China pushes its economic leverage

Chinese woman working on laptop

The rise of China and its impact on economies all over the world isn’t a new story, but this overview in the New York Times is worth reading. The tone is one of looking at the downside of China’s economic empire and the unwillingness of desperate partners like European nations to assert themselves. But there is an upside, as China can provide much needed capital to struggling countries, and this also gives China a huge stake in stability around the world. There are certainly concerns on issues like the environment and human rights, but one needs to look at the big picture as well. Fortunately, President Obama’s foreign policy is aimed at engaging but also containing China, and he has been willing to use our own leverage in this relationship.


More Apple audits in China

Apple is ramping up audits of factories in China.

Apple has told a prominent Chinese environmental activist that it will soon launch independent environmental audits of at least two suppliers’ factories in China, the activist said.

The audits come as Apple faces mounting criticism about toxic pollution and factory injuries at overseas suppliers’ factories. The environmental reviews would be separate from an independent probe of working conditions at the China factories of Apple suppliers, including Foxconn Technology, that began last week.

Ma Jun, founder of The Institute of Environmental and Public Affairs, told USA TODAY Monday in a phone interview that Apple agreed to the independent audits in late January in response to two reports that IPE and other environmental groups released last year documenting hazardous waste leaks and the use of toxic chemicals at suspected Apple suppliers.

Apple’s image has taken a beating with the problems at Foxconn, so let’s see if this is a new trend.


U.S. should increase Chinese tourism

Tom Friedman writes often about China, and his latest column addresses current hot issues like currency valuation, manufacturing and trade. But this paragraph grabbed my attention:

But we also need to stop thinking that a middle class can be sustained only by factory jobs. Thirty years ago, Hong Kong was a manufacturing center. Now its economy is 97 percent services. It has adjusted so well that this year the Hong Kong government is giving a bonus of $775 to each of its residents. One reason is that Hong Kong has transformed itself into a huge tourist center that last year received 36 million visitors — 23 million from China. Their hotel stays, dining and jewelry purchases are driving prosperity here. The U.S. Commerce Department says 801,000 Mainland Chinese visited the U.S. last year, adding $5 billion to the U.S. economy. More Chinese want to come, but, for security reasons, visas are hard to obtain. If we let in as many Chinese tourists as Hong Kong, it would inject more than $115 billion into what is a highly unionized U.S. hotel, restaurant, gaming and tourism industry.

The United States needs to get beyond some of the over-zealous security restrictions imposed after 9/11 and let as many Chinese and other tourists come visit as possible. Tourism has helped to sustain Europe for years, and the U.S. needs to take advantage of this as well.


China's ambitious investment in public works

It’s much easier to spend money when you actually have it. The U.S. is sitting on a massive deficit, so we have to borrow to fund our stimulus program. China has cold, hard cash, and .

Guizhou province, in southwestern China, is a place of striking natural beauty: jagged peaks surrounded by fields of bright green rape, ridges slashed with limestone outcrops and plunging waterfalls. But these days the region’s grandest sight is man-made: the Baling River Bridge. Due to be completed early next year, this 1.4-mile (2.25 km) marvel of engineering is a jarringly conspicuous splash of 21st century technology amid Guizhou’s farms and rice fields, which haven’t changed much in thousands of years. It’s as if the Golden Gate Bridge had been dropped into some bucolic Middle-earth mountainscape.

Out of place as it may appear, this is no bridge to nowhere. Soaring a quarter-mile (400 m) above the Baling River, the $216 million span will reduce travel time considerably for the stream of trucks and cars traversing a highway that connects the provincial capital, Guiyang, with the nearest big city, Kunming, the capital of neighboring Yunnan province. Far from resenting the bridge as a white elephant, the residents of nearby Guanling, a one-stoplight town where the average income is less than $150 a year, view it as crucial to economic development and improvement in their lives. “I really cannot wait for the bridge to be completed,” says Yuan Bo, 25, a graphic designer who takes a two-hour bus ride every week from his home in Anshun to help in his family’s Guanling restaurant.

What’s good for Yuan Bo and Guanling is good for China. While the recession-racked West debates the wisdom of borrowing billions of dollars and spending it on economic stimulus, China is reaching into its vast financial reserves to launch one of the most ambitious and expensive public-works programs ever undertaken. The Baling River Bridge is only one of hundreds of infrastructure projects — ports, airports, bridges, schools, hospitals, highways, railroads — on which China plans to spend about $450 billion over the next several years. Announced in November, this pumped-up New Deal is aimed at more than cushioning China’s economic fall as the global recession bites deeply into the country’s manufacturing and export sectors. The new projects will make it much easier for commerce and people to move around China, hence stimulating domestic demand and reducing China’s economic reliance on exports, vital as rich world consumers rebuild their balance sheets and international trade contracts.


Consumer spending in China

It’s not nearly as high as the Chinese government wants it to be. The Chinese are naturally conservative with their spending habits, and that could hamper future growth.


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