WSJ Tells the Truth on US/China Trade Deficit

With all of the anti-China mongering before the recent midterm elections, and constant pressure to adjust Chinese USD exchange rates, finally a US media source addresses the real issues.

In yesterday's WSJ article, Not Really 'Made in China', the author makes the point that the iphone, although thought of as ubiqutously American actually added almost 2 billion dollars to the US deficit with China last year.

Two academic researchers estimate that Apple Inc.'s iPhone—one of the best-selling U.S. technology products—actually added $1.9 billion to the U.S. trade deficit with China last year.

How is this possible? The researchers say traditional ways of measuring global trade produce the number but fail to reflect the complexities of global commerce where the design, manufacturing and assembly of products often involve several countries.

"A distorted picture" is the result, they say, one that exaggerates trade imbalances between nations.

Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China's contribution is the last step—assembling and shipping the phones.

So the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Hon Hai Precision Industry Co. accounts for just 3.6%, or $6.50, of the total, the researchers calculated in a report published this month.

Since the traditional trade deficit/surplus calculation counts the entire wholesale cost of the iphone as part of China's trade, there is a distorted view of the actual situation.

The vast majority of Chinese exports are made with various components that are first imported to China. Therefore, even if China implements currency exchange inform -  the traditional view of US politicians, very little would actually change with respect to Chinese exports. Although components of cost will rise for Chinese manufactures (ie. labor, overhead), the costs of parts that are foreign imported actually decreases for the factory. This means that the final price is about the same as the price before the currency adjustment. 

This means that the new currency policy would have little or no effect on the competitiveness of Chinese products wrt to American products. Although it would give China greater purchasing power for American goods, unless the US lowers export restrictions on high tech goods, exports wont increase much either.

Although there are issues with current US/China trade, its important for Americans to better understand that its not a black and white cause of Chinese exchange rate policies. There needs to be better analysis of the fundamental problems with the US economy and less Chinese fear-mongering. Thank you, WSJ for helping out. 

Chinese Savings = Religion

For the past few weeks, I've been spending more time with my grandparents. They came to visit our extended family for Chinese New Year and are enjoying the warm weather and nice accommodations here in Shenzhen. I try to see them at least 3-4x a week and I usually take them out to eat western food - something they enjoy but don't frequently do. 

Even though each of my grandparents still receive more than 3000 per month in retirement from the government as well as consistent money from my mom and uncles, they always stash it away. (My grandparents also have all of their medical bills taken care of by the gov't.) I have been trying for some time now to convince them to spend more money to enjoy their golden years. What’s wrong with more traveling, taking taxis and eating well? They won’t do it, but are always saving. Although they like eating McDonald's and Pizza Hut, they don't like to pay for it.

While the western media argues that due to the lack of a social safety net and social security system, Chinese people absolutely need to save - because the gov't won’t take care of them. I disagree with this notion. 

Saving money is a religion in China, especially for older generations. While some people have plenty of money saved away already, they still do it. Their daily lives have been routine for so long that there’s hardly any time or anywhere to spend the money. Buying groceries in the morning, cooking at home and playing cards and mahjong can only cost so much. 

Migrant workers are another example of savers. They typically make about 2000RMB or less every month and save the majority of it - sending some home. However, if you look at them, they all wear some decent clothes, laptops and all have better cell phones than I do. They just typically save on everyday expenses and sometimes make that big purchase, buying something more than one month's salary. 

I've recently thought that with improving living standards - esp. in the cities, Chinese middle class and white collar young people will evolve to a western-style lifestyle of using credit and spending lavishly without regard for price and cost. 

Some of my friends are like this. They spend most of their relatively high salary 10,000 RMB/month on iphones, designer clothing and taxis. They travel all over China and SE Asia. They're living the good life. I worry that if these people are the next generation, China will save less. 

One recent CNN report made me feel optimistic about these Chinese middle class. It is reported that there is an online group who tries to spend 100RMB/week. That's incredible! These people want to be more consceince of day-to-day spending and to be more mature of managing their own finances. Maybe there is hope yet for China and its future...

Check out the report:

China's (Optimistic) Future

During this current global recession and financial crisis, I've had many debates with fellow American friends living in Shenzhen on what will happen in China in the future. My friends (some of them have been in China for more than 5 years now and speak Mandarin fluently) often believe in a similar view as western media. 

"Chinese people let the totalitarian Chinese gov't rule in exchange for economic growth - at least 8%."

If this statement holds true, the current closures of thousands of factories directly linked to the export industry and the millions of workers that has join the unemployed poses a huge problem for the stability of the gov't and society in general. Recent unrest and footage of protesting workers have shown to be initial reactions of this issue. One of my friends even hypothesized that China will invade Taiwan just to distract the Chinese people and to increase nationalism sentiment.

I personally don’t understand where this "trade-off" between the Chinese people and gov't idea came from - because I disagree with it whole-heartedly. Although there have been riots - they have been relatively isolated and usually protesting justified inequalities perpetrated by local officials (often corrupt). In the video above, the toy factory closed unexpectedly and didn’t pay any of its workers. Is that the government's fault?

I personally see Chinese people as hard working, resilient people who have a history of getting through hard times. My parents lived through hard times with rationing and the Cultural Revolution where no one had anything. Just a few years ago, my hometown Harbin, didn’t have water for a week because of a chemical spill upstream that polluted the Songhua River. My extended family and grandparents still live there. Did people panic and riot? No. Everyone worked together to get through it. 

Look at the recent earthquake in Sichuan and the aftermath of that event. China is populated with people pulling together through hard times. In the absense of gov't help, villiagers banded together to help each other. People did what they could. While this happened, the gov't mobilized quickly and was on site immediately to help. Compare this to the 2005 Katrina disaster where the gov't didnt do anything for many days at the same time people were just waiting for people to "save them" at the New Orleans Superdome. 

The definition of a Chinese person's character is that he first blames himself before blaming someone else. He works to improve his own situation rather than waiting for the government to do something (Only when it’s too unfair do people take action). He is adaptive and stable. 

My outlook for the future China has always been optimistic. Here are the steps I foresee:

1. Although Chinese exports industries are getting hit hard; this is a natural situation that will realign the Chinese economy. Different businesses have already started to focus on selling their products, once destined for the US and Europe, in China.

2. The Chinese consumer, although not too confident currently, has savings and an ample appetite to spend. As Americans are riddled with debt and are saving more, Chinese consumers are still spending. Just walk around restaurants and malls and you won’t see any signs of recession here in Shenzhen. 

3. Migrant workers who lost their jobs are not going to riot. They are going to go home, start families, start businesses and live life. Less people are going to come back into the urban areas after Chinese New Year. In a recent report, China estimates about 20 million people have returned home.  Most people have made money in the past and have it saved up at home. And since living costs are drastically lower back in the smaller towns and villages, the savings go a long way. 

4. Thousands of 海归 (haigui - overseas Chinese) have returned to China - many with high level degrees. Since opportunities in the US, Europe and other areas of the world are gone, they have come back to China to find jobs. This will greatly enhance Chinese competitiveness and future development. 

5.  Local and provincial governments understand the importance of high tech industries as well as economically sustainable green technologies. This focus will help future economic prospects.

6. The government is trying to aid in everything it can. It’s helping small businesses get loans through banks and helping consumers spend with subsidies. More importantly, the Chinese stimulus package focuses on infrastructure projects that will greatly improve Chinese transportation efficiency. During the last Asian Financial Crisis, China's lead in investing in its infrastructure helped it sustain economic growth for more than 10 years. 

7. As the economy starts to realign away from exports, the Chinese gov't will slowly sell off US debt and appreciate the Chinese RMB to higher levels. With a higher RMB, China will then go buy even more assets all over the world to further its future development. 

Chinese 海归 (Turtles) Returning Home

I was in Beijing a few weeks ago, talking to some expat friends when we started discussing the changing dynamic of English speakers in China. 

As one of my friends noticed, there were noticably more Chinese people who graduated from overseas universities in the Beijing social circle. These include those who have grown up in the foreign country and those who went there to exculsively study. 

Talking to a family friend a few days later, he estimated that more than 250,000 海归 have come back from different countries abroad in the past year. This friend, who is involved in many academic and business circles, explained that the recent financial turmoil has drastically increased the rate of return of both recent college graduates and experienced professionals. "The world economy is helping to bring the best and brightest home."

For years there have been a brain drain on China. After President Nixon's visit to China, many promising Chinese have traveled to and studied at American universities. These were often the best and most promising students in China. While some came back, most remained abroad to make their new home. My family is an example of this process. Those who did return to China have done quite well. These people are influencial in business, academica and politics. (Many friends of my parents are CEOs, university presidents and influencal policy makers after returning in the mid-90s.

In recent years as the Chinese economy has boomed, many people who otherwise would have stayed abroad are returning to China. I am one of these people. The China story was too strong for me to not come back to China and experience it first hand. Although I plan to go back to the USA (who knows when), I definitely know China will be a big part of my future. 

It seems now with the economic crisis in full swing, this desire to return to China has caught on with more and more 海归. Just as there are record layoffs in the US in just about every industry, China is still experiencing a high growth rate and a bright future. Why wouldn't people come back. Jim Rogers even moved to Asia so that his daughters can learn Chinese.

The current return of 海归 creates some interesting issues for the future:

1. As fast as China is changing now, more Chinese with experience in other countries will increase the momentum. Armed with new thinking and new ideas of the west, they will make a lasting impact on Chinese society. This includes lifestyle, culture and day-to-day life things. 

2. Chinese competitiveness in the global market will increase dramatically. An increase of western thinking combined with current practices gives large Chinese companies a boost. 

3. More successful small businesses will be created in the long term. With practical experience in western corporations, returning Chinese will take advantage of low labor costs and set up more and more SMEs. 

4. There will be more competition in every field - from jobs to bank lending and resources.

5. The government will have to find a way to best utilize the skills, talents and influences of these 海归.

6. There will be a change of social dynamics between locals and 海归 as well as the relative relationship and negotiation of idenity and diaspora with the changing China.

Ultimately, the return of soo many foreign Chinese will only change China faster and improve its place in the world. This currently hidden phenomenon will have a big impact in the future development and modernization of China.

Counterfitting the RMB

One of the most notable and influencial topics discussed by all of my family during CNY this year has been the availability of new high-quality counterfeit bills. China has great skill in duplicating things of all types - including electronics, dvds, shoes, bags, ect. Now it seems that someone has helped improve on counterfits that they have been passed into banks and atms. Anyone living in China deals with this issue everyday. There are fake 1 RMB coins all the way up to 50s being passed around in the population, but never at this rate and quality.

When talking to my Chinese uncle and his friends a couple of days ago, they hypothesised that the fake bills orginiated from Taiwan. They described it as a relentless competition between the mainland and taiwan. The goal is to access the others' financies and undermine the currency. They suggested that China has also done the same in Taiwan.

No matter what the origions are, it is still very intimidating to know that fake bills are so prevelent among the population. Friends in the banking industry who handle and count money everyday have also discussed the current situation and the different countermeasures the banks are trying to implement. However, when people depsoit the fake currency in the ATM, it is automatically recycled when others retreve money.

Here's a recent CNN report on the situation:

Shenzhen: The Posterchild of China's Economic Development

Yesterday while riding back to my apartment on the bus after Thursday night basketball with team 老外 (Lao Wai）, I saw a new report about China's government meeting to commemorate the 30 year anniversary of the opening up policies of Deng Xiaoping. In these 30 years, China has gone from a tremendously poor country to the world's 3rd highest GDP. It's no doubt been quite a transformation.

In this time of celebration of the opening-up policies, Shenzhen has been on the forefront on the conversation - a figurehead of sorts of China's transformation.

Recently, I have been looking for a new apartment in the downtown area. Here is a view of the Shenzhen skyline from one of the places.



Here's a CNN video discussing change in Shenzhen:

Sex, Love & Money in China

Anyone who knows anything about Shenzhen knows that it is the "wild wild west" of Chinese capitalism. Although some would argue Shanghai or Hong Kong as the major financial centers, Shenzhen is the real place where all the most able and capable entrepreneurs go. Maybe in 10-20 years, Shenzhen will develop into a international city, it is still currently a culture-less metropolis with a specific focus on money and everything money related.

I like describing Shenzhen as a melting pot of the most able people in China. The young worker in the factory is usually the eldest and most responsible or able in his/her family while the company owners are hotshots from every part of China. It is certainly a weird and unique place with a young population that like to get ahead.

One of the more interesting and somewhat unfortunate aspects of his money-hungry city is its hidden cultural intersection between sex, love and money. Here's the rule: those who dont have money will do a lot to get it. In this case it has led to a system of mistresses and

In a article published online by Telegraph.co.uk entitled "China girls: 'The only luxury we can't afford is love'", it describes the current and growing issue of 2nd wives and "concubines" in China. It follows a variety of individuals who are in this community of "二奶 [ernai]" and discuss the various social, political and personal issues that are involved.

Anyone who lives in a major city in China can see the various signs of this system. It is as simple as going to a club/bar on a weekend and seeing all of the 40 year old guys sporting the beer belly with a young and attractive girl in her 20s.

Even yesterday as I rode the elevator down from my apartment building at dinner time, I chatted with a really pretty girl in her 20s. I noticed that she was wearing expensive jewlery, clothing while radiating Channel purfume. As we parted ways outside of the building after some small talk, I saw her go directly into a high priced Mercedes waiting for her, driven by a 40-something guy.

Most 二奶 receive "rental on a fashionable penthouse in one of the city's dazzling white apartment blocks, plus a 5,000-yuan (about £350) monthly budget for clothing, haircare and skin-whitening treatments. That's more than double China's average monthly income."

In turn her 'husband' - a successful industrialist whose factories stud mainland China - entertains Little Snow once or twice a month. The nights are raucous, but the sex lacklustre, to Little Snow 'a function no different from brushing my hair or drinking a glass of water'. He's up before the sun rises, sometimes leaving a rose on the pillow.

Is this wrong? Is this right? I don't know. However, I do know that this is all created by the income disparity that exists between people from the countryside and those from the cities, between the young and old, between women and men.

As long as men in China have most of the wealth and the distrubution disparty between the different classes are so large, this system will always exist. As the Telegraph article states:'

The country has changed rapidly; but Chinese thinking hasn't caught up with this new reality,' says Yang Erche Namu, aka Namu, one-time mistress to a diplomat and now a postergirl for modern Chinese feminism, whose ballsy bestselling books urge Chinese women to pursue emotional and financial emancipation. 'Some men are getting very rich, with cash to throw around, but at the same time the wealth gap is widening and the countryside is full of young girls living in poverty. So it's natural that love becomes a transaction - it's a simple case of supply and demand.'

In addition to the young 2nd wives, there are also 2nd husbands, gigalos or 鸭子 [yazi] in Shenzhen. While this usually occurs less frequently, it is still a part of the culture. A recent Malaysian article described a young, 22 year old Shenzhen man blackmailing his 50 year old wife for 1 million HKD.

This just shows that its all about the money in Shenzhen.


Note: Many people have written about the issues relating to prostitution and brothels in Shenzhen and other Chinese cities. I have been recently reading China Inc. by Ted Fishman and it gives a great summary of the situation for girls who go into the pay-for-sex industry and its links with economic and financial struggles.

Also, just to show that Sex & Money is related in every culture, below is a recent ABC News report describing the growth in the US brothel service in the current bad economy.

China Takes Action. US Hangs Out

For the past few days since Barack Obama was elected President, I've been trying my best to keep up with the news about his presidential transition and the economy. Although it has only been a few days since the historic election, there has already been a lot of politics and fighting between the various interest groups in the US.

The main issue currently in the US is the economy. As GM is almost going bankrupt and more people hit the unemployment lines everyday, the country has sought a change from the current status quo and is looking to Obama as the savior. It seems that most people want him to start doing things right away and try to pursue his policy direction he laid out during his campaign.

Obama has announced his desire for middle class tax relief, help in healthcare and unemployment insurance for the poor as well as investments in infulstructure and public work projects all over the country to stimulate the economy. The issue right now is that:

1. He's still not the president. He only becomes president in January.
2. Even though he has a "mandate" from the election, he has to get past the lame-duck congress and lame duck president bush to see any of his proposals become law before he's sworn in.
3. Even when he is officially president, he will still have to play the politics game back and forth with congress to get anything done. As we've seen the $150 billion in amendments and pork addes on to the $700 billion bailout of Wall Street, there will definitely more of the same to any new stimulous package.

So in the midst of an economic crisis for the ages, the US government cant act because of procedural issues and infighting.

On the flip side, look at China. Just before I went to bed last night, CNN reported that China, in all its "red, commie" glory, has announced a $586 Billion spending plan for the next to years to bolster its economy in this downturn. Without too much debate or infighting, China has acted urgently to combat this crisis.

And surprise surpise, the investment is for "infrastructure and social welfare" projects/programs. I guess this is what Obama was thinking about doing in his plan. Now lets see how long it takes the US to do the same exact thing as China.

Shenzhen Opens Office in NYC to Promote Trade & Relations

In a recent press release published online by Marketwatch, on Oct. 27, 2008, Shenzhen will officially opened a office in New York City.

The City of Shenzhen, China announced today that it will be hosting a luncheon ceremony on October 27 at the Marriott Marquis in New York, to celebrate the opening of the New York Representative Office of Shenzhen and to discuss key economic developments as well as business opportunities between Shenzhen and the U.S.

The opening ceremony will not only include government officials and representatives of Shenzhen and the Chinese consulate in NYC, but it will also include prominent leaders of major electronics and financial firms based in Shenzhen.

What seems most likely is the continued expansion of ties in the financial and high tech industries. Shenzhen has already planned a NASDAQ exchange for small and medium sized companies that can supplement the already existing Shenzhen Exchange. It is also focused on decreasing the number of value-added companies (that produce toys for example) and promote the high tech industry. This would push it away from just a factory town to a city of innovation, design and creatvity.

Great move by Shenzhen. Silicon Valley anyone?

China Mostly Immune to Global Financial Crisis

For the past few weeks, I've been engrossed with the current US election. As a person who has volunteered for campaigns, canvassed in low income neighborhoods and helped register people to vote in the US, it has been an interesting election season so far.

The main issue this year has been the economy and the current financial crisis affecting the world. As a friend who works for McKinsey Consulting told me more than a year ago... "it'll be really really bad. Just wait, Mike." I guess he was right. Another one of my friends who used to work for Lehman in Hong Kong is looking for a new job.

(Yep, the Dow Jones just went under 10,000. This is getting even more crazy.)

What's great news in China is that the main Chinese banks are largely unaffected by the crisis plaguing the rest of the world. It seems that Chinese leaders didn't really understand financial derivatives back a few years ago. Since they didn't understand them, they didn't invest in them. This act of conservative and cautious investing has greatly benefited the Chinese economy. Even though the Chinese stock market has taken a hit - as have just about everyone, the "robust" Chinese economy is said to be able to muscle through while the rest of the world struggles. - CNN.

I guess I'll just have to put my Bschool plans on hold and stay in China for a little longer. It's really the only place where there are jobs.

Expat Exodux = Easy to find a Job in Shenzhen

In the past few months, there has been a huge exodus of foreigners from Guangdong province. Due to the Olympics, China employed a lot of regulations that could help control the flow of foreigners into China. Not only was it much more difficult to obtain a visa but it was almost impossible to get a visa in Hong Kong.

Also, foreigners who were living in China and working on Tourist visas were shooed away. This usually stemmed from police approaching expats on the street to see adaquate identification. For people who were employed, he/she faced increased scrutiny in applying for a work visa. While most of these regulations were a surprise to expats, they were all on the books but werent really enforced until recently.

All of these efforts led to a huge decline in the expat community in Guangdong. As a friend of mine described to me, supposedly as much as 90% of the foreigners in Guangdong had left before the Olmypics started. That's just crazy.

Just walk around the Shekou area and you can see the effects. Once filled with foreigners from all over the world, Shekou is now mostly empty. Business is down for both restaurants and bars. I went there on a night out with friends this past Wednesday and there were barley anyone there. Woah.

Another side effect of this exodus deals with jobs. Many foreigners working in Guangdong were employed as project managers for various trading or manufacturing companies - usually under tourist visas. Since most of these people have left China, it has created a vaccum of talent for people seeking jobs. It is now incredibly easy to find a project management job in Shenzhen that pays a very attractive salary. I would assume this is the case as well in other cities like Beijing and Shanghai. It was always easy to find English teaching jobs in Shenzhen, but it's definitely even easier now.

As the US economy tanks and the world economy goes into a recession of sorts, I see China becoming an increasingly attractive place for young people to come to. Recently, another 100+ newly college-grad English teachers have deceded on Shenzhen through the CLTC Program's deal with the Shenzhen Government Education Bureau. Students are arriving every semester to study Chinese at different universities all over the country from places like the USA, Europe, South America, Mexico, Korea and Japan. Even people who have gone back to the USA are returning to China for round 2.

If you want that job, get over here early.

Shezhen Investing $200 Million in Vietnam

For the past year a lot of factors have been hurting Shenzhen factories manufacturers.

1. Huge increases in the cost of commodities, from plastics to iron and everything in between
2. Inflation in China
3. Appreciation of the RMB - making products less competitive when exporting to the US
4. New worker standards in China = higher wages for the same jobs
5. The inability to pass the rising costs to the clients overseas
6. Tax breaks and customs tax rebates to Chinese companies exporting internationally have been repealed

All of these factors have severely hurt once profitable businesses into lagging money-losing enterprises. The owner of my new apartment i'm renting in Nanshan is a part owner of a factory who does business with western clients like Walmart. He said that every month he loses 400,000 RMB on workers salaries and factory overhead costs. However, if he actually worked on any orders, his loses would INCREASE to 600,000 RMB. He loses money if his factory makes product. This means that the factory stays idle while he and his partners look for new sources of income.

In the west, companies are already exploring other sources of low cost labor. Vietnam is supposed to be the Next Guangdong province. A lot of foreign companies have already left China for greener pastures in Vietnam. Realizing this trend, Shenzhen is taking action. In a recent Thanhnien News article, Shenzhen is reportedly investing $200 million in a economic trade zone.

The park, 125 kilometers from the Vietnamese capital, aims to attract 170 Chinese manufacturing companies in the clothing and electronics industries to take advantage of the country’s cheap labor and the government’s preferential policies and tax incentives...

So it seems, not only are western companies leaving Shenzhen for more inland provinces and other southeast asian countries, so are Shenzhen factories themselves. Maybe in a few years, the same factories will be doing business with the same clients only in Vietnam instead of Shenzhen.

NY Times is Beginning to Like China

During the entire Olympics period, the NY Times has many more "objective" articles regarding China. Recently however, they've taken it to another level - basically suggesting that the US should learn from China. Previously it was the interesting pros of having an authoritarian government and the benefits of being a communal society. Now its the inward focus and own-nation building.

In today's NY Times op-ed article A Biblical Seven Years by Thomas Friedman, China's emergence in its 7-year preparation for the Olympics is compared to the US and the 7 years since 9/11 and translated into an election contest between Obama and McCain.

Without even getting into the article itself, it is quite amazing the amount of "good press" China has gotten in the past few weeks because of the Olympics. It seems that the success of these Games have given China a better platform to showcase its achievements. Even though the human rights and Tibet issue is always raised in any general article, at least it is moved down further near the end of the article.

Here's the complete NY Times text:

After attending the spectacular closing ceremony at the Beijing Olympics and feeling the vibrations from hundreds of Chinese drummers pulsating in my own chest, I was tempted to conclude two things: “Holy mackerel, the energy coming out of this country is unrivaled.” And, two: “We are so cooked. Start teaching your kids Mandarin.”

However, I’ve learned over the years not to over-interpret any two-week event. Olympics don’t change history. They are mere snapshots — a country posing in its Sunday bests for all the world too see. But, as snapshots go, the one China presented through the Olympics was enormously powerful — and it’s one that Americans need to reflect upon this election season.

China did not build the magnificent $43 billion infrastructure for these games, or put on the unparalleled opening and closing ceremonies, simply by the dumb luck of discovering oil. No, it was the culmination of seven years of national investment, planning, concentrated state power, national mobilization and hard work.

Seven years ... Seven years ... Oh, that’s right. China was awarded these Olympic Games on July 13, 2001 — just two months before 9/11.

As I sat in my seat at the Bird’s Nest, watching thousands of Chinese dancers, drummers, singers and acrobats on stilts perform their magic at the closing ceremony, I couldn’t help but reflect on how China and America have spent the last seven years: China has been preparing for the Olympics; we’ve been preparing for Al Qaeda. They’ve been building better stadiums, subways, airports, roads and parks. And we’ve been building better metal detectors, armored Humvees and pilotless drones.

The difference is starting to show. Just compare arriving at La Guardia’s dumpy terminal in New York City and driving through the crumbling infrastructure into Manhattan with arriving at Shanghai’s sleek airport and taking the 220-mile-per-hour magnetic levitation train, which uses electromagnetic propulsion instead of steel wheels and tracks, to get to town in a blink.

Then ask yourself: Who is living in the third world country?

Yes, if you drive an hour out of Beijing, you meet the vast dirt-poor third world of China. But here’s what’s new: The rich parts of China, the modern parts of Beijing or Shanghai or Dalian, are now more state of the art than rich America. The buildings are architecturally more interesting, the wireless networks more sophisticated, the roads and trains more efficient and nicer. And, I repeat, they did not get all this by discovering oil. They got it by digging inside themselves.

I realize the differences: We were attacked on 9/11; they were not. We have real enemies; theirs are small and mostly domestic. We had to respond to 9/11 at least by eliminating the Al Qaeda base in Afghanistan and investing in tighter homeland security. They could avoid foreign entanglements. Trying to build democracy in Iraq, though, which I supported, was a war of choice and is unlikely to ever produce anything equal to its huge price tag.

But the first rule of holes is that when you’re in one, stop digging. When you see how much modern infrastructure has been built in China since 2001, under the banner of the Olympics, and you see how much infrastructure has been postponed in America since 2001, under the banner of the war on terrorism, it’s clear that the next seven years need to be devoted to nation-building in America.

We need to finish our business in Iraq and Afghanistan as quickly as possible, which is why it is a travesty that the Iraqi Parliament has gone on vacation while 130,000 U.S. troops are standing guard. We can no longer afford to postpone our nation-building while Iraqis squabble over whether to do theirs.

A lot of people are now advising Barack Obama to get dirty with John McCain. Sure, fight fire with fire. That’s necessary, but it is not sufficient.

Obama got this far because many voters projected onto him that he could be the leader of an American renewal. They know we need nation-building at home now — not in Iraq, not in Afghanistan, not in Georgia, but in America. Obama cannot lose that theme.

He cannot let Republicans make this election about who is tough enough to stand up to Russia or bin Laden. It has to be about who is strong enough, focused enough, creative enough and unifying enough to get Americans to rebuild America. The next president can have all the foreign affairs experience in the world, but it will be useless, utterly useless, if we, as a country, are weak.

Obama is more right than he knows when he proclaims that this is “our” moment, this is “our” time. But it is our time to get back to work on the only home we have, our time for nation-building in America. I never want to tell my girls — and I’m sure Obama feels the same about his — that they have to go to China to see the future.

Harmony and the Dream: The Difference Between East and West

In the 2nd semester of my sophomore year of college, I was honored to take a class with professor Jeffrey Friedman entitled Liberalism, Communitarianism and the Good. POLS V3027 was a political science class focused on theory and the development of political beliefs based on various factors, cultures and influences.

Not only did the class have an interesting focus, but it was taught extremely well. I can say that my life has been visibly changed since taking his class. These were some of the comments that students made after taking his class on CULPA.

Professor Friedman is the best teacher I've had. He is brilliant (you may think you've had brilliant professors before but this experience will make you re-evaluate that), intellectually rigorous (what do you say about a teacher who is able to tie all the tangents together), challenging (you WON'T find anyone who thinks like him and he expects you to think for yourself as well) and compassionate (really listens to students and seems to care). I have also never taken a class with such devastating intellectual and political implications.

He made people feel self-conscious about the quality of their comments in class. But, I will be forever grateful that I took this class because I got over my fear of public speaking and it really opened my mind and challenged me to think constantly during the class. He comes off as opinionated, but I think that's just because he knows he's right :). He really took the discussion to places I have never before nor since traveled to in any other class here. Always challenging us NOT to assume things, not to be lazy in thinking liberal ideology is always right, to read critically - to have our "bullshit detector" always on.

He's simply mind-blowing, funny, and the smartest person I've ever met (and that's genius level, because I like to think I'm pretty smart myself!). His democracy class was the best class I've taken at BC-- the readings on public ignorance and human fallibility were so compelling that I can no longer read the NY Times in the same complacent way I used to. Really, he should write a book and change the world.

After his class, it has been has almost been impossible to find worthy reading material on the NY Times ... until now.

Going through all of the NY Times daily emails that I had forgotten about during the Olympics, I found an amazing article entitled Harmony and the Dream written by op-ed columnist, David Brooks. It describes the basic difference between individualistic and collective societies (exactly like my liberalism and communitarian class) under the auspice of the 2008 Olympics in Beijing where the idea of friends living in harmony was a central theme during the Games.

The world can be divided in many ways — rich and poor, democratic and authoritarian — but one of the most striking is the divide between the societies with an individualist mentality and the ones with a collectivist mentality.

This is a divide that goes deeper than economics into the way people perceive the world. If you show an American an image of a fish tank, the American will usually describe the biggest fish in the tank and what it is doing. If you ask a Chinese person to describe a fish tank, the Chinese will usually describe the context in which the fish swim.

These sorts of experiments have been done over and over again, and the results reveal the same underlying pattern. Americans usually see individuals; Chinese and other Asians see contexts.

This concept translates further than just the Olympics. It is embodied in politics, business, society and even personal friendships. It is the small, yet overarching difference between the East and West. And I believe it is the key for mutual understanding between the different worlds.

David Brooks should continue this train of thought and help Americans and the western world examine and reexamine its view of China. There is much more to be written and seen.

Here is the full text of the article:

The world can be divided in many ways — rich and poor, democratic and authoritarian — but one of the most striking is the divide between the societies with an individualist mentality and the ones with a collectivist mentality.

This is a divide that goes deeper than economics into the way people perceive the world. If you show an American an image of a fish tank, the American will usually describe the biggest fish in the tank and what it is doing. If you ask a Chinese person to describe a fish tank, the Chinese will usually describe the context in which the fish swim.

These sorts of experiments have been done over and over again, and the results reveal the same underlying pattern. Americans usually see individuals; Chinese and other Asians see contexts.

When the psychologist Richard Nisbett showed Americans individual pictures of a chicken, a cow and hay and asked the subjects to pick out the two that go together, the Americans would usually pick out the chicken and the cow. They’re both animals. Most Asian people, on the other hand, would pick out the cow and the hay, since cows depend on hay. Americans are more likely to see categories. Asians are more likely to see relationships.

You can create a global continuum with the most individualistic societies — like the United States or Britain — on one end, and the most collectivist societies — like China or Japan — on the other.

The individualistic countries tend to put rights and privacy first. People in these societies tend to overvalue their own skills and overestimate their own importance to any group effort. People in collective societies tend to value harmony and duty. They tend to underestimate their own skills and are more self-effacing when describing their contributions to group efforts.

Researchers argue about why certain cultures have become more individualistic than others. Some say that Western cultures draw their values from ancient Greece, with its emphasis on individual heroism, while other cultures draw on more on tribal philosophies. Recently, some scientists have theorized that it all goes back to microbes. Collectivist societies tend to pop up in parts of the world, especially around the equator, with plenty of disease-causing microbes. In such an environment, you’d want to shun outsiders, who might bring strange diseases, and enforce a certain conformity over eating rituals and social behavior.

Either way, individualistic societies have tended to do better economically. We in the West have a narrative that involves the development of individual reason and conscience during the Renaissance and the Enlightenment, and then the subsequent flourishing of capitalism. According to this narrative, societies get more individualistic as they develop.

But what happens if collectivist societies snap out of their economic stagnation? What happens if collectivist societies, especially those in Asia, rise economically and come to rival the West? A new sort of global conversation develops.

The opening ceremony in Beijing was a statement in that conversation. It was part of China’s assertion that development doesn’t come only through Western, liberal means, but also through Eastern and collective ones.

The ceremony drew from China’s long history, but surely the most striking features were the images of thousands of Chinese moving as one — drumming as one, dancing as one, sprinting on precise formations without ever stumbling or colliding. We’ve seen displays of mass conformity before, but this was collectivism of the present — a high-tech vision of the harmonious society performed in the context of China’s miraculous growth.

If Asia’s success reopens the debate between individualism and collectivism (which seemed closed after the cold war), then it’s unlikely that the forces of individualism will sweep the field or even gain an edge.

For one thing, there are relatively few individualistic societies on earth. For another, the essence of a lot of the latest scientific research is that the Western idea of individual choice is an illusion and the Chinese are right to put first emphasis on social contexts.

Scientists have delighted to show that so-called rational choice is shaped by a whole range of subconscious influences, like emotional contagions and priming effects (people who think of a professor before taking a test do better than people who think of a criminal). Meanwhile, human brains turn out to be extremely permeable (they naturally mimic the neural firings of people around them). Relationships are the key to happiness. People who live in the densest social networks tend to flourish, while people who live with few social bonds are much more prone to depression and suicide.

The rise of China isn’t only an economic event. It’s a cultural one. The ideal of a harmonious collective may turn out to be as attractive as the ideal of the American Dream.

It’s certainly a useful ideology for aspiring autocrats.

Cultural Captialism: Modern Dance Festival in Beijing

Last week, my friend and fellow Columbia Alum, Gigi, invited me to a modern dance performance in Beijing. I personally jumped at the opportunity since it was almost 2 years since I had been to a dance performance. As we all already know, Shenzhen is lacking in culture.

As Gigi reminded me in a text message: "Modern dance is supposed to play with the idea of free association of body movements and break the rules of traditional aesthetic styles"....blah blah.

The JK booking Dance Festival Beijing 2008 was held at the Nine Theaters in Chaoyang District. had a total of 8 total numbers with 5 different groups from both the US and China. The US participants were Odyssey Dance Theatre from Salt Lake City and Kim Robards Dance from Denver. Their Chinese counterparts included the Beijing Modern Dance Company and choreographers from the National Ballet of China and TAO Studio,

The dance performance was very impressive. The Chinese performances were displayed in interesting cultural costumes and backgrounds. The American performances were mostly in a traditional western context. The Odyssey Dance Theatre even performed "The Factory", a hip hop piece (I was at one point brought onto the stage and proceeded to dance with the performers for a few minutes). 2 of their dancers were even finalists on the American show, So You Think You Can Dance.

At the end of the performance, Gigi and I stayed for the discussion with the various directors. Most people in the audience asked about specific pieces that they enjoyed. What was the inspiration for it?

As a relative novice in art and dance, my question for the directors reflected on a overall view of the development of modern dance in China as well as how it felt have this kind of cross cultural collaboration.

All of the directors responded positively. They discussed the honor of being able to perform together with Chinese groups and the amazing expansion of modern dance and art in China in the past few years. They also talked about collaboration and learning from each other.

The most interesting comment came from Director Derryl Yeager from the Odyssey Dance Theatre. He discussed his excitement for his dance company and the future possibilities for more traveling tours and performances in China. He enthusiastically wanted to do more of these performance festivals in China.

By spending so much time in Shenzhen and Guangdong province, my primary experience has been associated with trading goods and services. This usually revolves around using cost advantages in one place to arbitrage in another. With my education company, it involves giving students the opportunity to experience another place through travel - almost a trading company dealing in people, instead of physical things.

At no point did I ever consider the idea of trading in culture or "cultural capitalism." All of the American directors had the expressed goal of promoting their own group in China. Just as the NBA and the MLB are heavily investing in China to further expand their market, or multinational corporations expanding their operations in China to expand their own market, these dance companies are in effect doing the same. They are using their time and energy to promote their own art.

These dance companies are also proceeding in a similar way as their business counterparts did. To begin tapping into the Chinese market, western corporations began by established joint ventures with Chinese counterparts. This was not only the only way they could get in at the time, but it was the best way to understand how to navigate China. This is almost what this festival was.

Also just as corporations passed on certain technical aspects or management ideas to their Chinese partners, so did the American dance groups show off their techniques and creative intensions.

What is most interesting is that it seems that there are truly a huge number of people who are interested in China's potential other than for business. Collaboration in academics, art, law, sport, society, culture and other areas are just as important as for pure business.

2008 Beijing Olympics: Hotel Price Rollercoaster

One of the more interesting aspects of the Beijing 2008 Olympics has been the evolution of the price of hotels and different types of accommodations.

In July 2007, I was working with a few different Chinese universities in Beijing on a summer camp for American teenagers. When asking about the possible cost of the basic university dorms during the Olympics, the managers and deans all stated that none of the hotels could give us an accurate price. These hotels (about 2 star level) usually cost around 30 USD per night for a double room. It seemed like all of the different universities were preparing for a huge increase in price due to anticipating huge crowds for the Olympics.

During the same time, all of the major 4 and 5 star hotels in Beijing were preparing for the same surge – of price and of tourists interested in the Olympics.

Fast forward a year and the Olympics are upon us. The prices have quadrupled across the board. No matter if it is the cheapest hostels, the 5 star hotels or everything in between. My friend was planning of traveling in Beijing during this time for 2 days. The price for Leo Hostel in Beijing is 550RMB or almost 80USD for a single room. Dorm rooms with 8 people cost 40 USD. Typical hotels costing 50 USD are now asking for 200. This is amazing.


At the same time, a combination of factors has changed the scope of the Olympics with respect to visitors.

1. The increased regulations of visa applications have made it much more difficult for foreign visitors to participate in the festivities.

2. Due to the same visa issues, many westerners already in China have left. One friend told me that 80% of all foreigners have left China in the past 6 months. I don’t really believe the ratio is truly that high, but its definitely true. Many friends and friends of friends in Shenzhen and Guangzhou have left.

3. Recent terrorist attacks in Xinjiang province have forced the government to increase security measures. Not only has this possibly affected foreign tourists, but many Chinese tourists have stayed away from Beijing.

“They’ve even mobilized surface to air missile defense systems around Beijing. You know if something happens, it’s going to be in Beijing.” – My Aunt

Combine these reasons with protests from some European heads of states, the Tibetan issue and the Sichuan earthquake, the amount of foreign tourists at the Beijing Olympics are drastically less than the 500,000 previously expected. As The Times of India reports:

People connected to the travel industry were expecting a flood of visitors coming to Beijing two weeks before the Games.

Instead, there is a small trickle of visitors just three days before the start of the Games apart from the athletes and sports officials from different participating countries.The arrival lounges at the Beijing airport, including the recently opened Terminal 3, are not at all as crowded as one would expect at the airport of a city hosting the world's biggest sports event.

Though exact numbers are not available, most observers feel there are lesser foreign tourists seen at Beijing's airport on a given day now than what was visible few months back.

Without the amount of foreigners expected, many of the hotels have changed pulled back on their previously ridiculous rates. Although rates are still higher than before, they are much more "reasonable".

"I am getting very low price quotations from three-star hotels. They are ready to sell rooms at nearly half the price they were asking for two weeks back. Lot of hotels are losing hopes of 100 per cent occupancy during the 16 days of the Games," Chang Qing, a travel agent, said.

Some news outlets have even reported that many 4 star hotels have less than a 50% occupancy rate for the entire Olympics. Who knows what the figures are for 3 star hotels and smaller establishments. I guess all that preparation starting a year ago was really a waste of time.

Shenzhen Increases Minimum Wage

Shenzhen has announced that its minimum salary level will go up on July 1, 2008. This makes the minimum wage higher than that of Shanghai and Guangzhou.

Under the adjustment plan, four districts within the Special Economic Zone including Futian and Luohu districts will see their minimum wage level reach one-thousand yuan per month, up over 17 percent from previous year.

Elsewhere, the minimum wage will rise 20 percent year on year to 900 yuan a month. The local government says the move aims to enhance the city's competitive power and to attract more talent. Shenzhen now has more than 7 million migrant workers, but it is still short of over 740 thousand laborers. Increasing salary may help labor-thirsty companies to employ more staff.

In reality, the minimum wage doesn't effect the vast majority of Shenzhen workers. Even the factory worker on the bottom of the pyramid makes atleast 1600 to 1800RMB per month. If anything it helps the workers of McDonald's and KFC.

Shenzhen Democracy

For the past 30 years, Shenzhen has been the big Chinese experiment on capitalism. This Special Economic Zone started from a fishing village to become the most modern Chinese city. Not only is the economy in the forfront, but the rule of law, transportation and civil systems are among the best in China. There has even been talk about a Shenzhen - Hong Kong mega city in its future plans while the development of Shenzhen's airport has been mentioned in Kanye West's blog.

This big experiment seems to be ready to expand to politics as well. Reported in the Pakistan Observer, Shenzhen's steps Toward Democracy describes the future development of an“intraparty democracy.”

The Shenzhen local government published a draft of a document titled “Shenzhen Future Reforms” on its Web site for the public to comment upon . The draft summarizes tentative plans for political, administrative, economic and cultural reforms in Shenzhen and describes 19 key tasks, including the holding of mayoral elections in Shenzhen when “conditions allow.” Members of the regional National People’s Congress will be allowed to run directly in these elections.

By conducting China’s “intraparty democracy” experiment in Shenzhen, Chinese President Hu Jintao is paying homage to the legacy of Deng Xiaoping and signaling that if the test proves successful, intraparty democracy will spread to the rest of China.

The document is a result of the National People’s Congress in March, when “intraparty democracy” the Chinese Communist Party (CPC) version of “rule by consensus” was put in place as one of the key planks of Chinese President Hu Jintao”s legacy. The groundwork for the Shenzhen experiment originally was laid in March when Wang Yang, secretary of the CPC’s Guangdong Provincial Committee, visited Shenzhen and officially announced that the city would “set an example for the nation.” Such initiatives have been tried at the village level before but never in as large or as prominent a city as Shenzhen.

Long a showcase for new ideas from the center, Shenzhen was one of the original sites of Chinese leader Deng Xiaoping’s groundbreaking economic, political and social reform programs and was home to China’s first special economic zone. By formally launching China’s intraparty democracy experiment in Shenzhen, Hu is paying direct homage to Deng’s legacy and signaling that if this test proves successful, intraparty democracy will spread to the rest of China. The province of Guangdong has never built the political power base that Shanghai has, so this latest spotlight on Shenzhen does not signal an impending central government “crackdown” on disobedient local officials.

Beijing wants to build some sense of accountability in the prevailing system and emphasize that the party and government are owned by the people.

I have been recently been considering leaving Shenzhen, but I might just have to stay a little bit longer to see these things happen firsthand, undercover.

Chinese Thieves Revealed

This is an issue that everyone who lives in a big city has to deal with. It's something unpleasant, disgraceful, kinda sad, and ultimately just sucks.

Yes, I’m talking about thieves, pick-pockets, purse snatchers, whatever you want to call it.

As a relatively forgetful person, I’ve had many encounters with people taking my stuff. The first time was probably in the 1st or 2nd grade when someone stole my bike in Ohio. My BMX "Batman" bike was great but some kid probably saw how cool it was and rode it away when I didn’t lock it up tight.

During my time in China, I have always been warned by my friends and relatives to be careful of thieves. They often recount horror stories they hear on the news: A guy walking around is stabbed for a cell phone or wallet, and guys on motorcycles drag a yuppie for a ways while trying to snatch her purse.

There are other stories about gangs of people working as a pack (ie. Ocean's 11 or Gangs of NY). I believed that these stories were true, but I had never experienced it myself.


Tuesday Morning, 7:10am, 东门中 bus stop.

I was waiting at the bus stop to go to work in the morning. Suddenly, a bus stops in front of me. Out jumps 2 guys followed by an angry women yelling and screaming, kicking 2 guys. You assholes, you tried to steal my cell phone!!! Fuck you!!

After her rant, she got back on the bus and it drove off. I watched this episode play out right in front of me. I had nothing else to do and it was kinda funny. Before I went back to sending a text message, I took a quick glance at the 2 guys as they walked away. No big deal.

5 minutes pass and I get hungry. I'm still waiting for my 106 bus, but I wanted to grab some breakfast nearby. I start looking around my stop to search for street vendors, and I immediately see one of the guys on the other side of the bus stop, creeping around.

I cant believe it, these thieves were going to work my stop!!

Different scenarios immediately popped into my head. Did I want to beat them up for being thieves and be the savior? Did I want to pretend I didn’t know what they were doing and try to be a "victim" of theirs? I finally decided on passively observing their interactions and how they operate.

As I watched them work, it seemed clear that they were not "professionals." When “professionals” come to mind, I think of Matt Damon pulling some guy's wallet on the bus in Ocean's 11, or the train snatch in Ocean's 12. These guys, although they probably did it for a living, were not that good. They didn’t have the look, feel or skill of a professional. What they did have, was the balls.

These two guys operated as a set. One guy (thief1), the one in the white dress shirt with black, cross shoulder bag pretended he was a regular guy going to work. He definitely looked the part. He walked around the stop, looked at the bus schedule, huffed and puffed and pretended to be late. At other times he would bust out his cell phone and pretend to start talking on it like he had important business to attend to.

Good concept, bad acting.

It was ultimately his job to locate the target, start talking to the target and work that avenue.

The 2nd guy (thief2) in the team of two was the guy dressed in all brown and his arms crossed. He stayed back, leering at different people and waited until his partner to make the initial move. After the thief1 started talking to someone, the thief2 would slowly move up behind the potential victim and set up shop. Again, the picture above shows them in action targeting a young guy in the black shirt (who's talking to thief1).

I observed thief2 much more than I did thief1. What I saw was that thief2 was very blatant in what he was doing. He would stay back and hang out to let his partner initiate the contact. However, when he was standing there, instead of being discreet and relaxed, he started looking around, almost too excited to maintain secrecy.

Whenever someone passed him, he immediately looked at their bag, wallet, cell phone, ect. There was no discreteness at all. It was like a fat kid looking into the glass of a cake store. Half the time when he was staring at everyone's bags and cell phones, almost drooling at them, I wanted to grab him, beat him up and then give him a lesson about covert operations. I'm no thief/pickpocket, but I bet I could do it a lot better than he could!

Ultimately, after these guys stayed around for 10 minutes, they didn’t see many good targets so they moved on to a different stop.

What's funny is that on 2 days later, I saw the duo again working the bus stop. However, after I got there, they immediately got onto a bus and left.

From my observations of this duo, the easiest way to recognize a thief is to look into his/her eyes. Most of the people doing petty theft are amateurs from the countryside. They are usually too greedy and too stupid do be discrete.

The eyes reveal all.

Future China/US Trade War?

There has been an abundant amount of coverage on the possible US sanctions towards Chinese goods if China doesn’t appreciate the yuan at a faster pace than it is doing currently. Paulson: China must implement reforms describes current US Treasury Secretary’s view of what’s going on.

Paulson said there is agreement in principle between the U.S. and China on the need for greater yuan flexibility. The discussion is about "the pace" of change.

"They're moving, but they're not moving, in my judgment, quickly enough," he said. "China is by far the largest" economy that doesn't have a market-determined currency, but enjoys the benefits of the global economy."

In a 4/21/07 Bloomberg.com article entitled Paulson Says China Must Yield `Tangible Results' on Yuan, Trade, Paulson described the possible consequences and repercussions if China doesn't act quickly.

"The American people are concerned, Congress is concerned and there's a lot of protectionist sentiment'' toward China, Paulson said in an interview on the ``Charlie Rose'' show on PBS television following his speech in New York." The more tangible reforms we see, the easier it is for me to deal with Congress.''

"There will be some, I believe, unattractive bills that are voted on in Congress,'' Paulson acknowledged. "I think the Chinese are very well aware of this -- I think they should be aware of it.''

Other parts of the Bush Administration have also taken action by imposing import duties on Chinese glossy paper and by filing 2 complaints to the WTO for copyright infringement and piracy.

The feeling of uncertainty in Chinese and US relations changed 2 days later in another Bloomberg piece by Matthew Benjamin. In his story, called Paulson May Be Unable to Get China, U.S. Off Collision Course, Benjamin painted a grim picture if reforms in the Chinese currency doesn't happen soon.

Without steps to allow a significant increase in the yuan, which most economists consider unlikely, Paulson may not be able to continue holding off moves in Congress to punish China.

"After years of talk and bluster, protectionism no longer seems like an empty threat,'' says Stephen Roach, chief global economist at Morgan Stanley in New York. "Trade sanctions against China are now all but inevitable.''

These increasingly real threats come with the backing of Congressional democrats who maintain that they would achieve “strong and effective legislation is likely to pass with a veto-proof margin.”

Although it might seem that the appreciation of the yuan is all but unavoidable, Benjamin also shows the hidden side of the currency struggle, relating both US and Chinese workers and businesses.

When China allowed a small rise in the value of its currency in 2005, Hangzhou food-company executive Wang Yuzhou saw his profits squeezed. Any further move threatens the livelihoods of his 1,000 workers and the 5,000 rural households that supply his plants, he says.

John Walker says China's currency policies have already cost 100 jobs at his Lewisburg, Tennessee, die-casting company. He wants the U.S. Congress to do "whatever it takes'' to force an increase in an undervalued yuan that he contends gives an unfair advantage to Chinese competitors.

Citizens on both side of the Pacific Ocean have money, family and livelihoods at stake. It is often easy for Americans (me included) to jump into the US perspective (of John Walker) while being ignorant of Wang Yuzhou’s plea.

But what can China do other than to appease the US on their currency appreciation wishes? The answer lies in a recent 4/18/07 NY Times article. China Leans Less on U.S. Trade describes the readjustment of China’s global trade strategy.

At booth after booth at China’s main trade fair (Canton Fair) this week, the refrain from Chinese business executives is the same: the American market is not as crucial as it used to be.

Instead, Chinese producers of everything from socket wrenches to sport utility vehicles say, their fastest growth these days lies in Europe, Africa, the Middle East, South America and elsewhere in Asia — in other words, practically anywhere other than the United States.

So it is throughout China. With ample support from the Beijing government — including a flurry of trade missions to Africa and assistance with trade fairs in Germany, Australia or someplace in between — Chinese companies are poised to expand into the markets of many of the world’s rapidly growing economies.

By placing the focus on new markets for the abundant amount of Chinese goods (produced in cities like Shenzhen), Chinese businesses are beginning to hedge their profit margins and risk.

The government and companies across China increasingly see a danger in becoming too dependent on a single market (USA). So they are stepping up efforts to sell to other countries, particularly those outside the industrial world.

This change in direction is a small but important step for China. Maybe in the future, they will not need to be so dependent on American politics and their tariffs.

On the other side: what would happen to the US if cheap Chinese goods start decreasing?