The Intricacies of China Unseating Germany As the World's Biggest Exporter! (Part 1)

In the January 10, 2010 edition of the yahoo.com news, it was promulgated that China has overtaken Germany as the world's biggest exporter even though full confirmation is expected in February 2010 when the final figures for Europe's biggest economy is released. The assertion from the perspective of the author of the article is a reflection of the economic strides China has made to reach a pinnacle of an economic super power and also a vivid sign of a gradual shift of power from the West to the East. According to the article, the total export in 2009 for China was more than $1.2 trillion as against $1.17 forecasted for Germany. Sincerely, this is not the first time China has overtaken Germany with regards to economy issues as it is germane and a memento of what happened in 2007 with regards to the two countries. Recall in 2007, China overtook Germany as the world's third biggest economy and obviously that should have served as a signal that the country is on course to unseat Germany as the world's largest exporter. At least, the incident should not preposterous to the world considering the fact that the symptoms were evident enough.

In my article titled "Another Economic Bubble Burst Ahead- China, I prognosticated the possibility of China becoming the locomotive engine driving the world economy as it is predestined to lead the world in the industrial sector, technology sector and the financial sector. Believe it or not, the attainment of the status of the world's largest exporter coupled with technology and strong financial base suggest a paradigm of the country being the "locomotive" engine driving the world economy. If China continues to maintain its GDP growth rate of over 8% whilst that of the western world hovers around growth values of less than 3%, it is likely China will dethrone Japan as the world's second biggest economy by the year 2015 and if possible in the years after overtake United States as the world's largest economy. This hypothesis is based on the 2008 GDP growth estimates where China recorded 9.6% with Japan recording -0.4%, Germany 1% and U.S 1.1%. Optimists argue that it is not possible for China to overtake United States as the world's biggest economy and they could be partially right. However, the world did not envision China would overtake United States in Auto sales in 2009. Again, analyst did not envisage China overtaking Germany so soon and here we are it has happened. Indeed, the moment may be right and China could be said to be on its way to the throne. As an analyst, I am of the view that China can overtake Japan but not United States. There are several factors involved here which will be discussed in a later article. But for now, I will touch on one of the factors namely the economic statistic GDP (purchasing power parity) per CAPITA which is only an indicator of the standard of living. Though this is not a true measurement for standard of living it can be used as a proxy for accessing the standard of living of countries. China has a population of about 1.3 billion with an estimated growth of 0.655 % (2009 estimate) whilst the U.S has a population of about 307 million and an estimated growth of 0.975 % (2009 estimate). China has estimated GDP (ppp) per CAPITA of $2,033 and is ranked 131th out of 207 economies in the world in terms of per capita income. United States value is $44,155 and is ranked 8th also out of 207 economies. Hypothetically, the standard of living of the people in the United States should be about ten times better than that of China. Doing the math here, it presupposes that the ability of the citizens to impact the economy (in terms of GDP growth) through their purchasing power is ten times more for United States. This also means the ability of the United States to maintain its economy size judging from the fact that the U.S economy depends much on domestic consumer spending is more predictable as against China. If China's economy is to be dependent on domestic spending in the midst of global slump in exports, then the low GDP (ppp) per CAPITA signals a disadvantage compared to United States. China may increase its GDP growth but it would have to leverage its per capita by bridging the wide purchasing power parity gap between its urban and rural population segments. Subsequently, it may call for policies that would increase the standard of living of its people across all segments.

How be it, China cannot overtake the U.S in terms of economy size until this population segment factor and other factors are diligently pursued and completed. Meanwhile, in terms of global competitiveness they are ranked nearly the same (U.S is 5.59/134 whilst China is 4.73/134). However, in terms of attracting and retaining investors or Foreign Direct Investment, U.S is better ranked than China. Reminder is the growing impasse between Google and China about the internet security breach prompting threats of Google leaving China. What is not clear is whether China would accept the departure of Google. If Google should leave, what effect will it have on the credibility of companies or nations doing business with China? Now, proponents of GDP per CAPITA economics may argue that the GDP per CAPITA statistic is not a good measure for standard of living and personal income levels in a country. Nevertheless, all things being equal there is a systematic level of correlation between GDP per CAPITA and standard of living in most countries. That is to say GDP per CAPITA decreases as the standard of living decrease and vice versa.

Strangely, the yahoo.com news article attributed the feat of China to its ability to enact policies to deal with the world recession. The article emphasized that its policies were able to cushion the economic shock from the global economic crises whilst other nations were overwhelmed by the crisis. It must be stressed here that much as the policies and global recovery were contributing factors, the real cause of China's survival and stronger emergence is bottled up in its exchange rate policies and government subsidies and financial assistance package that is the stimulus. In fact, the combine policy framework of exchange rate manipulation and government subsidies promotes low pricing strategy for its exports ultimately increasing the attractiveness of its products and also its market share of the world's export. Unfortunately, the global trade imbalance cannot be completely removed as the Chinese government would want to enact policies and strategies that will give Chinese products an edge in exports in addition to promoting less import. Now, in the midst of all these developments there are two questions that needs to be addressed by the world and they are

1. Whether China the current locomotive engine of the world economy will bow to another

currency revaluation pressure

2. Whether the trade imbalance between China and the world is a threat in terms of monopoly and

whether the world has other options to deal with it.

The objective of this two part article is to discuss in circumspect the ramifications of the unanswered questions and what it means for the world.

Currency revaluation issue

In the next few months and perhaps years there is expected to be a growing pressure on China by the United States, Germany and the other economies of the world about the urgent need for China to revaluate its currency the Yuan to correct for and curtail the growing trade imbalance between China and these economies. It is an undisputable fact that China has trade surplus with almost all these countries as these economies are drowning in mounting trade deficit with no end in sight. The fact is China has been through such barrage of criticisms before with regards to the impact of its low valued currency on exports. Recall in 2005, China under growing criticism of the impact of its low valued currency on international trade was compelled to revalue the Yuan by a whooping 2% against the dollar. Additionally, a policy change of pursuing a floating exchange rate system for its currency was effected. The corollary was the creation of a currency (the Yuan) whose value was based on a set of major currencies which could deviate as much as 0.5% within a day. Yet again, the western world in the nearest future may be agitating for another round of revaluation. Europeans and the United States may be perturbed because competition with China is becoming difficult primarily due to the Yuan being relatively low in value which makes the products from China less expensive for foreign countries and that of EU and U.S more expensive. However, criticisms may not be feasible this time. It is likely China may not vouchsafe to the western countries led pressure to revalue its currency. Apparently, the world may be forced to seek for other options of dealing with the situation which could call for trade tactics such as imposition of trade tariffs, quotas e.t.c. on Chinese exports. But one wonders if such option will yield the expected results as well judging from the fact that an action plan of this sort may seem more visionary to China than pragmatic and results-producing. On the other hand, China may argue that revaluation of the yuan will have marginal impact on the exports trend and subsequently the global imbalance using the developments in 2005 as the basis for argument. In retrospect, the revaluation of its currency in 2005 produced a marginal effect on the attractiveness of its exports and consequently China may not yield to the exchange rate policies again. Analytically, revaluation may not reduce the competitiveness of Chinese products neither would it correct the international trade imbalance due to the fact that there are other factors other than exchange rate policies that contribute to the attractiveness of its exports. These are factors that are contributing immensely to the low priced exports therefore exacerbating the global trade imbalance.

Now, the factors other than exchange rate that make its exports superior in terms of global demand are government subsidies, expansion of China's trade horizon and piracy problems. Government provides subsidies for exporters which culminate in lower cost of production. These firms and investors receive free loans and some free factors of production such as land which has led to lower cost of production and lower pricing of exports. There are also cases of other government fiscal inputs such as increased tax rebates on exports, increased tax refunds and improved export credit insurance during the year 2009. Let's not forget also the 4 trillion yuan ($586 billion) stimulus package injected into the economy by the government. All these factors are incentives that culminate in a lower cost of production and substantiate lower pricing of its exports in addition to making it more competitive. Ultimately, if China should revalue its currency again to make its products expensive, the effect on trade imbalance would be marginal. But the question that remains is whether the government will remove these incentives for its exports to be expensive and to plummet.

Currently, China has judiciously widen its trade horizon with several countries in the world and should the western world reduce their imports of Chinese goods, there is the possibility of China expanding its trade with the East (The Asian block), South America (predominantly Brazil based on BRIC alliance), and Africa where it has made unimaginable strides. This is even against the background that the western world is the major trading partner of China. Turning their attention away from the western world will be a desperate move as the country would want to maintain its superiority in exports. On the other hand, people in the western world are attracted to China's low priced products because of the propensity to make some savings in this era of economic hardships. So the situation seems very paradoxical with regards to the export between China and the western world.

Another factor that has contributed to reduction in market share for the western world is the lack of restrictions on piracy in China. Individuals engage in fictitious production of products that are similar to those produced by EU or United States firms operating in China and abroad. For example low-tech goods or electronic gadgets such as CDs and DVDs can easily be produced by individuals and this is taking market share from other countries. The other serious defect of this problem is the reduction in imports as well for China. The pirated products increase supply and so lessen proclivity towards more imports. China much as it exports lots of low-tech goods also imports many as well but the imports are likely to be reduced by the pirated products in the system. This means due to piracy products in the system, there is less import demand compared to actually what the import should have been. This is to the advantage of China obviously increasing its net exports and GDP as well.

All in all, the demand by the world on China to pursue exchange rate policies to correct the imbalance in trade may not suffice because of these factors and secondly China would want to maintain its position in the world economy. Nevertheless, on a positive note the growth of China is good for the world. Like a German analyst recently said, growth in China is good for the other economies of the world as the country's demand for capital goods such as machinery, raw materials, oil and high value products used in its industrial sector also stimulates exports from other countries such as Germany and United States. However, what remains to be known is whether future policies will seek to monopolize the world economy by promoting vertical integration in the Chinese industrial sector. An action plan of vertical integration will ultimately reduce the importation of heavy duty or high valued products by firms in China. Read the next segment of this article!

Source: Charles Horace Ampong [MSc(Eng), MBA(finance)]
GLG Councils Consultant
Blog: http://www.charliepee.blogspot.com

China's Gray Revolution - Why China May Invent the New Business of Aging

Discussions of China tend to focus on size - a nation of over 1.3 billion people certainly deserves attention from business and investors worldwide. But, 'total' numbers reveal little about underlying social and market dynamics nor the opportunities they may present.

China is undergoing a 'gray' revolution. While discussions of aging and innovation almost exclusively focus on the industrialized economies of Europe, North America, Japan and the tiger economies of Asia, China may be the venue to watch, and for innovators to engage in what's new in aging. A convergence of forces -- demographic transition, family dynamics, and institutional readiness provide a promising market for innovations in health delivery, eldercare and aging services.

Disruptive Demographics in the Middle Kingdom

Gray China - Asia Studies Monitor data indicate that life expectancy in China was a young 41 years old compared to 65 and older in Europe and North America in 1950. China is closing the longevity gap. Today, life expectancy in China has jumped to nearly 79 years compared to 82+ years in western industrialized economies.

According to the United Nations, the number of people over 60 in China is approximately 167 million. Imagine - an entire nation of older adults larger than the total populations of Germany and France combined. In only 10 years, China's older population is projected to be 248 million and by mid-century 437 million people or more than the total projected population of the United States in 2050.

Living Globally But Aging Alone - Two socio-economic factors shape China's aging today: fewer children and economic development. The oft-cited one child one family policy, instituted in 1979, has been effective in managing population growth. It has also resulted in a fundamental change in China's support ratio (the number of people working compared to the number of people over retirement age). According to the Center for Strategic and International Studies, China's support ratio is more than 5 working people for every older person, by 2030 it may be only 2.5 working adults, and by mid-century ~1.6 working age people to every adult over retirement age.

Globalization brings change to even the most traditional families. Economic opportunity is growing fastest in China's urban centers. Income for younger workers may be 3X higher in cities than in rural regions. Consequently, many adult children are leaving the family home for work in other regions. An extraordinary number and proportion of elderly Chinese are aging alone. China Daily reports that an estimated 80 million (of the nation's 167 million 60+ population) older adults live alone. If accurate, these numbers reflect more than 47 percent of the older population aging alone compared to 30 percent of older people "home alone" in the United States - greatly challenging the commonly held belief that family tradition and culture shapes the alternative futures of aging around the world.

Care Gap - The family has traditionally provided eldercare. Consequently, China has an underdeveloped aging services system. Today there is a growing care gap to meet daily and long-term care needs. Community senior centers are slowly emerging in cities and some rural areas. The China National Committee on Ageing estimates that about 25 percent or 30 million older people need long-term care due to disability and disease. Compared to an estimated 50-70 long-term care beds per 1000 older adults in industrialized economies, there are only ~10 per 1000 older people in China. 2008 data indicates that most of these beds are already filled. Beyond facilities, the formal "careforce" in China is approximately 30,000 workers - estimates suggest that 10 million workers may be needed.

Innovating a New Industry of Old Age in China

An underdeveloped network of aging services and related institutions is a problem for China, but it may also be an opportunity. Institutions are generally biased in favor of 'yesterday's' definition of a problem and yesterday's range of available solutions. Simply applying models of aging services from other nations, many designed decades ago, will not necessarily meet China's needs. Aging in China will require engineering new organizations that combine public and private providers, services and technologies. China's demographic imperative to do something now, without a real legacy of service providers wedded to established practices and technology, is an opportunity to invent a new business of aging. Recognizing the clear need, China's Ministry of Civil Affairs Wang Hui declared in a People's Daily interview "We want to turn elderly care services into an industry in the long run."

Insight & Innovations

What are the opportunities for creative public-private partnerships, technology and services to support China's aging population? Remote family care, health & wellness and aging services are three categories that could draw upon China's existing capacity, a wide variety of global companies, NGOs and technologies to implement a uniquely Chinese eldercare services industry in the near-term.

Remote Family Care - China's 4-2-1 family structure, four elderly parents, a young couple, with one child is Asia's sandwich generation. Insurers that currently offer life products in China, e.g., Allianz, Ping An, may find that their growing market of young urban consumers are a cross-sell opportunity for a product to provide home care services to their parents living near or a region away. Other firms that may find family care services an adjacent opportunity to their core business are banks and money transfer agents that facilitate funds transfers from children working in cities to their rural parents. Insurers and banks could aggregate these demands and source homecare, maintenance and other services to public or approved private providers.

Maintaining regular social connection with family is critical to the health and wellbeing of an elderly parent - but it is also important to young parents seeking family advice and grandchildren learning about their past. An estimated 384 million Chinese are now online - not the same as human touch, but 'virtual' touch may replace no touch at all. AgeLab field research indicates that selected senior centers in urban areas have one or more Internet connections. Community centers and senior housing, such as those offered by Provincial governments, Society Care (established 1950) and Modern Care (established 1990) should make these services an investment priority and promote their use. Introduction of easy-to-use video conferencing applications and Internet social networking sites such as China's Kaixin, Weibo, QQ and Youku are the new tools to connect the generations.

Health & Wellness - Maintaining good dietary habits becomes more important with age. But, eating, and eating well, is a social activity. Older adults that live alone become less interested and, eventually less able, to prepare a nutritious meal. Working within the context of traditional Chinese cooking, food companies (e.g., Groupe Danone, Nestle, General Mills) may find easy-to-prepare, easy to digest, high nutrition 'functional foods' be successful in China's fast growing aging market.

Managing chronic disease (particularly hypertension, diabetes, heart disease) in China, as in every other country, is critical to wellbeing across the lifespan as well as managing the personal and public cost of disability. Disease management services that focus on diet, physical activity, medication compliance, and behavior modification (e.g., smoking cessation) are expanding into developing economies and reaching disadvantaged elderly. Healthways, for example, partners with Fleury S.A. to provide disease management and wellness services to 40 million Brazilians. In Singapore, the Tsao Foundation provides social care services and operates clinics that are a model of integrative medicine using the best of both traditional Chinese and western medical practice.

Telemedicine may be one of the best investments for an aging China. Telemedicine is not a second best alternative to care. The Scottish Centre for Telehealth, in partnership with Cisco, has shown that telemedicine can produce an over 90 percent patient satisfaction rating. NGOs, telecommunications companies and large health services providers (e.g., Partners HealthCare Center for Connected Health, University of Rochester) could be valuable partners to connect rural elderly and caregivers with specialists within China and around the world.

Aging Services - 'Smart' elderly housing will be a growing need. Public housing that provides a common smart technology infrastructure may facilitate the delivery of services that can be scaled across a province or the nation. For example, selected senior housing facilities in Singapore share a common information communications technology infrastructure, e.g., Internet access in each unit. Rethinking housing as a platform for technology-enabled services may optimize the integration of 'intelligent' devices and services already on the market (e.g., monitoring and health management applications offered by Philips, GE, and other firms in the global Continua Health Alliance) supporting safety, disease management, and social services.

Despite advances in technology, caregiving remains a high-touch business. The careforce shortage in China is critical. Development of professional programs and certification of formal caregivers would benefit from collaboration with long-term care companies and aging services organizations with expertise in training and the use of new technologies (e.g., HelpAge International, Home Instead, Golden Living). In addition to the training, expertise and services, investment in large-scale (provincial as well as national systems) health and homecare information management systems may help families understand the range of available services and government to ensure the highest quality of care.

Aging in China is not just about the elderly. It is about the wellbeing of all people in China as well as its performance in the world economy. Changing demographics, lifestyles, and an institutional readiness for innovation are converging to create an extraordinary opportunity for business, aging services and ultimately China's people to build an "elder care services industry". If successful, it might just become another leading export.

MIT AgeLab Research Assistant Victoria Lee conducted field research in China and translation of references in preparation of this article.

Further Reading

- Coughlin, J. & Pope, J. "Innovations in Health, Wellness & Aging-in-Place: Development of a Consumer-Centered Approach to Intelligent Home Services", IEEE Engineering in Medicine & Biology, July-August 2008.

- "An Investigation of Development Issues of Urban Senior Apartments in China," China East Normal University, 2007

- Coughlin, J., Pope, J., Leedle, B. "Old Age, New Technology and Future Innovations in Disease Management and Home Health Care," in Home Health Care Management and Practice, 18(3), pp. 196-207, 2006.

- U.S. Census Bureau, International Data Base

- "A Forecast and Research on the Development Trends of Aging Chinese Population" China National Committee on Aging, 2006

- "A Whitepaper of the Development of Senior Cares in China," State Council of PRC, December 12, 2006,

- "Demands and Development of Senior Apartments in China," Beijing University, 2003,

- "Market Research of the Development of Senior Apartments in Beijing," China Academy of Science, 1998,

Joseph F. Coughlin, PhD is Director of the Massachusetts Institute of Technology AgeLab. His research focuses on how the convergence of demographic change and technology will drive innovation in business and government. Dr. Coughlin teaches strategic management and policy innovation in MIT's Engineering Systems Division. He speaks, consults and collaborates with governments and businesses worldwide. He is author of the online publication http://www.disruptivedemographics.com.

It's Just A Plastic Part - Why Not Buy It In China?

Financial Considerations

Before you jump to this conclusion in order to meet your budget, consider the true cost of having an off-shore molder make your products. You have a quote for the tooling and the part price, but have you also added the cost of freight to the port and then to your facility? You will also need to pay customs fees. Typical lead time for the freight is 3 to 4 weeks for off-shore vs. 3 to 5 days in the U.S. Have you factored in the cost of additional inventory to cover the transit time? Most off-shore molders will require at least a deposit or full payment before they ship the product vs. 30 day terms from most U.S. molders. What is your company paying for financing?

There are additional risks when working with an off-shore supplier. Inconsistency in the material that is used to mold the parts is very common. The first run works, but the 3rd or 4th doesn't fit or is discolored. Shrinkage in molding is very sensitive to the material that was used, the cycle time at which it ran, or how much regrind was used in the material. The part may meet the print when it came off the machine, but as it traveled in the container it shrank or warped to the point that it no longer works. Who's going to pay for the replacement parts? Let's say your product consists of several parts that connect together, your only concern may not just be whether they fit, but does the color match? Scarier than color or fit, what if your parts are used with consumables or medical applications, do you know that the material used does not contain toxic chemicals that are released under heat? How about parts that need to hold weight, will it become brittle if left in the sun? A good domestic molder can help you identify cost effective materials that can meet the application environment. They will also back up every shipment with lot numbers and material certification. In the worst case scenario, at least you know a domestic supplier is liable for the products that were made. A Chinese supplier does not even have to give a deposition.

Let's say I'm frustrated with my off-shore supplier and want to pull the mold and have a U.S. molder run it. It can be a challenge to get the off-shore molder to release the mold, and even if they do, it may only be the insert and not include the mold base. The mold base can be up to 30% of the complete mold cost. Even if it's a complete mold, the U.S. molder may have to modify the mold to run in their equipment.

You can source your tooling from off-shore and have it produced domestically, but still consider that if you have the molder source the tooling for you, they take complete responsibility for the finished part. It can be very frustrating to be between an off-shore mold maker and a domestic molder arguing over why the part doesn't fit. Did the mold maker not put in enough vents, or did the molder try to reduce the cycle time to meet their quote? Did the off-shore mold maker make production parts with the material specified for the job, or with what they had in stock? It's worth the piece of mind, not to mention any mold modification fees that may be incurred, to have the molder take on the ultimate responsibility for the tooling.

What is your time worth? Communication is a challenge when you're working with off-shore suppliers. Although much of our correspondence is via e-mail, it is still not a substitute for face-to-face conversations especially when you are developing a product. You will need to factor in additional time to communicate not just for the initial project, but also for any modifications to the part that you would like to make in the future.

If producing offshore, you need to locate a dependable company to hire for your molding, which can lead to down time for your company while you are on long travel trips overseas. Is your company ready to pay those travel expenses? Perhaps you could use online product sourcing, but in this day and age do you really know who you are dealing with? Finding an overseas company online entails a great risk of fraud. Finally, you could use a buying agent, but then you have to deal with commissions and with a buying agent it's hard to regulate production performance.

American Jobs

Buying products made in American factories by American workers keeps jobs in the US. Each dollar spent on payroll is reinvested by the employee in other local industries, such as restaurants, gas stations, hardware stores and their employees. In addition tax dollars generated by local businesses benefit the entire community. Much of the real cost of 'offshoring' is hidden by these factors, but they are quite real nonetheless.

Everyone knows that buying in the USA keeps our nation employed and our economy alive and competitive. According to Sue Kirchoff of USA Today, there was a "loss of 2.6 million manufacturing jobs since mid-2000, and studies predict millions of service jobs - call centers, engineering, architectural drafting and others-will move abroad in the next decade." That's a lot of unemployed workers. Barbara Hagenbaugh also of USA Today writes "Fifty years ago, a third of U.S. employees worked in factories, making everything from clothing to lipstick to cars. Today, a little more than one-tenth of the nation's 131 million workers are employed by manufacturing firms. Four-fifths are in services." Service jobs in the US are increasing while manufacturing jobs are decreasing and many of these service jobs are entry level or low pay jobs.

Here are some statistics from Hagenbaugh's article.

Percentage of non-farm workers employed in manufacturing and service jobs:

Manufacturing jobs

1950 - 34%

2002 - 13%

Service jobs

1950 - 59%

2002 - 82%

What does this mean for the US as a nation? Hagenbaugh continues, "The migration of jobs to China also has serious national security implications. Large military equipment sits idle in repair centers as the few American companies left that provide spare parts or tools have dwindled. Humvees receive armor plating at a painful pace as only one U.S. manufacturer of armored steel remains. Thanks to its lopsided balance of trade with the U.S., China has been able to increase its military funding by 18.2 percent during the last year, much of it focused on emerging military and space applications."

China's foreign trade has grown faster than its gross domestic product (GDP) and has a labor force of 795.3 million people. For the past 25 years the government has also focused on foreign trade as a major vehicle for economic growth, with 21% of China's exports going to the US, and a total of $1216.1 billion dollars world wide. China is the second largest world economy with a GDP of $10.21 trillion (behind only the U.S.) on a Purchasing Power Parity. Meanwhile the US exports only 6% of our goods to China. According to CIA World Factbook, the US public debt is $9 trillion. In "Correlation and Casualty", L. Josh Bivens writes, "The relationship between trade deficits in manufactured goods and manufacturing employment seems obvious: imports decrease labor demand in manufacturing while exports spur this demand. A rising trade deficit means, all else equal, that labor demand in U.S. manufacturing is reduced."

Jobs kept in the US increase the US economy while exporting manufacturing jobs increases unemployment which in turn strains national healthcare and unemployment and reduces consumer spending. Ned Barker of Frontline PBS says, "They (China) also face discriminatory rules, burdensome red tape, language difficulties, and a population that earns only a fraction of what U.S. consumers make, and therefore lacks the purchasing power to buy consumer goods made in America."

Some people, like Yvonne Smith, the communications director at the Port of Long Beach, see our dependence on foreign trade as a direct cause to the current state of the US economy. She has reported that through just Long Beach, the U.S. is importing $36 billion in goods a year from China and exporting just $3 billion. Ned Barker also finds "U.S. imports from China outpace U.S. exports to China by more than five to one, and the deficit shows no signs of abating."

Intellectual Property

How about the patent you have on your product? China's commercial law is still a work in progress. Business executive and lawyer Craig Maginness at http://www.exinglobal.typepad.com states, China has a very "Lax protection of IP rights (Indeed in some sectors it seems as if official government policy is to encourage co-option of foreign technology)."

Environmental Considerations

Consumers these days are becoming more and more concerned with the way products are produced and where they are produced. Buying made in the USA also insures that manufacturing workers are paid fair wages, have safe working conditions and that manufacturing plants take care of the natural environment around them. In an article by Kerri Houston, she finds that both worker and environmental conditions are not up to US standards, "Chinese manufacturing benefits financially from ignoring the few environmental laws on its books. Waterways and wells in China run red and purple with dyes and toxins that factories dump into ground and river. Many Chinese factories disregard international norms for workers by embracing low pay, forced labor, and deplorable work conditions."

Why buy Made in the USA? To insure a better product at a reasonable cost and support local economies that keep Americans employed. If you are looking for the right company for injection molding, consider the costs of the environment, your own mold making and production, and the future of America. Often times a U.S. production company is a better bargain. For more information, visit www.injectionmoldingusa.com.

Lisa Chissus is the president of two manufacturing companies; Flex-a-lite Consolidated and Cascade Plastics, which are both located in Fife, Washington. Chissus is the 3rd generation to run Flex-a-lite Consolidated which manufacturers high performance automotive cooling fans, radiators, and oil coolers as well as egg incubation systems used in hatcheries all over the world.

Lisa Chissus, Cascade Plastics' CEO, took over as general manager in 2001 and then bought the company in April of 2005. Under her direction, the company has risen to become a leader in the custom injection molding industry. Cascade Plastics specializes in manufacturing high volume, close tolerance consumer products. They are UL Certified (UL cert. #C3131) and ISO 9001-2000 certified, and one of only two woman owned manufacturers in the state of Washington. The 43,000 square foot state-of-the-art manufacturing facility was specifically designed for injection molding and has the capacity to support up to 30 injection-molding machines. Currently, the facility is equipped with 15 machines ranging from 55 tons to 850 tons and 5 storage silos with 400,000 lb. bulk pellet storage capacity

Chissus has been named Person of the Year in the Performance Automotive Aftermarket 2001 as well as Top 40 Under 40 in the South Puget Sound in 2004. Chissus is a graduate of the University of Puget Sound Business Leadership Program and currently resides in Pierce County with her husband and two children.

China plus ASEAN plus FTA equals East Asian Unification? Not Quite Part II

As discussed in Part I of this series, the ASEAN-China Free Trade Agreement (ACFTA) will be a win-win for the signatories. The agreement will produce greater economies of scales, as it expands trade between members, which will result in an aggregate increase in competitive export products from China and ASEAN. However, it will not foreshadow European-style regional integration, at least not in the near future. The centrifugal force generated by the agreement will not only draw ASEAN closer to China, the regions manufacturing hub, but it will push those states outside the bloc to liberalize their own trade in order to stay competitive. While the United States is generally supportive of ASEAN, it is not in the strategic interest of the U.S. for it to be outside of an Asian economic bloc, especially one that will aid in cementing a strong Chinese leadership position in Southeast Asia. Implementation of this agreement has increased concerns among some analysts that the economic and perhaps, the political center of gravity of the region are shifting away from the United States and toward China.

Over the last 10 years, Southeast Asia has received approximately US$90 billion in U.S. foreign direct investment (FDI); it is the third largest market for U.S. exports; and U.S.-ASEAN trade is over US$140 billion (Pitsuwan 2008). Southeast Asia is flush with agricultural and natural resources, and is home to more than half of the world's annual merchant shipping traffic. Intraregional trade between ASEAN nations still hovers at 25% and in East Asia, it now verges on 55% (Pitsuwan 2008). Over 80% of Japanese and Chinese oil imports travel through these sea-lanes. The geopolitical reality is that due to proximity and economic clout, China's access to this region will increase. This could not only be detrimental to America's economic interests, but also represent a strategic threat.

It is in America and ASEANs best interest for the U.S. to not only promote further ASEAN integration, but also establish stronger ties with the region. This will enable ASEAN to serve as a fulcrum between China (and India). America must also realize that China's increasing penetration into Southeast Asia is not a zero-sum game; the U.S. must be prepared to have a constructive working relationship with China in the region. If the America hopes to balance China's growing influence it will need a rapprochement with ASEAN that displays a cohesive policy for the organization, but at the same time exploit the diversity of opinion within ASEAN. This will allow the U.S. to advance its policy goals in the region.

China

Over the last decade, China's resurgent role in Southeast Asia has moved from a situation that generated fear in the region, to one where China is seen as a benign regional leader that plays a constructive role in creating opportunity. China has worked hard to market this image while participating in regional institutions. Its long-term goals are to create greater interdependencies between itself and Southeast Asia through economic incentives, which will give ASEAN a strong stake in China's success. In this way, ASEAN can serve as insurance against possible U.S., Japanese, Indian containment in the South China Sea and Indian Ocean. At the same time, Beijing hopes it can simultaneously reduce the influence of the United States in the South China Sea.

China is increasing its political reach in the region through a series of strong bilateral ties with ASEAN member-states. These links include increased cooperation in regional security (including providing military training), scholarships, and helping to facilitate conflict resolution in the region. China has also promised over US$10 billion in infrastructure, energy, and cultural programs between the countries. China has especially provided special assistance to the lesser developed states of Cambodia, Laos, and Myanmar.

During the 1997 Asian financial Crisis, America did not provide significant leadership, which left room for China advance itself as a regional leader, often at the expense of Japan. China promised not to devalue its currency, the Renminbi, which helped return stability to the markets, a move much praised in the region. Tokyo worked to provide a competitive framework for an Asian Monetary fund, in an effort to engender long-term stability. Washington repeatedly blocked this endeavor, out of fear it would be froze-out by a potential Asian bloc. Japan and China are still pushing their competing ideas of a greater-East Asia economic sphere, but the main difference between the two nations is that Japan wishes to include Australia, New Zealand, and India in an attempt to minimize the influence of China. Obviously, China is not interested in having none ASEAN and East Asian nations involved.

The idea for an Asian Monetary Fund did not die. In February 2008, the ASEAN+3 forum in Thailand agreed to expand bilateral currency swaps and also enlarge the Chiang Mai Initiative reserve fund in order to enhance regional economic stability in the wake of the current global financial crisis. This goal has prompted ASEAN+3, in coordination with the Asian Development Bank (ADB), to develop an Asian Currency Unit (ACU) as part of a comprehensive Asian Monetary Fund. China has promoted the idea, which has gained wide regional support. China championing this effort appears surprising considering past objections; however, Beijing is supportive of the ACU because it is now able to take a greater leadership role in its management than Japan, whereas it was not in a position to do so 10 years earlier. Although meant to be non-tradable, the ACU would be an indicator of the stability of participating currencies in the region, an Asian version of the European Currency Unit, which was the precursor to the Euro. Due to the wide variance in levels of economic development, the sophistication of financial transfer systems, and the levels of nationalism in the Pacific Rim, a single currency for the region is still unlikely.

What ASEAN Needs

Western analyst had long criticized and even dismissed ASEAN; the common narrative characterized the organization as soft on human rights and democracy, and therefore incapable of taking decisive and constructive action concerning regional issues that were important to the West. Some pasts areas of conflict involved human rights in Myanmar and East Timor, as well as issues of democracy in key members states like Singapore, Indonesia, and Malaysia. Part of the problem is that Western observers have not tended to judge ASEAN on its own merit, but instead, based on how it compares to the contemporary European Union (EU). As a result, ASEAN has never been fully respected by the United States.

For their part, not all ASEAN members have been eager to see a stronger American presence in the region. In the 1990's, former Malaysian Prime Minister Mahathir Mohamad called for a greater East Asian forum, which would exclude the U.S., Australia, and New Zealand. Many in the region termed this the "caucus without Caucasians", something Washington successfully nixed, but to only see it rebooted a decade later as ASEAN+3.

At the time, the exclusion of Western nations reflected the regional vogue of "Asian Values", an ideology trumpeted by Malaysia, Singapore, Indonesia, along with some political thinkers in Japan. Those who adhered to this ideology espoused that all Asians share distinctive cultural traits that make them fundamentally different from Westerners; therefore, Western political and social norms were not entirely appropriate for Asian societies. Some of these shared Asian values are a preference for social harmony, government paternalism, collectivism over the rights of individuals, respect toward authority, and a greater concern for socio-economic stability over human rights.

By the turn of the century, deeply pragmatic ASEAN states came to the realization that it was impossible to push Western powers out of the region, so it began what was termed, "constructive engagement" with all of them. Under this policy, ASEAN intends to hedge its relationship with the larger powers (China, India, America, and Australia) as an intermediary, reaping the benefits for its member states. Singapore Minister of Foreign Affairs George Yeo, speaking for ASEAN to the press in November 2007, described the importance of America to Southeast Asia: "In short, no major strategic issue in Asia can be resolved without the active participation of the U.S" (Marciel 2008).

America's Next Move

In the aftermath of 9-11, the bulk of Washington's foreign policy capacity was consumed by wars in the Middle East and Central Asia. Major initiatives in Southeast Asia fell by the wayside as the primary focus moved to counterterrorism and other security concerns. Even when America's focus broadened beyond the "War on Terror" into issues of trade, its approach was often ineffectual. The U.S. cannot afford to squander another decade in the region teetering between security issues and weak trade.

The 2005, Joint Vision Statement on the ASEAN-U.S. Enhanced Partnership was not enough to secure America's future in Southeast Asia; Washington needs to define, create, and utilize more avenues of regular dialogue between itself and ASEAN. Although the U.S. and ASEAN have enjoyed relations for 30 years, no regular annual summits have ever been established. Shoring up the 21-member Asia-Pacific Economic Cooperation forum (APEC) is a good place to begin, but it should only be a pass-through for more specialized U.S.-ASEAN talks. The current lack of contact hurts America's ability to focus its attention on ASEAN states. The U.S. should encourage East/Southeast Asian integration, because it will help to socialize and constrain provocative movements by China. It may also encourage American investors to do greater business in the region, as the various types of independent national laws and regulations are streamlined. Nevertheless, America should also exploit areas of friction between ASEAN and China, as well as the lack of cohesion within ASEAN.

Although China has achieved strong ties with certain members of ASEAN, many nations in the region, such as Malaysia, the Philippines, and Vietnam still maintain a healthy fear of Chinese hegemony and anti-Chinese sentiment in their populations has not yet abated. There have been complaints, by some ASEAN members, that China pushed bilateral FTA negotiations to isolate nations that were not very pro-China, such as Malaysia and Vietnam. Southeast Asian diplomats have also grumbled that China's influence has hindered consensus building within ASEAN as member nations try to gage Beijing's potential reaction.

The U.S. has also not closely engaged China-friendly states, such as Myanmar and Cambodia. This is especially true in the case of Myanmar due to human rights concerns, which have resulted in embargoes that have resulted in little political change. The U.S. needs a more pragmatic approach. These nations would be very receptive to American competition for their attention.

The United States and Japan remain the largest investors in the region and the largest ASEAN export receivers. China is not close to eclipsing the U.S. in hard power projection and America is still the largest source of popular culture. With respect to trade, some ASEAN members are not pleased that Early Harvest has allowed China to compete in raw materials, agricultural products, and minerals it did not produce, whereas China will eventually have lower tariff free access to manufacturing markets that ASEAN and Chinese firms were already competing in.

The U.S. has much more work to do on the free trade front. Thus far, America has only one FTA completed agreements, in the nearly 15 years since the U.S. initiated its first Asia-Pacific TIFA, with Singapore in 1991. There are stalled negotiations for FTAs with Thailand and Malaysia, and the Philippines and Indonesia have expressed interest in FTAs. Besides FTAs, policymakers have other eco­nomically significant agreements available, including the expansion of trade and investment framework agree­ments (TIFA) and open skies agreements (OSA). A TIFA is a consultative mechanism for the United States to discuss trade issues, and an OSA creates free markets for aviation services. America has TIFAs with ASEAN, but TIFAs and OSAs have been severely underutilized. Unlike China, the U.S. should work as multilateral as possible with ASEAN to avoid the negative effects of export diversion and encourage ASEAN unity.

Long term, the U.S. could do more in advancing the scope of FTAs and OSAs in Asia. A region-wide agreement would better reduce regional trade barriers, increase U.S.-ASEAN trade, and advance American security interests. The U.S. must stop blocking Japan's attempts to project a competing vision of Asian unity, because it has not worked. The only result is Japan losing influence to China, which is not in Japan or America's national interests. Instead, Washington can work with Japan to promote shared interests inside the ASEAN+3 framework, where Japan can serve as a U.S. proxy on specific issues critical to both nations. This would be a similar relationship to what the U.S. enjoys with Britain with respect to the European Union. Currently, Northeast Asia's economic heavyweights are the world's last remaining region that lacks an inter-governmental trade bloc, such as ASEAN. The U.S. does not want to find itself outside such a teaming, so it should be working with Japan to create one that is more inclusive. Even if FTAs are not politically feasible, the US should focus on TIFAs for high priority areas of interest.

Lastly, the U.S. should do what it must to gain Japan's assistance in fighting any attempts for an tradable ACU, because that could limit U.S. government's ability to finance its larger budget deficits at relatively low interest.

Notes:

As discussed in Part I of this series, the ASEAN-China Free Trade Agreement (ACFTA) will be a win-win for the signatories. The agreement will produce greater economies of scales, as it expands trade between members, which will result in an aggregate increase in competitive export products from China and ASEAN. However, it will not foreshadow European-style regional integration, at least not in the near future. The centrifugal force generated by the agreement will not only draw ASEAN closer to China, the regions manufacturing hub, but it will push those states outside the bloc to liberalize their own trade in order to stay competitive. While the United States is generally supportive of ASEAN, it is not in the strategic interest of the U.S. for it to be outside of an Asian economic bloc, especially one that will aid in cementing a strong Chinese leadership position in Southeast Asia. Implementation of this agreement has increased concerns among some analysts that the economic and perhaps, the political center of gravity of the region are shifting away from the United States and toward China.

Over the last 10 years, Southeast Asia has received approximately US$90 billion in U.S. foreign direct investment (FDI); it is the third largest market for U.S. exports; and U.S.-ASEAN trade is over US$140 billion (Pitsuwan 2008). Southeast Asia is flush with agricultural and natural resources, and is home to more than half of the world's annual merchant shipping traffic. Intraregional trade between ASEAN nations still hovers at 25% and in East Asia, it now verges on 55% (Pitsuwan 2008). Over 80% of Japanese and Chinese oil imports travel through these sea-lanes. The geopolitical reality is that due to proximity and economic clout, China's access to this region will increase. This could not only be detrimental to America's economic interests, but also represent a strategic threat.

It is in America and ASEANs best interest for the U.S. to not only promote further ASEAN integration, but also establish stronger ties with the region. This will enable ASEAN to serve as a fulcrum between China (and India). America must also realize that China's increasing penetration into Southeast Asia is not a zero-sum game; the U.S. must be prepared to have a constructive working relationship with China in the region. If the America hopes to balance China's growing influence it will need a rapprochement with ASEAN that displays a cohesive policy for the organization, but at the same time exploit the diversity of opinion within ASEAN. This will allow the U.S. to advance its policy goals in the region.

China

Over the last decade, China's resurgent role in Southeast Asia has moved from a situation that generated fear in the region, to one where China is seen as a benign regional leader that plays a constructive role in creating opportunity. China has worked hard to market this image while participating in regional institutions. Its long-term goals are to create greater interdependencies between itself and Southeast Asia through economic incentives, which will give ASEAN a strong stake in China's success. In this way, ASEAN can serve as insurance against possible U.S., Japanese, Indian containment in the South China Sea and Indian Ocean. At the same time, Beijing hopes it can simultaneously reduce the influence of the United States in the South China Sea.

China is increasing its political reach in the region through a series of strong bilateral ties with ASEAN member-states. These links include increased cooperation in regional security (including providing military training), scholarships, and helping to facilitate conflict resolution in the region. China has also promised over US$10 billion in infrastructure, energy, and cultural programs between the countries. China has especially provided special assistance to the lesser developed states of Cambodia, Laos, and Myanmar.

During the 1997 Asian financial Crisis, America did not provide significant leadership, which left room for China advance itself as a regional leader, often at the expense of Japan. China promised not to devalue its currency, the Renminbi, which helped return stability to the markets, a move much praised in the region. Tokyo worked to provide a competitive framework for an Asian Monetary fund, in an effort to engender long-term stability. Washington repeatedly blocked this endeavor, out of fear it would be froze-out by a potential Asian bloc. Japan and China are still pushing their competing ideas of a greater-East Asia economic sphere, but the main difference between the two nations is that Japan wishes to include Australia, New Zealand, and India in an attempt to minimize the influence of China. Obviously, China is not interested in having none ASEAN and East Asian nations involved.

The idea for an Asian Monetary Fund did not die. In February 2008, the ASEAN+3 forum in Thailand agreed to expand bilateral currency swaps and also enlarge the Chiang Mai Initiative reserve fund in order to enhance regional economic stability in the wake of the current global financial crisis. This goal has prompted ASEAN+3, in coordination with the Asian Development Bank (ADB), to develop an Asian Currency Unit (ACU) as part of a comprehensive Asian Monetary Fund. China has promoted the idea, which has gained wide regional support. China championing this effort appears surprising considering past objections; however, Beijing is supportive of the ACU because it is now able to take a greater leadership role in its management than Japan, whereas it was not in a position to do so 10 years earlier. Although meant to be non-tradable, the ACU would be an indicator of the stability of participating currencies in the region, an Asian version of the European Currency Unit, which was the precursor to the Euro. Due to the wide variance in levels of economic development, the sophistication of financial transfer systems, and the levels of nationalism in the Pacific Rim, a single currency for the region is still unlikely.

What ASEAN Needs

Western analyst had long criticized and even dismissed ASEAN; the common narrative characterized the organization as soft on human rights and democracy, and therefore incapable of taking decisive and constructive action concerning regional issues that were important to the West. Some pasts areas of conflict involved human rights in Myanmar and East Timor, as well as issues of democracy in key members states like Singapore, Indonesia, and Malaysia. Part of the problem is that Western observers have not tended to judge ASEAN on its own merit, but instead, based on how it compares to the contemporary European Union (EU). As a result, ASEAN has never been fully respected by the United States.

For their part, not all ASEAN members have been eager to see a stronger American presence in the region. In the 1990's, former Malaysian Prime Minister Mahathir Mohamad called for a greater East Asian forum, which would exclude the U.S., Australia, and New Zealand. Many in the region termed this the "caucus without Caucasians", something Washington successfully nixed, but to only see it rebooted a decade later as ASEAN+3.

At the time, the exclusion of Western nations reflected the regional vogue of "Asian Values", an ideology trumpeted by Malaysia, Singapore, Indonesia, along with some political thinkers in Japan. Those who adhered to this ideology espoused that all Asians share distinctive cultural traits that make them fundamentally different from Westerners; therefore, Western political and social norms were not entirely appropriate for Asian societies. Some of these shared Asian values are a preference for social harmony, government paternalism, collectivism over the rights of individuals, respect toward authority, and a greater concern for socio-economic stability over human rights.

By the turn of the century, deeply pragmatic ASEAN states came to the realization that it was impossible to push Western powers out of the region, so it began what was termed, "constructive engagement" with all of them. Under this policy, ASEAN intends to hedge its relationship with the larger powers (China, India, America, and Australia) as an intermediary, reaping the benefits for its member states. Singapore Minister of Foreign Affairs George Yeo, speaking for ASEAN to the press in November 2007, described the importance of America to Southeast Asia: "In short, no major strategic issue in Asia can be resolved without the active participation of the U.S" (Marciel 2008).

America's Next Move

In the aftermath of 9-11, the bulk of Washington's foreign policy capacity was consumed by wars in the Middle East and Central Asia. Major initiatives in Southeast Asia fell by the wayside as the primary focus moved to counterterrorism and other security concerns. Even when America's focus broadened beyond the "War on Terror" into issues of trade, its approach was often ineffectual. The U.S. cannot afford to squander another decade in the region teetering between security issues and weak trade.

The 2005, Joint Vision Statement on the ASEAN-U.S. Enhanced Partnership was not enough to secure America's future in Southeast Asia; Washington needs to define, create, and utilize more avenues of regular dialogue between itself and ASEAN. Although the U.S. and ASEAN have enjoyed relations for 30 years, no regular annual summits have ever been established. Shoring up the 21-member Asia-Pacific Economic Cooperation forum (APEC) is a good place to begin, but it should only be a pass-through for more specialized U.S.-ASEAN talks. The current lack of contact hurts America's ability to focus its attention on ASEAN states. The U.S. should encourage East/Southeast Asian integration, because it will help to socialize and constrain provocative movements by China. It may also encourage American investors to do greater business in the region, as the various types of independent national laws and regulations are streamlined. Nevertheless, America should also exploit areas of friction between ASEAN and China, as well as the lack of cohesion within ASEAN.

Although China has achieved strong ties with certain members of ASEAN, many nations in the region, such as Malaysia, the Philippines, and Vietnam still maintain a healthy fear of Chinese hegemony and anti-Chinese sentiment in their populations has not yet abated. There have been complaints, by some ASEAN members, that China pushed bilateral FTA negotiations to isolate nations that were not very pro-China, such as Malaysia and Vietnam. Southeast Asian diplomats have also grumbled that China's influence has hindered consensus building within ASEAN as member nations try to gage Beijing's potential reaction.

The U.S. has also not closely engaged China-friendly states, such as Myanmar and Cambodia. This is especially true in the case of Myanmar due to human rights concerns, which have resulted in embargoes that have resulted in little political change. The U.S. needs a more pragmatic approach. These nations would be very receptive to American competition for their attention.

The United States and Japan remain the largest investors in the region and the largest ASEAN export receivers. China is not close to eclipsing the U.S. in hard power projection and America is still the largest source of popular culture. With respect to trade, some ASEAN members are not pleased that Early Harvest has allowed China to compete in raw materials, agricultural products, and minerals it did not produce, whereas China will eventually have lower tariff free access to manufacturing markets that ASEAN and Chinese firms were already competing in.

The U.S. has much more work to do on the free trade front. Thus far, America has only one FTA completed agreements, in the nearly 15 years since the U.S. initiated its first Asia-Pacific TIFA, with Singapore in 1991. There are stalled negotiations for FTAs with Thailand and Malaysia, and the Philippines and Indonesia have expressed interest in FTAs. Besides FTAs, policymakers have other eco­nomically significant agreements available, including the expansion of trade and investment framework agree­ments (TIFA) and open skies agreements (OSA). A TIFA is a consultative mechanism for the United States to discuss trade issues, and an OSA creates free markets for aviation services. America has TIFAs with ASEAN, but TIFAs and OSAs have been severely underutilized. Unlike China, the U.S. should work as multilateral as possible with ASEAN to avoid the negative effects of export diversion and encourage ASEAN unity.

Long term, the U.S. could do more in advancing the scope of FTAs and OSAs in Asia. A region-wide agreement would better reduce regional trade barriers, increase U.S.-ASEAN trade, and advance American security interests. The U.S. must stop blocking Japan's attempts to project a competing vision of Asian unity, because it has not worked. The only result is Japan losing influence to China, which is not in Japan or America's national interests. Instead, Washington can work with Japan to promote shared interests inside the ASEAN+3 framework, where Japan can serve as a U.S. proxy on specific issues critical to both nations. This would be a similar relationship to what the U.S. enjoys with Britain with respect to the European Union. Currently, Northeast Asia's economic heavyweights are the world's last remaining region that lacks an inter-governmental trade bloc, such as ASEAN. The U.S. does not want to find itself outside such a teaming, so it should be working with Japan to create one that is more inclusive. Even if FTAs are not politically feasible, the US should focus on TIFAs for high priority areas of interest.

Lastly, the U.S. should do what it must to gain Japan's assistance in fighting any attempts for an tradable ACU, because that could limit U.S. government's ability to finance its larger budget deficits at relatively low interest.

Notes:

Pitsuwan, Surin. 2008. "Bolstering U.S.-ASEAN Cooperation"

Japan Times Online.

Marciel, Scot A. 2008. "Remarks to Center o Strategic International Studies Meeting

'U.S. and Southeast Asia: Toward a Strategy for Enhanced Engagement'"

U.S. State Department.

Collin A. Spears

Any Increased Tension Between China and The Us - Blame it on Obama

For someone who graduated from Yale, you'd think that Barack Obama would understand global trade and the global economy a lot better than he does. [in my opinion]. Apparently, he doesn't because he doesn't understand [or perhaps care] that many of his actions are creating tensions between China and the United States. No, China has not been the world's best trading partner, but they have been our largest trading partner.

And yes, it is true that China has taken advantage of the United States' ability to purchase due to our strong middle-class to import almost as much as China was able to produce previously. Today, China could easily produce enough products for three or four countries the size of the United States. The entire EU, all put together barely equals the GDP of the US. So that would mean there are two countries so to speak with the ability to buy that number of products, but China could produce enough for five.

Therefore, China cannot continue its year-over-year growth of 10% by exporting products forever, there aren't enough customers, and are not enough raw materials in the world for them to keep doing this. Eventually they're going to have to produce products for themselves and allow other nations to come up in the world so that they can produce products for them as well. What they've done is overproduced for a world that does not need that much.

Because of this ability to overproduce, their prices have also come down on many items and this has hurt American manufacturers. Most of the manufacturing companies in the United States which use union labor are upset that all of their manufacturing jobs are going overseas. President Obama made good on a campaign promise he made before his election to help the steel workers union by levying tariffs against China's exports recently.

You see, although President Obama has not often made good on his promises as President, he has discovered that the healthcare insurance bill was going to charge an additional tax for "Cadillac Health Care Plans" which meant that many of the steel worker union employees, most of them, would be charged extra money for their healthcare insurance.

Therefore, the union did not support Obama's health care plan. So to make this up to them and to make good on his promise before the election he put a tariff on Chinese tires. In other words, he would sacrifice US Chinese trade relations to appease the unions, this is the same type of union that caused the auto industry to collapse, and have lobbied for more regulations on corporations to serve the union's political will, forcing American companies to take their jobs overseas.

President Obama is now part of the problem, in my personal or professional opinion after following politics, and free trade issues for over 30 years. I honestly believe Obama should be impeached. And I believe this should happen immediately. Please consider all this.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes that we need better leadership.

Texas Relates To Import Safety Issues As China Executes Its Top Food and Drug Administrator

China's official Xinhua news agency announced yesterday the execution of Zheng Xiaoyu, the former head of its State Food and Drug Administration, in an attempt to show the country's seriousness about cleaning up obvious problems with exporting contaminated food and drugs.

Xiaoyu was convicted of accepting bribes totaling the equivalent of one million USD to approve untested drugs. The Beijing No. 1 Intermediate People's Court carried out the sentence after denying appeals from Xiaoyu, who argued the punishment was too harsh for the crime, and that he had confessed to his wrongdoings. Evidently, it wasn't enough. Xiaoyu was the first ministerial-level official executed in China in seven years, and only the fourth within the past thirty.

The execution is expected to be met with mixed reviews by the American public, which has been outraged by China's continuous problems with contaminated food and drugs. Numerous industries -- from major retail chains, to the health insurance and health care industries -- have been trying to contain serious health and safety risks from the products. Hundreds of human and animal lives have been affected in the U.S. alone.

But putting an individual to death for accepting bribes also is riling up human rights' activists, many of whom argue that, no matter one's stance on the effectiveness of the death penalty, it should not be considered for nonviolent crimes. China's reputation for violating human rights, after all, is no better than its reputation for exporting dangerously contaminated goods.

The nationwide contamination earlier this year of some of the U.S.'s top pet food brands by wheat protein imported from China was only the latest in a series of scandals involving compromised products from the country, including tires, children's toys, vitamins used for baby formula, and toothpaste. Even phony anti-malarial drugs have been exported and used, killing or further sickening desperately ill patients.

Texas understands this issue well. With so many products legally and illegally imported from the border, and with only 1% of all of the nation's imports being inspected by the Food and Drug Administration, it's likely that nearly any establishment in the state selling almost any goods -- from Dallas, to Houston, to Austin, to the tiny border towns -- is making available a product American regulatory industries would never allow to be produced in the U.S. Even fruit is subject to different regulations in Mexico, and is often sprayed with chemicals now banned in this country. The problems with Chinese imports, then, which circulate throughout every state, only adds to the problem, and Texans have been shown to be less than tolerant about products on the market that could put public health at risk.

China knows America's outrage, and is making overt efforts to reassure the Western public of its commitment to safety, including the conviction and execution of Xiaoyu. Without its exports, the Chinese economy would collapse. Wal-Mart alone is China's eighth largest trading partner, and over 90% of the vitamin C sold in the U.S. is produced there. In fact, Americans would be surprised to know that much of their aspirin, pain relievers, and antibiotics, including penicillin, are produced in China. Labels stating a vitamin or drug's country of origin are not required in the U.S., however, and few products actually reveal it. Fewer Americans probably even think about it when picking up a prescription from the pharmacy.

This is certainly not to say that all products from China are dangerous, or even of poor quality. It's the fact we simply don't know that makes us cringe. We don't know which exports are safe or, at times, even when we're buying imported products, let alone imported drugs from a facility in China that may or may not be clean, and that may or may not be producing untested products. Xiaoyu's willingness to accept bribes to approve untested drugs forces most of us to count our blessings that we weren't one of the many malaria patients trusting phony medication, or one of the many beloved pets ingesting contaminated wheat protein. Perhaps this will be a turning point for China's regulatory industry. Perhaps. But until then: buyer beware.

Making sure the products you buy are safe is one very important part of taking care of your health. How you take care of yourself will certainly affect you as you age, and eventually your wallet, as well.

If you’re a young individual who tries to keep informed and maintain a healthy condition and lifestyle, you should take a look at the revolutionary, comprehensive and highly-affordable individual health insurance solutions created by Precedent specifically for you. Visit our website, [http://www.precedent.com], for more information. We offer a unique and innovative suite of individual health insurance solutions, including highly-competitive HSA-qualified plans, and an unparalleled "real time" application and acceptance experience.

Precedent puts a new spin on health insurance. Learn more at [http://www.precedent.com]

Any Increased Tension Between China and The Us - Blame it on Obama

For someone who graduated from Yale, you'd think that Barack Obama would understand global trade and the global economy a lot better than he does. [in my opinion]. Apparently, he doesn't because he doesn't understand [or perhaps care] that many of his actions are creating tensions between China and the United States. No, China has not been the world's best trading partner, but they have been our largest trading partner.

And yes, it is true that China has taken advantage of the United States' ability to purchase due to our strong middle-class to import almost as much as China was able to produce previously. Today, China could easily produce enough products for three or four countries the size of the United States. The entire EU, all put together barely equals the GDP of the US. So that would mean there are two countries so to speak with the ability to buy that number of products, but China could produce enough for five.

Therefore, China cannot continue its year-over-year growth of 10% by exporting products forever, there aren't enough customers, and are not enough raw materials in the world for them to keep doing this. Eventually they're going to have to produce products for themselves and allow other nations to come up in the world so that they can produce products for them as well. What they've done is overproduced for a world that does not need that much.

Because of this ability to overproduce, their prices have also come down on many items and this has hurt American manufacturers. Most of the manufacturing companies in the United States which use union labor are upset that all of their manufacturing jobs are going overseas. President Obama made good on a campaign promise he made before his election to help the steel workers union by levying tariffs against China's exports recently.

You see, although President Obama has not often made good on his promises as President, he has discovered that the healthcare insurance bill was going to charge an additional tax for "Cadillac Health Care Plans" which meant that many of the steel worker union employees, most of them, would be charged extra money for their healthcare insurance.

Therefore, the union did not support Obama's health care plan. So to make this up to them and to make good on his promise before the election he put a tariff on Chinese tires. In other words, he would sacrifice US Chinese trade relations to appease the unions, this is the same type of union that caused the auto industry to collapse, and have lobbied for more regulations on corporations to serve the union's political will, forcing American companies to take their jobs overseas.

President Obama is now part of the problem, in my personal or professional opinion after following politics, and free trade issues for over 30 years. I honestly believe Obama should be impeached. And I believe this should happen immediately. Please consider all this.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes that we need better leadership.

How Long Do You Honestly Believe it Will Be Before the US and China Go to War?

Currently, the United States is the only world superpower. However, it is believed that before 2050 China will also reach superpower status. Even if China cannot produce 10% year-over-year growth from now until then, if they can cruise along at 5 to 8% growth and until then, the nation should be able to meet that potential goal. China does not need to surpass the United States in GDP to become the next global superpower, as it has already passed all but the two other top nations.

Soon China will have a greater GDP than both Germany, and Japan. Then there will be a large gap and eventually China will surpass the United States in their gross domestic product. Right now, every time the United States makes an enemy in the world because another nation is unethical, violating human rights, or using underhanded methods to seize private enterprise, China goes in and makes a friend. They've done this in Africa, Central America and in the Middle East.

China will do anything, or go anywhere on the globe to get the raw materials, resources, and the oil it needs to continue to grow its economy. Right now, China's growth has been due mostly because the United States middle class has been buying all of their products. They are also looking to European markets to sell them the same amount of their exported products.

The European Union and the United States of America have a similar GDP. If China can get into the EU and sell the same number of products they will be able to double their exported goods over the next 10 years. Unfortunately, there are many conflicts in the world, and we have some trade war issues going on as China violates World Trade Organization rules, one after another. They will also do business with illegitimate and corrupt regimes, unlike the United States.

Previously, the United States would take someone off their trading partner list if they were doing unethical things in the world. Now, the United States can't do that as if they do, China will come in and trade with them. This means enforcement of WTO rules, human rights issues, and other problems in the world cannot be solved through free trade. It's a huge humanitarian crisis.

We have a serious problem going on in the world, and that problem is China. It's time that we address these issues, and realize if there is political impasse in the future as China grows stronger there will be wars over resources. It's a very ugly and unfortunate challenge that lies ahead. I ask that you please consider this, and understand as the future approaches.

Not long ago, I mentioned this to Guang Wu, the author of a new book; "China: Has the Last Opportunity Passed by!?" and he addresses all sorts of challenges for the future of China in his research.

Lance Winslow - Lance Winslow's Bio. Lance Winslow says we cannot run from these problems or go hide in some Custom Closets

Note: All of Lance Winslow's articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers. Lance Winslow believes those who use these strategies lack integrity and mislead the reader. Indeed, those who use such cheating tools, crutches, and tricks of the trade may even be breaking the law by misleading the consumer and misrepresenting themselves in online marketing, which he finds completely unacceptable.

China Produces Energy From Waste

China is creating unprecedented wealth for an unprecedented number of people. At the same time, China is also creating an unprecedented volume of rubbish. The country already produces more rubbish than any other nation, and every year Chinese cities generate one-third of the total amount of rubbish produced in the world. Annually, China throws away some 190 million tonnes of municipal solid waste (MSW). Approximately five per cent gets recycled and less than ten per cent is used to produce Energy-from-Waste (EFW) also known as Waste-to-Energy (WTE), while more than 80 per cent of this waste ends up buried in landfills. This is creating a potential crisis that government is working hard to avoid by implementing integrated waste management plans that include EFW facilities.

These efforts reflect a growing global chorus that is calling for additional economic investment in the EFW industry. As noted by the World Economic Forum in its "Green Investing" report issued earlier this year, EFW can be an important contributor to a carbon-neutral infrastructure. Similar sentiments were expressed in 2008 at the Global Roundtable on Climate Change: "... efforts to reduce global emissions of methane from landfills should be expanded, including increased use of waste-to-energy facilities..."

To address China's waste challenge, communities (as part of an integrated waste management system) are being encouraged to reduce, re-use, recycle and rethink their waste disposal options to recover energy from waste. While recycling is a preferred first step in the waste management process, not all waste can be recycled. And, after recycling, there are only two options for disposal: bury waste in a landfill, or burn it. As old landfills expand or new landfills are developed, the amount of open space that is destroyed will increase. In addition, decomposing rubbish creates methane gas - a potent greenhouse gas that is over 20 times more effective in trapping heat in the atmosphere than carbon dioxide (CO2). Methane has been identified as a significant contributor to global warming. When a landfill is capped, methane can still be released for years, although the land has limited uses. Landfills also release hazardous air pollutants (HAPs) which are contained in landfill gas. Ground water can also become contaminated from landfill leachate.

What Exactly Is Energy-from-Waste?

EFW is a process where MSW (i.e. household rubbish) is combusted at high temperatures in specialised combustion units and reduced to ten per cent of its original volume. The heat generated from these combustion chambers heats up water in steel tubes that form the walls of the combustion chambers. The water is turned to steam and sent through a turbine that continuously generates electricity. EFW facilities use state-of-the-art technology including sophisticated air pollution control systems. Combusting one tonne of waste in an EFW facility prevents the equivalent of one tonne of CO2 from entering the atmosphere through the burning of fossil fuels to produce the same amount of electricity, and the decomposition of MSW in landfills. EFW facilities also recycle metal that would have otherwise been dumped. Increasing local metal recycling also offsets greenhouse gases as it reduces the need to mine for virgin metals.

China faces an acute electricity shortage which is likely to persist for the foreseeable future. The construction of additional EFW facilities will only play a relatively small part in China's energy mix, but will be an important component in diversifying the number of energy sources that the country relies upon. In addition, EFW facilities operate 24 hours a day, seven days a week, making them the most continuously reliable source of renewable electricity generation. The energy output of these facilities can help replace base-load coal and gas-fired power plants as an energy source. For every tonne of waste processed at an EFW facility, one barrel of oil would not need to be imported, or a quarter-tonne of coal would not have to be mined.

This article was written by Allard Nooy, for the China market news magazine, BusinessForum China. With stories and analysis ranging from China sourcing to China investments, Business Forum China is the source of all business news in China.

Five Effects of China Becoming the World's Number One Car Maker

The current recession has not harmed Car manufacturing in China, in fact its official now that local demand for cars has surpassed the USA. China now is the World's biggest car market. How does this affect the Global economy, and what is the future for Chinese auto manufacturers?

1. Higher Oil Prices

With China becoming the biggest market for automobiles, the need for oil grows greater. This could result in higher oil prices, as Chinese consumers buy more cars, and as China is not an oil producer, the nation needs to find ways to import more oil.

2. Lower Car Prices in Asia

In 2010, China and ASEAN (Association of South East Asian Nations) have agreed to drop import tariffs. Previously many ASEAN countries imposed import tariffs on Chinese, and other Countries importing goods. Now this has ended, Chinese automakers can import cheaper cars into ASEAN countries.

3. More Demand for Roads

The more cars on the road, the more the demand for extending, improving, and expanding the existing road system in China. Chinese Towns and Cities are going to be quicker to reach, and more remoter areas accessible.. This could create "mini booms: in tourism to areas now closer to bigger cities, and for Companies involved in road building projects.

4. Suburbanization

Owning a Car, means you can live further away from work, resulting in the suburbanization common in the United States. Chinese cities are set to expand, as the suburbs grow, and strip Malls may start taking over the role of traditional markets, and shops. Good news for Global retailers like Wallmart, Carrefour, and national Chinese retailers.

5. Carbon Emissions

Cars pollute, and China may need to start finding ways to cut carbon emissions as car ownership rises. Many Chinese car manufacturers make cheaper, smaller cars but often they are modeled on the 1990's pre-hybrid cars we used to drive.

China is currently going through the same cycle of development as 1950's America did, where increased car ownership created a new suburban lifestyle. This change is going to see more Chinese made cars on the roads of Asia, and create a new suburbia across the region.

Discover how to survive and thrive in a changing economy.