefits and
improved working conditions. Jobs with American
companies are among the most coveted. One
only needs to tour the factories of the "old"
China to see re-enactments of American
industrialization in the early 1900s. Then take a
look at the foreign factories gracing the "new"
China, -- gleaming work places, with high safety
standards, exceptional benefits, top wages and
employee-friendly work policies.
In addition, the inter-relationship of business
interests is a powerful force for peaceful co-
existence. Healthy free-market competition
retards political hostilities. It was once noted
that America has never gone to war with a
country that has a McDonald's. There is a
foundation of truth in that glib quip.
Perhaps the greatest consternation and
controversy involves the impact of China on the
American worker. Put simply, the claim is that
the low cost of production in China is taking
away American jobs. If this were even true to
the extent claimed, there is little that can be
done about it. As we remove trade barriers, the
Chinese will for a time enjoy a competitive
advantage. While American wages have been
forced above the natural free market rate by a
prolonged robust economy, an exceptional
cultural dedication to higher wages and the
effects of trade unionism's myopic attention to
wages and benefits, the Chinese wage scales
have been suppressed by decades of political
control. Intense trade will bring future balance.
In the meantime, America will suffer from a
competitive disadvantage in wages, but benefit
greatly from the counter inflationary pressures
and benefits of lower cost of goods.
It should also be kept in mind that China has
not cost American workers their jobs to any
significant extent. Many of the lost jobs in
America have simply vanished to industrial
technology. Other factory closings have been
the result of moves within America - from one
state to another. Corporate mergers and
takeovers also have trimmed employment roles.
Many companies ceased to exist.
Even those jobs exported beyond our borders are
not all destined for China. India, Mexico,
Southeast Asia and parts of Africa are also
enticing producers to establish factories. Due to
the increasing attractiveness, or aggressiveness,
of other emerging nations such as Vietnam and
Thailand, it is likely that the Chinese share of
American jobs will shrink even further.
On the margins, unfair trade practices and
notions of restrictive tariffs can be addressed.
In the big picture, however, it is neither practical
nor viable in the long run.
The China transition is amazing, but still
uneven. For those who wish to dwell only on the
negative, there will be ample anecdotal fodder
for their prejudices. To a much greater extent,
China has made enormous progress in re-
entering the global family and reorienting its
economy from central planning to free market.
As an American, I root for the home team, but I
am pleased that the game is economic
competition of the type we proffer rather than
ideological enmity and military brinksmanship of
a previous era.
