China’s fast economic rise, stockpiling of enormous reserves of foreign currency (mostly U.S. dollars) and treasury holdings have been achieved to a great extent at the expense of others. Though its people have been diligent in their enterprises, the communist policies favor them while exploiting the rest of the world. It has held down the value of its currency, the renminbi, for years together heedless of the protestations of the rest of the world. This serves to make Chinese exports cheaper and the imports to China more expensive. For too long, has this been a one way street.
Damaging as it is, the gravest threat hurting the U.S. and other developed countries is widespread intellectual and technological theft. Following that, the big hurdle is the many restrictions in the form of protectionist barriers that are imposed on foreign companies trying to do business with and in China. A glaring example of this is Beijing’s insistence that foreign companies have to share their technology and intellectual property with China for their products to be sold in China. They force foreign companies to transfer such technology to state firms, by dangling the prospect of access to the huge Chinese market. They then capitalize on the situation with their own state and in some instances private domestic companies, out produce and under price the foreign companies. These state companies and others are aided by massive official support, directly and indirectly. They in turn bombard the same U.S. and European markets with their exports. There hardly exists any enforcement of intellectual property rights which goes against the commitment made by China when it sought and was admitted to the World Trade Organization in 2001. It controls and limits the U.S. and other foreign investment and when the foreign companies bid on state tenders and projects there is no transparency at all.
Amongst its own youth, officials engage in widespread theft of other student’s identities and transcripts to benefit their offspring. When such is the case, one need not take a course in logic to see how outsiders fare in their commercial pursuits. There is widespread counterfeiting of designer consumer goods, pirated DVD’s and most software used in China is illegally procured. Automakers like VOLKSWAGEN had to contend with its JETTA brand being duplicated as a Chinese Cherry car and GM was shocked to face an identical version of its QQ with a Chinese manufacturer. HONDA had to fight an exact replica bearing the name HONGDA. All the competing local brands naturally were made at a much lower cost. YAMAHA’s Jimbao motorbikes countered another Chinese twin at one third their price. Recently, German Chancellor Angela Merkel during her visit to China openly remarked in her meeting with Chinese executives, if parts of the new VOLSWAGEN had already been counterfeited.
China is manipulating the supply of rare earth minerals which are crucial to a host of industries like clean-tech products, including solar panels, wind turbines and batteries as well as for components in cell phones. Five of these minerals come almost exclusively from China and they are absolutely vital to the manufacture of small, powerful, electric motors, energy efficient compact fluorescent bulbs etc. As evidenced with the brief shutdown of its supply to Japan last September after the brazen Chinese trawler episode in Japanese territorial waters, the world’s industries have cause for concern. Belatedly, the U.S., Japan, Vietnam and Australia are looking to alternate sources of supply.
Flush with its foreign exchange reserves, China is actively investing in the distressed economies of Europe, courting their support for its policies and to soften their opposition. During Prime Minister Wen’s visit, he reminded them of this with his remark that China had acted as “a friend” to Greece, Spain, Italy and other troubled economies. In the future, people will ruminate on the matter of not needing any enemies when one has such friends.
The most brazen episode recently was a fake, flawless APPLE store in Kunming discovered by an American blogger living there. Even the employees were under the impression that they were working for the famous American company. Bad enough to have counterfeited products openly sold in China but to have such a storefront too? Looks like a script made for a movie. It was unclear whether that store was selling duplicated APPLE products, or products smuggled in to avoid paying higher local taxes.
In Africa, China courted the powerful in Namibia by offering scholarships and grants to their children to study at Chinese universities. This was solely done to gain access to mineral resources, and to win no-bid contracts for its well connected companies. When this was made public by a local newspaper, it unleashed a wave of fury from the nation’s civil society groups. In Zambia, also a mineral rich country, China’s treatment of local workers has generated a great deal of resentment as they tended to look down upon the local work force. While it is a universally acknowledged fact that exports of cheap Chinese products has devastated the local manufacturers, the export of cheap labor from China is also fostering bitterness across Asia and Africa. This has led to unfortunate instances of violence against the poor Chinese workers who are merely doing their jobs provided by their home companies, who ship them abroad. Local residents accuse the Chinese companies of stealing their jobs and isolate them all the while hankering after their natural resources. It is widely heard across Africa that the previous century saw Europeans colonize them, and in this century the Chinese have taken over that role.
Such activities have spread to Latin America too, in China’s quest for commodities, be it soy beans from Brazil, timber from Guyana or iron ore and copper from the mines of Peru. They extract the resources from those companies and in turn flood the local markets with cheap cell phones, toys, textiles and cars, wiping out local manufacturers. They attempted to buy vast acreage of land in South America but were thwarted by Brazil and Argentina. They have been extremely uneasy about land purchases by the Chinese so China has now taken to leasing the land from the farmers. Commodities exported from Brazil to China amount to almost 84% but 98% of imports from China to Brazil consist of lower priced cars and other goods. Resentment and caution is uppermost in the minds of people there.