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By Tom Cushing

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About this blog: The Raucous Caucus shares the southpaw perspectives of this Boomer on the state of the nation, the world, and, sometimes, other stuff. I enjoy crafting it to keep current, and occasionally to rant on some issue I care about deeply...  (More)

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China’s Other Hobby

Uploaded: Feb 21, 2013
News that the Chinese People's Liberation Army has been seeking to liberate data from all manner of American computing systems has dominated the high-tech news this week. I'm no expert on the defense side of cyber-warfare, but it seems to me that if this country wanted to launch a successful, full-frontal assault on China, or Iran and North Korea for that matter, all we'd have to do is make it a video game with a catchy title, throw-in a few impossibly fast cars and impossibly endowed protagonists – and market it to middle school gamers (meaning anyone under thirty). Them furriners'll rush to the peace table, gangnam-style.

A much more insidious, if plain-sight threat to western interests is examined in African economist Dambisa Moyo's thorough, insightful book: "Winner Take All." In it, she describes the upstream end of China's insatiable manufacturing economy. For at least the past decade, China has made a concerted push to develop and acquire long-term access so-called commodity resources all over the world.

Moyo's focus is on the Third World, where, ironically, the Communist country's approach has been to partner with local governments to assist with rich resource development, and then corner the market for the resulting output. China has surpassed the US as Africa's largest trading partner, and its investment in the continent has sky-rocketed. The Chinese way, unfettered by the notion of the "White Man's Burden," contrasts with the traditional Aid Approach of The West, and has so far been locally very well-received. Therein lies the concern.

Doomsayers have a rich history, from Greek mythology's Cassandra and the Bible's Jeremiah, through the early economist Malthus. The latter is particularly relevant here, for he famously predicted that resources increase arithmetically, while human population tends to explode exponentially (or something like it), leading inevitably to shortages, famine and strife. So far, the world at-large has staved-off the Malthusian apocalypse, but sooner or later … It's like somebody telling you you're going to die – they're bound to be right, it's just a question of when.

Dr. Moyo's point is that it will not take a global catastrophe for China's strategy to bear economic and other influential fruit. She is at pains to describe the present approach as strictly economic, as opposed to the neo-colonialism charges that have been leveled against it, by Secretary of State Clinton and others. But she also discusses the direct export of large numbers of Chinese workers and the strong cultural ties being forged between them and the local citizenries. Further, the infrastructure and other development that has accompanied these projects, and the revenues from commodities sales have boosted the fortunes of the receiving societies and their political entities.

Interestingly, Moyo notes that the Chinese push has corresponded to a substantial drop-off in foreign-aid from the West since the financial crisis of 2008. As she asserts elsewhere, most democratic governments levy taxes on their populations and rely on local votes to stay in power, whereas leaders in aid-based countries can be/have been propped-up by foreigners. She sees local development, then, very positively, as the new basis for various African governments' accountability to their peoples. In any event, alliances of mutual advantage are being forged with China. Remember that early scene in The Godfather where Don Corleone says he may never call-in his favor?

To be sure, western companies have long been participants in extraction industries in Africa, Latin America and Asia. Those histories are sometimes sordid, but the better, more recent examples have involved many important elements of the Chinese model -- like infrastructure, local education and advancement of nationals into management positions. The difference here seems to be in the central organization, scale and unified purpose of the Chinese effort. It's not clear that western nations, individually or in concert, have approached these issues so strategically, or with such a long focus.

In the short run, commodities prices for minerals, energy, foodstuffs, etc. are notoriously fickle. In the longer term, however, market forces are very likely to vindicate some of Moyo's predictions. This low-tech phenomenon may ultimately have a greater international economic and diplomatic impact than cyber-hacking, and our middle-school army is no match for it.

As a concluding point, I think it's important that Dr. Moyo's is an African "voice." Albeit she consults with the best investment banks and has degrees from Oxford and Harvard, her frame of reference is distinct from that of a native daughter or son. She didn't grow up thinking of Chinese or Soviets necessarily as the bad guys; Anglos and Americans haven't always worn white hats in her part of the world, either. In our geographic isolation, we risk a lot if we discount the legitimacy and power of such a voice. She's not necessarily correct, but hers is an exceptionally well-informed opinion, and well worth a thoughtful read.

o --- o --- o --- o --- o ---o

Several commenters have noted on several occasions that these blogs are too long, too convoluted and use dollar words when dimes'll do. So as a service to Myers-Briggs Judgers (I'm a Perceiver, in case that's unclear), others for whom context and nuance are mere annoyances, and everybody else who writes better than I do, I offer the Reader's Digest condensed version:

China buys lots of raw materials. They are making many friends, by partnering with resource-rich countries, all over the world. The African economist-author and a dead European doomsayer think this is bad news for everybody else. They may be right.

Comments

 +  Like this comment
Posted by Don Gnass, a resident of Blackhawk,
on Feb 21, 2013 at 9:46 pm

even that was too long.


 +  Like this comment
Posted by Tom Cushing, a resident of Alamo,
on Feb 22, 2013 at 6:22 am

Darn it! Well Don, maybe ask for a refund?


 +  Like this comment
Posted by Christine Connor, a resident of another community,
on Feb 23, 2013 at 10:47 am

This was interesting always TC. Thank you. I wonder too how this will line up in the future with the trend in Chin now to duplicate (faster and bigger natch) our trend to graduate masses of college graduates unable to find "good" jobs and feeling manufacturing jobs are beneath them. Less Chinese workers would , it seems, be available for "export" and manufacturing outside of China could become more reliant on local labor. I wonder what that will look like in the end...


 +  Like this comment
Posted by Tom Cushing, a resident of Alamo,
on Feb 24, 2013 at 7:36 am

Thanks, 2C. See guys? They read me in Boston (if you define 'they' as my friend from middle school). Atlanta, too, when Enderdog shows up. She even made a point about the actual content of the blog, for which I'm also grateful.

To paraphrase the philosopher Bueller, F.: Life moves pretty fast. It's no doubt true that China faces a whole host of challenges -- meeting the the expectations of its burgeoning middle class, as above, control of information in the Digital Age, air polluted enough to gag a chain-smoking Angeleno. They're also looking over Their shoulders at now-lower-cost manufacturing locales. Who knows -- maybe some day they'll have to worry about Sequestration?

I wish I knew more, but I know frighteningly little about a land whose future and ours are bound to be increasingly intertwined. I thought this book was fascinating, though, and certainly credible enough to report-out here.

Any actual China Hands want to chime-in?


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Feb 25, 2013 at 10:56 am

U.S. policies have enabled China to become what it is today, a big polluting slave labor empire that undermines the stability of third world governments through bribes.

Democrats enacted pro-labor and pro-environmental policies that raised the cost of U.S. labor. U.S. businesses responded by lobbying for free trade rules that enabled companies to move operations to China and other low cost countries in order to get cheap foreign labor and lax environmental rules.

Free trade enable Americans to enjoy cheap imported goods and cleaner air and water. We can also feel superior to other nations, as the U.S. no longer has as much pollution or as bad of labor practices. All of those evils still exist, of course, just here not as much. We pushed it offshore.

The U.S. also enacted the Foreign Corrupt Practices Act, which prevents U.S. companies from paying bribes to foreign officials. This gives Chinese companies an advantage with corrupt third world governments, as China is not concerned about bribes.

The good news is, China is starting to get sick of pollution. Just last week, China's Ministry of Finance proposed environmental tax reforms, including the introduction of a carbon tax. Maybe China will follow America's lead and pass laws that push pollution to other low cost countries. Then they can feel smug about themselves too.


 +  Like this comment
Posted by Dave, a resident of Danville,
on Feb 26, 2013 at 12:55 pm

Spcwt seems almost wistful for the days of low wages and unchecked industrial pollution........Ah, the good old days!


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Feb 26, 2013 at 4:00 pm

Me? No way. I love clean air and cheap imported goods.


 +  Like this comment
Posted by Citizen Paine, a resident of Danville,
on Feb 27, 2013 at 8:01 am

More on China's response to its development/pollution challenges: Web Link


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Feb 27, 2013 at 1:06 pm

Thanks for the article CP. It should be required reading for the dreamers who still think we can stop climate change.

Trying to stop climate change is like trying to stop a bus full of unruly teenagers from farting. The adults can agree to hold it in, but that's not going to stop the teens. Better to adapt than try to stop it. Roll down the windows.

Even the so-called mature economies aren't doing a good job reducing CO2 emissions. The developed countries that signed the Kyoto Protocol in 1997 were supposed to reduce their carbon emissions to 1990 levels by 2010 They ended up INCREASING them by 10% to 20% and more.

Japan promised a 6% reduction relative to its 1990 levels, but instead saw a 7.4% increase, despite 20 years of economic stagnation. Australia, where growth has been more robust, pledged to let carbon increase by no more than 8%. Instead its 1990-2010 emissions rose 47.5%. Netherlands increased by 20%. Canada increased by 24%.

China's CO2 emissions are increasing by over 9% per year. They now account for 30% of all CO2 emissions. The U.S. accounts for 16%. The U.S. and Europe could get rid of every car, bus, and all motorized vehicles and global CO2 emissions would still increase.

I've read China must grow its economy by 8% per year just to create enough jobs for workers displaced from modernizing state-owned industries. As Zou Ji noted in the article, China has no choice but to grow using coal.

How do you tell poor people that they can't rely on cheap coal to rise out of poverty? The average Chinese citizen lives on $2 per day or less. Do you just tell them they must remain poor?

You can't expect the Chinese economy to rely on alternative energy. Low carbon fuels are expensive and will be for the foreseeable future. People who deny that, deny science.

Did you see the comment that China now spends 3% of their GDP on treating smog-related illnesses?

Still glad we outsourced our production to China?

What a disaster.


 +  Like this comment
Posted by Everywoman, a resident of Danville,
on Feb 27, 2013 at 1:31 pm

@ spcwt -- I was fascinated by your analysis, and I have one question: How do I get my husband to 'agree to hold it in?'


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Feb 27, 2013 at 2:13 pm

Open the window.


 +  Like this comment
Posted by Dave, a resident of Danville,
on Feb 28, 2013 at 9:43 pm

One hopeful sign, though, is that China is rapidly developing its manufacturing capacity for solar energy panels.


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Mar 1, 2013 at 7:58 pm

Uh... yeah. Solar panels will fix this. ha ha.

That's like peeing in the desert and expecting it to turn into a garden paradise. Not going to happen.


 +  Like this comment
Posted by Dave, a resident of Danville,
on Mar 4, 2013 at 1:42 pm

To date, China has installed 21 gigawatts of solar energy capacity already and has plans to increase that to 35 gigawatts by 2015. That is a lot. This rapid expansion is large part a response to increasing pollution from the burning of fossil fuels.


 +  Like this comment
Posted by spcwt, a resident of Danville,
on Mar 5, 2013 at 12:08 pm

21 gigawatts is not a lot.

China has more than 500 gigawatts of coal burning power plants.

China burns almost as much coal as the rest of the world — combined. 3.8 billion tons per year.

And its coal use is growing. China builds, on average, one new coal burning power plant every week. Web Link


 +  Like this comment
Posted by Dave, a resident of Danville,
on Mar 7, 2013 at 10:31 pm

Seems like pretty rapid change in the right direction. It won't be long before China far surpasses the U.S. in solar energy production.



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