From a British perspective the relationship is less fraught And in Shanghai, among the shining skyscrapers, elderly ragged beggars rummaged through rubbish bins. The same party that presided over a nation that cycled to work in identical blue overalls now has to cope with the strains of a society that rivals Brazil as the most unequal on earth.I was told in Beijing that there were two stories about China, both equally valid. One was the boom itself; the other the threats and costs associated with the boom. That is right, but I think there is also a third story, about what this boom means for the rest of us. That is the hardest to fathom.The boom is a Chinese achievement, of course, but it has only been made possible by the actions of the West, in particular by the United States The key driver of the boom has been exports to the US. Without those exports - and the flow of investment and expertise from abroad - China would not be able sustain its present growth. Hardly a day goes by without a new announcement about a trade deal. Some 60 per cent of the exports of the Shanghai region are either from foreign investors or from joint ventures with local companies. Those exports go to the entire developed world and are not just the cheap Christmas-cracker products - check the label next time you buy a fridge.From the point of view of a US manufacturing company it is a no-brainer to outsource some of its production to China. Labour costs are one 10th of their US equivalents, and workers are highly motivated and don't strike or sue for stress. Plants, because they are new, are often better fitted out than those in the States. And the Chinese authorities are less rigorous in their environmental and other regulations.The result is more than an annual trade deficit of more than $100bn a year with China and an exodus of manufacturing jobs.
China gets the most modern plants and all the know-how of advanced American production techniques. In return, the US consumer gets cheap goods, which hold down US inflation rates, and US companies get, they hope, early access to the world's fastest-growing market. But you don't have to listen very hard to hear disquiet in America about the deficit, the export of jobs and the fact that companies are giving away their know-how for free.From a British perspective the relationship is less fraught. Contrary to popular perception, we are big investors in China, until recently the biggest in Europe (we have just been overtaken by Germany), but we are not exporting manufacturing jobs on the US scale. BP is huge there, but then the international oil companies are always investing abroad because that is where most of the oil is. Our banks are there, most notably, of course, HSBC, but again we are not losing obvious jobs; in so far as we are losing jobs in banking to countries with lower wages, it is to India, not China.Still , there are tensions. |
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