China - threat?

Here's another story about Wal-Mart & importing from PBS:

Sam Walton did Import

 

From LE's link:

'In truth, Walton's "Buy American" campaign did rescue some U.S. manufacturers, but only those who followed his playbook. In a letter he wrote to suppliers in 1985, he made clear he was committed to buying U.S. goods only if they upgraded their operations and improved productivity to "fill our requirements."

"We're not interested in charity here; we don't believe in subsidizing substandard work or inefficiency," Walton wrote in his 1992 autobiography Made in America]. "So our primary goal became to work with American manufacturers, and see if our formidable buying power could help them deliver the goods, and in the process, save some American manufacturing jobs."

As one retired senior Wal-Mart executive explained: "Sam wanted everything possible [made] in the U. S., but he was not going to pay [extra] for it to stay. The main thing he asked was: 'Is it good for our customers?' If not, we went and made it overseas."'


Sam Walton wasn't perfect. But neither are you, LadyEagle, and neither am I or any other poster on this board.

Sam Walton was a great American and great for Americans. I have no doubt whatsoever that Wal-Mart would be a better company today if he was still running it.

 

I don't know all the ends and outs of MFT status. But I know Clinton played a big role in it. Perhaps it started sooner.

I am not so sure about Sam's greatness. He was accomplished that is for sure. But his willingness to go to imports when the labor violations are not to American standards leaves something to be diesired. The last American TV manufacturer is still in business only because they sued China for unfair trade practice of dumping below cost TV on the market. The American manufacturer won, but guess who joined the law suit on China's side? You guess it, Wal-Mart. You can't justify an American retailer helping a foreign government who is unfairly driving the American out of business.

 

"In truth, Walton's "Buy American" campaign did rescue some U.S. manufacturers, but only those who followed his playbook. In a letter he wrote to suppliers in 1985, he made clear he was committed to buying U.S. goods only if they upgraded their operations and improved productivity to "fill our requirements.""---------------------------------------------------

And we will eventually reach this standard when we have American workers who will compete with the Chinese by working long ours for no overtime without benefits and low, I mean really Low pay.

The pay off for Wal-mart is that they will be the most favored American retailer in China, they hope to have 2000 stores in China in the near future.

 

If the average American earns $24K/year ($12/hr), and the average Wal-Mart employees earns $12/hr -- exactly the American average, how is this low pay? And they do have access to benefits, unlike the Chinese, who are forced to pay for health care upfront with cash.

I think Wal-Mart is getting a raw deal in public relations.

 

You are misreading me. I am not saying wal-mart employees are low paid. I am saying if we are going to get all of our imports from China. I we are going to enjoy the benefits of getting imports from a country with few human rights in which the gov owns most of the factories. Than we will not be able to compete again in manufacturing until we are competitive. That means we will not be able to pay American factory workers high pay and high benefits. We can't make products that will compete with China when our labor cost are so much higher.

 

Not only that, but China dumps chemicals into the environment. They don't have the same costly government regulations as American manufacturers, which cause the cost of American goods to be higher, not to mention the human wage element.

From ChinaDaily.com

 

China is no threat. Chinese people traditionally mistrust their govt. We are well on the way to corrupting the young people with consumer garbage. China will fall apart like the USSR did.

 

China is highly unlikely to fall apart. Even when it fragments, (and that's happened numerous times), it remains a cultural entity.

"Falling apart" in Chinese culture would be six to 12 regional warlords - only with thermonuclear weapons.

Corruption has happened before, too. The Chinese are good at institutionalizing and controlling corruption. It's part of reality as far as they are concerned.

 

An interesting and relevant article by Bill Gertz of the Washington Times , detailing the continuing buildup of hardened nuclear sites in China:Commercial photos show Chinese nuke buildup

 

FTR,

I'll check out the book. I need to bone up on the subject...

 

FTR,

I don't know if you have been watching the Bernanke hearings, but there is tremendous PR pressure for China to further float their currency, even from Sen. Schumer. Since a quarter of our current-accounts deficit is with the Chinese, a fully-floating currency would knock down their surplus greatly, hurting their attractiveness for foreign investment and thereby decreasing the hard currency available for modernizing their infrastructure. One can't divorce this from their military capabilities...

 

A fixed currency policy is where a government arbitrarily dictates the rate of exchange between it's currency and those of other nations, ignoring the current-accounts balance (trade deficit or surplus). A floating currency policy is where the exchange rate is set by the supply /demand dynamics of the currency (the market).

In China's case, even though it has an excess of dollars ($1 trillion, by some estimates) and that surplus should devalue the dollar in relation to the yuan, the Chinese government sets a fixed exchange rate of 8.066 yuans to the dollar. This makes yuans cheap in comparison to the dollar, and gives China an unfair trade advantage with the U.S. The effect is to make Chinese imports less expensive than domestic products, so Americans buy the imports instead of American products. It grossly inflates the trade surplus China has with the U.S. (and other foreign currencies, as well), and basically causes us to finance growth of the Chinese economy (9%, last year), and costs our economy jobs. That trade surplus greatly contributes to the modernization of China's infrastructure (everything from airports to ports to telecommunications, etc.) and that, in turn, means that the west is basically underwriting the relative military capability of China.

A floating currency policy would revalue the yuan in relation to it's current-accounts balance with the dollar (and also other foreign currencies). It would reduce Chinese exports, thereby reducing the trade surplus (and possibly even eliminating it); less foreign income would flow into China, meaning they would have less money to plow into modernizing their economy (and slowing down the military buildup). It would also mean that fewer American jobs would disappear to Chinese competition.

In a nutshell, it means that China has been "cheating" in it's trade relationship with the United States (and other nations, as well). Rightly so, Congress and the markets have been greatly concerned about this artifical imbalance, and grilled Fed. Chairman Bernanke both on the effect this cheating has on our economy, and how to force China to comply with international currency standards. Here is a short article from MarketWatch which details legislation introduced to strip China of normal trade status (which confers certain trading privileges to China):

U.S. Senators seek to end China's normal trade status

By John Godfrey
Of DOW JONES NEWSWIRES
"WASHINGTON (MarketWatch) -- U.S. Sens. Lindsey Graham, R-S.C., and Byron Dorgan, D-N.D., announced legislation Thursday that would revoke normal trade relations with China.
Under the legislation, Congress would have to vote annually to grant China normal trade relations with the U.S.
Dorgan and Graham said China has "cheated" consistently since the U.S. granted it permanent normal trade relation status in 2000. "

FTR, there is a great disparity of opinion on how to force China to float it's currency, and even Bernanke did not offer any real solutions; he merely advised that it should occur. There are legislative measures that our Congress can enact to "encourage" the Chinese to quit cheating, and there are also World Trade Organization (WTO) channels through which we can seek compliance (but the WTO is notoriously slow in resolving trade complaints). The issue is complicated by the possibility of Chinese retaliation (such as imposing general or specific tariffs on our imports into China, and also erecting regulatory barriers to our ability to penetrate the Chinese market with goods and services.)

Our trade deficit with China is not only the result of this currency cheating, but it indirectly weakens our national security in relation to a possible military confrontation over Taiwan (or other future theatres of conflict). It has to end, somehow. That's the conundrum. Sorry to be so long-winded, but it is a complicated, vital issue of economic and national security.

 

Thanks, FTR. Here is a report today of a $100 billion oil deal between Iran and China that will make it even harder for China to support economic sanctions on Iran by the UN Security Council --
China, Iran Near $100B Oil Field Deal
With Carl Limbacher and NewsMax.com Staff
Friday, Feb. 17, 2006 9:26 a.m. EST
"China and Iran are close to setting plans to develop Iran's Yadavaran oil field, according to published reports, a multibillion-dollar deal that comes as Tehran faces the prospect of sanctions over its nuclear program.

The deal is thought potentially to be worth about $100 billion."

It confirms aggressive investment by China in nations that are energy rich yet lacking in development, like Venezuala (recently) and Iran, that are also potentially hostile to the U.S. China is, of course, sucking up crude as fast as it can buy it, so locking in these investments are surely a major motivation as well.

 

Have you ever been in China? I have and I consider China a threat only to herself. Presently they are almost feeding themselves, and that for them is a big accomplishment. Their growth and their place in the world depents directly on outside investment coming to China. The investment that we have in China can easily be removed at any time. Now I agree that the quicker we remove our(manufacturing ) investment from China the quicker China will(or would) fall.