China Ignores Real Problem

[Disgruntled70sHab]

And they have for quite some time now.

Mon, July 16, 2007

China ignores real problem

By EZRA LEVANT

China's main diplomatic characteristic -- saving face -- is in overdrive these days in the lead up to the 2008 Olympics in Beijing. So recent widespread problems with Chinese food and drug manufacturing are more embarrassing than usual.

"Made in China" is now synonymous with "buyer beware".

First it was poisoned pet food exported to the West that killed dogs and cats, then it was toxic fish from Chinese fish farms, toothpaste sweetened with antifreeze, juice with unsafe colour dyes and children's toys painted with lead paint.

Counterfeit products are rife -- brand names and quality certifications on labels are meaningless. It ranges from the massive to the ridiculous: A recent news item out of Beijing reported that a dim sum restaurant was selling pork dumplings with shredded cardboard -- softened with industrial chemicals -- instead of pork.

The arc of all these stories is the same: The Chinese government denies the news, then tries to explain it, then executes a scapegoat.

It's the same approach they took during the SARS outbreak; it's the same approach all dictatorships take, including the Soviet Union's approach to the Chernobyl nuclear fire.

And so, it was no surprise that China announced that it had executed Zheng Xiaoyu, the head of that country's food and drug administration from 1997 to 2006.


The government alleged Zheng took nearly $1-million in bribes over that period from food manufacturers.

That's likely true -- kick-backs and bribes are the standard privilege that all senior Communist Party members take for themselves.

But Zheng's crime in the eyes of China wasn't that he allowed poisonous food, but that his corrupt trail was caught by the media.

The execution of Zheng was designed to show that China is serious about cracking down on poisonous food, and perhaps even on corruption, too.

But it actually does the opposite. Zheng's trial was not a real trial, for there are no real trials in China -- no presumption of innocence, no rule of law, no rules of evidence and no independent judges.

The judges -- as always -- are directed by the Communist Party in how to render their verdicts.

They're more clerks than judges.

Because a real trial is exactly what the face-saving Chinese Communists don't want.

They wanted a single scapegoat: Zheng. Not a transparent trial. If Zheng had been the head of the Canadian or U.S. food administration, he would have had a lengthy public trial, where prosecutors would have had to publicize the details of his corrupt deeds.

Zheng himself could have implicated others and the whole thing would have been pored over by the public and the media -- and by other food manufacturers and bureaucrats. The trial itself would have become one giant teaching moment -- where China could have used the law to teach a new, higher moral code when it comes to food and drug safety.

China didn't do that because it is still a culture of government secrecy and scapegoating. The government wanted someone to blame. Zheng probably was guilty, but a fair trial could have fingered dozens if not hundreds more, and would have forced China to come to terms with its problem.

No doubt, the entire system of food inspection would be overhauled if such a trial were held in the West.

It is only a partial truth to say that China has a food problem -- or a pollution problem.

The link.

[wpghabsfan]

China is as corrupt and negligent as they come. Governments like Canada's should stop supporting them until they clean up there act. Of course that's easier said then done considering they have the world's hottest economy and everybody wants to ride the wave. The IOC should have never gave the olympics to them. How can a country with such a porous human rights record be given an event that, for the most part, champions fair play and sportmanship above all?

[cigarviper]

China has always concerned me and always will. A very underestimated amount of global power in the hands of a brutal dictatorship as witnessed in the article above. They are trouble and will be more so in decades to come unless there is real reform from within and that won't happen.

[Cranky]

$50.00 for the first guy who gets rid of China.

China will become a world class piranha state within 10 years. It's holding back the aggression until after the Olympics and after that, look out. Taiwan is gone, Japan will need to go nuclear, it will build a 7 seas navy with the money YOU (yes, you know who you are WalMart shoppers), it will support any and all governments that can feed it raw material and best of all, they will demand that goods are bought yuan's.

The time to reign China in is NOW....not when they are a full grown economic gorilla.

[Cranky]

wpghabsfan said:

China is as corrupt and negligent as they come. Governments like Canada's should stop supporting them until they clean up there act. Of course that's easier said then done considering they have the world's hottest economy and everybody wants to ride the wave. The IOC should have never gave the olympics to them. How can a country with such a porous human rights record be given an event that, for the most part, champions fair play and sportmanship above all?

MONEY. China will pay the IOC without a single complaint. I am not sure if you know this but part of the Olympic games proceeded go to the IOC. China has no problem with that since they have plenty of it from WalMart shoppers. Build a 1.3 trillion cash reserve from OUR economies.

I just love to see the US slap exchange controls on their currency. All they have to do is say that they will not exchange their "new dollars" with anyone they don't support. China will go bankrupt INSTANTLY.

[CentreHice]

I heard somewhere that China holds a huge IOU over the U.S.'s head, and that if anyone can bankrupt someone, it's the other way around.....i.e. calling in the loan.

Anyone have a source that either verifies that, or proves it wrong?

[Disgruntled70sHab]

centrehice said:

I heard somewhere that China holds a huge IOU over the U.S.'s head, and that if anyone can bankrupt someone, it's the other way around.....i.e. calling in the loan.

Anyone have a source that either verifies that, or proves it wrong?

A good friend of mine is an economics prof at a local college here in town. He also teaches Canada/US relations, which is always packed.

Anyway, he told me that the reason the American dollar hasn't plunged like it could have, was because of a deal with China. In exchange for cheaper merchandise, China agrees to buy "X" numbers of American dollars. This actually stabilized the dollar regardless what the US national debt may be.

HA, the same friend told me that China exports 176,000 sea containers a week to supply Wal*Mart USA alone. That total doesn't reflect the remainder of the US market it also supplies.

Cheers.

[CentreHice]

disgruntled70shab said:

centrehice said:

I heard somewhere that China holds a huge IOU over the U.S.'s head, and that if anyone can bankrupt someone, it's the other way around.....i.e. calling in the loan.

Anyone have a source that either verifies that, or proves it wrong?

A good friend of mine is an economics prof at a local college here in town. He also teaches Canada/US relations, which is always packed.

Anyway, he told me that the reason the American dollar hasn't plunged like it could have, was because of a deal with China. In exchange for cheaper merchandise, China agrees to buy "X" numbers of American dollars. This actually stabilized the dollar regardless what the US national debt may be.

Thanks Dis...I'm going to look into it further.

[Cranky]

centrehice said:

I heard somewhere that China holds a huge IOU over the U.S.'s head, and that if anyone can bankrupt someone, it's the other way around.....i.e. calling in the loan.

Anyone have a source that either verifies that, or proves it wrong?

China has a huge amount invested in the US bond market. I think it's about 200 billion.

If the Chinese used it as a weapon and dumped all of it then they could inflict short term pain to the US economy. A dump of that magnitude would force the bond market to up it's yield rates and it will probably bring up the interest rates a few percenage points. For sure, that would cause a cooling of the US economy.

And then it will be war.....

Not a shooting war but a trade war to end all trade wars. The US would totally shut down Chinese and Chinese related imports and cause a massive economic slow down to the Chinese economy. US manufacturers would restart their own operations or move manufacturing to other low cost countries. There is NOTHING that China makes of strategic or economic importance. China would be completely screwed since there is no other "new" economy to replace the US. Of course, this would create instability inside China and the Chinese government will invariably blame the Ugly-American for trying to "destroy" China. What follows that is anybodies guess. Chinese government may turn completely hostile and with a massive manufacturing base translating to military might, it may start to mimic pre WW2 Japan.

The effects on the American economy to shutting off trade with China would be a huge loss to American companies that invested heavily in China. In fact, a lot of American companies know the potential catastrophic risk like this and have already diversified their manufacturing to other low cost markets. US companies who sell to China would also be affected but most of them would recover by increased sales within the US. There will be some very vocal losers but in the end, the masses will not cry for them. After all, they went to China and shut down their own manufacturing to make MORE MONEY and everybody knows that.

In the end, while China may cause a short term economic left hook to the US economy, the US can deliver a far greater long term kidney blow to the Chinese economy. Some of the big corporations will lose billions BUT the middle and low class of the masses will win and the medium to small companies will win. That is why I pray seventimes a day to the almighty money God's for Chinese American trade war.

[Cranky]

disgruntled70shab said:

HA, the same friend told me that China exports 176,000 sea containers a week to supply Wal*Mart USA alone. That total doesn't reflect the remainder of the US market it also supplies.

Cheers.

Dis,

I know all too painfully how much comes from China. I can tell you that they displaced about 200 containers worth a year of manufacturing just from my companies alone. Add tens of thousands of containers of product from companies I use to supply who are now either bankrupt (or close to it) or have left to manufacture in China.

Worse still, China has no regard for anybodies patents. In the last few weeks, I am patenting two more products but this time I am not wasting any money to patent them in China. In fact, filling for a patent in China is equivilant to an invitation for their manufacturers to copy it.

*sigh* .....my accountant, my laywers and my business friends thinks that I am a certified idiot for refusing to make my products in China. I guess they don't know about Spartans never surrendering.

[Disgruntled70sHab]

habsaddict said:

disgruntled70shab said:

HA, the same friend told me that China exports 176,000 sea containers a week to supply Wal*Mart USA alone. That total doesn't reflect the remainder of the US market it also supplies.

Cheers.

Dis,

I know all too painfully how much comes from China. I can tell you that they displaced about 200 containers worth a year of manufacturing just from my companies alone. Add tens of thousands of containers of product from companies I use to supply who are now either bankrupt (or close to it) or have left to manufacture in China.

Worse still, China has no regard for anybodies patents. In the last few weeks, I am patenting two more products but this time I am not wasting any money to patent them in China. In fact, filling for a patent in China is equivilant to an invitation for their manufacturers to copy it.

*sigh* .....my accountant, my laywers and my business friends thinks that I am a certified idiot for refusing to make my products in China. I guess they don't know about Spartans never surrendering.

I'm trying to get in contact with my friend today, HA. I suspect that number of sea containers for Wal*Mart is much larger. However, I have to get some hard references first.

As for copy write violations; I was in Syria back in '96 and copy write laws are non existant. You can get what you want, in what quantity you want; music, movies, name it. Doesn't matter.

And like China, Syria pays pennies for labour (well, not literally). They can make it cheaply and quickly. However, we soon found out that you get what you pay for. Clothes sometimes fall apart within a week of getting them.

A familiar pattern?

Cheers.

[Doc Holliday]

I can't speak for all industries, but in the furniture manufacturing industry, a few years ago companies like Sears, Costco and Leons were simply taking their supplier's catalog and sending it to China manufacturing companies to see for how much less they can do it... Then they would turn around and tell their suppliers with their "new" price will have to be.... I remember a company's president going to Leon's with the intention of negotiating a small 3-5% raise in prices and coming back with having to cut his price by 35% or lose it. Loads of manufacturers who were depending on these contracts either died by losing that business or died trying to keep it at a price that doesn't make any sense. Government officials and Union Leaders are acting like this is not happening... Complete economic segments like wood transformation and textile are vanishing from this country.

A word on Wall-Mart: A local Canadian business making bicycles was living mostly out of his contract with Canadian Tire. One day Canadian Tire decided that cheaper China made bicycles was the way to go for them and guess what saved that local company: a new contract with Wall-Mart who, as part of their local buying policy gave them a new contract. ever since that day, I see Wall-Mart a little differently.

[Disgruntled70sHab]

Good story, Doc. in this article John Mariotti has some good things to say about Wal-Mart as well.

"He could not be clearer on his opinion about Wal-Mart: It's a great company, and a great company to do business with. "Wal-Mart has done more good for America by several thousand orders of magnitude than they've done bad," Mariotti says. "They have raised the bar, and raised the bar for everybody."

I was looking over another web site and found this:

Wal-Mart's China inventory to hit US$18b this year
By Jiang Jingjing (China Business Weekly)
Updated: 2004-11-29 15:21

The world's largest retailer, Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year, keeping the annual growth rate of over 20 per cent consistent over two years.

and later in the article ...

"If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada," Xu said .... Last year, the firm bought US$15 billion products from China, half from direct purchasing, the other from the firm's suppliers in China.

and later still ...

Insiders point out Wal-Mart's imports from China have largely influenced the US trade deficit in China, which is expected to reach US$150 billion this year.

$150 billion in trade with China alone!

Here's the rest.

Cheers.