China’s Growth Affects All of Us

Ted C. Fisher, in his book, “China, Inc.” cites some statistics that should peak anyone’s interest. Here are a few of them:

“Three hundred million rural Chinese will move to cities in the next fifteen years. China must build urban infrastructure equivalent to Houston’s every month in order to absorb them.”
“General Motors expects the Chinese automobile market to be bigger than the U.S. market by the year 2025. Some 74 million Chinese families can now afford to buy cars.”
“On average, American companies make a 42 percent return on their China operations.”
“There are 220 million ‘surplus workers’ in China’s central and western regions. The number of people working in the United States is about 140 million.”
“One in ten American jobs is at risk of being ‘offshored’. ”
“China has 320 million people under the age of fourteen, more than the entire population of the United States.”

Until now, the mental picture that most of us would have of China is one of very poor people who live in grass huts and farming rice. While that is still a fairly accurate picture of much of China, it is one that is changing very rapidly.

Go to a Wal Mart store to see where merchandise is manufactured, and you will find very few items that are made in America. According to the Los Angeles Times, in 1995, only about 6 percent of Wal-Mart’s merchandise was from China, but by 2003, it was somewhere between 50 and 85 percent.

Many industries are moving to China to take advantage of the cheap labor force, but to say that is the only reason industries are moving there would be inaccurate. The Chinese people are very intelligent, hard-working, and innovative, and they are incredibly adept at copying anything from watches to computers. On the other hand, they are do not respect copyrights or patents.

For example, software that cost an American company thousands of dollars can be purchased as a pirated version for the equivalent of a few dollars in China, giving Chinese companies a distinct advantage over American companies.

According to Fisher, Wal-Mart has played a role in China’s growth, due to their policy of demanding cheap prices for goods. While Wal-Mart has done a lot to raise the living standard for millions of Americans, it has also contributed to the trend of American industries that move to China to get their goods produced at cheaper prices for Wal-Mart.

But don’t pick on Wal-Mart. Industries of all types from all over the world are moving to China for the same reason. As more and more factories are built, people from the vast rural areas of China are migrating to cities like Shanghai and Beijing for the jobs they create. In doing so, they create a demand for housing and other infrastructure, placing a demand on the world market for all kinds of raw materials and building materials.

When Ross Perot talked about that “giant sucking sound” of jobs going to Mexico when NAFTA was passed in the mid-nineties, he didn’t see the effect that China would have on Mexico. Not only are goods less expensive to produce in China than they are in America, they also cost less to produce in China than Mexico. As a result, industries are even moving from Mexico to China, making the job market in Mexico worse, and intensifying the illegal immigration problem. Many of the immigrants who come here looking for jobs are ones who lost their industrial jobs in Mexico.

Oddly enough, private business and industry in China is still technically illegal, a holdover from the Communist roots of its government. But the government has turned a blind eye to private industry because of the benefits that capitalism has brought to its country.

China is a sleeping giant that is waking up very rapidly. We as Americans need to understand what is going on in China, because it is already having a profound effect on us. Even more important is that it could someday represent one of the largest mission fields for spreading the Gospel in the world. More on China next week.