Archive for the 'China' Category


China Just Overtook The US As The World’s Largest Economy – Yahoo Finance

China Just Overtook The US As The World’s Largest Economy – Yahoo Finance. By Mike Bird, Business Insider, October 8, 2014

REUTERS/Shannon Stapleton Sorry, America. China just overtook the US to become the world’s largest economy, according to the International Monetary Fund.

Chris Giles at the Financial Times flagged up the change. He also alerted us in April that it was all about to happen.

Basically, the method used by the IMF adjusts for purchasing power parity, explained here.

The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.


So the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world’s biggest economy.

We’ve just gone past that crossover on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion):

China US economies

IMF, Google Public Data Explorer Adjusted for purchasing power, China’s economy is now the world’s largest. It’s not all sour news for the US. It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US and isn’t likely to overtake for quite some time:

View gallery


US China economies

IMF, Google Public Data Explorter But in terms of the raw market value of China’s currency, it still has a long way to go.

Editor’s comment

Well, ‘Financial Times’ is the first to proclaim that China is the number one economy in the world, however, in the next couple of years, all of the economic literature will clearly demonstrate that China is the number one economy. So, how did this happen? For the United States, the decline started in 1980 with Ronald Reagan administration. The credo for this administration is that the rich aren’t rich enough, the corporations aren’t big enough and the regular workers make too much money. The results – loss of good paying jobs to other countries especially manufacturing jobs. And, in 2014, the income inequality in the U.S. is at its highest in over a hundred years, 90% of all profits go to the top. Salaries for workers have plateaued  and, possibly, will decrease in the future (especially when taking into inflation). China’s story starts in 1990, when the Chinese government went all in on manufacturing. By 1995, by hook and by crook, they were allowed as a preferred trade partner through the World Trade Organization agreements, which meant they could charge any import tax rate on U.S. imports coming into China, while getting 0% tax placed on their products shipped into the USA. This was the floodgate that caused an immediate and irreversible decline in jobs, especially manufacturing jobs, all the while sucking money out of the U.S. economy and directly deposited into the Communist Chinese banks.

The Future

The future of the economy of the U.S. is not very rosy, especially when it continually is aiding its main competitor, China. Whereas the Chinese government is doing everything it can to encourage its economy to grow, large stimulus package during The Great Recession, huge infrastructure projects – improving freeways, bridges, airports and bullet trains and putting millions to work, the United States has done nothing (except for the minor stimulus package of 2009), and has been totally hands off, much like the Herbert Hoover administration during The Great Depression. Despite verbal commitments from the President and some Congressmen – nothing has been done. All projects to: increase jobs, raise wages, bring jobs back from foreign countries have time and time blocked by the multi-national corporations (because it is in their best financial interests). As the mid-term elections in 2014 looms, the future looks even bleaker with a good possibility that the Party of the multi-national corporations, the GOP, will become a majority in the Senate, together with their majority in the House, American jobs have never looked more vulnerable. This looks exactly as I predicted in my entry: How Did We Get To Here Part IV: Years 2014 – 2034. Remember to start collecting your Made in USA artifacts – they will be very valuable in twenty years.


Shoe Factory Labor Strike is Largest in China in Years

Chinese Trade Group to Mediate Shoe Factory Strike – ABC News. When it comes to getting news about China that is accurate and informative, it is nearly impossible. Because of the bias against overseas news (unless it is a “sensational story”), American media is always two steps behind and very superficial (maybe because they do not want to offend their Chinese Associates?). The BBC News and AlJazeera are usually better when it comes to International news.

So here is the biggest news story that nobody has heard of. Forget Ukraine. Since April 5, 2014, Chinese workers have been striking against the largest shoe manufacturer in the world, Yue Yuen. It is estimated that 40,000 workers have been on strike and over 3,000 have participated as part of a protest march. That is correct – for over two weeks and you have heard not word one.

Chinese workers on strike (30,000 workers)

Chinese workers on strike (40,000 workers)

Who is Yue Yuen?

Yue Yuen is a shoe manufacturer (the largest in the world). It makes shoes for Addidas, Nike, Timberland, Under Armour, Merrell, Salomon, Crocs, Asics, Reebok, Puma, New Balance, Converse and Reebok (Boston Globe story). Yue Yuan makes athletic and casual outdoor shoes as well as sandals. The Taiwanese- owned company employed at total of 460,000 workers in 2011. It has factories in China, Vietnam, Indonesia, Mexico and the U.S.  Yue Yuen operates 3 factories in the Guangdong province, which employs 60,000 workers. The strike is occurring in Dongguan City, a key manufacturing center in China and located 30 kilometers east of Guangzhou (another major city). Yue Yuen made over 300 million pairs of shoes last year making a net profit of $434.8 million in profits on $7.58 billion revenues (40,000 workers strike in Southern China story). Here is another link about the largest shoe manufacturer that you have never heard about from the BBC. You kind of get the feeling that all of our athletic shoes come from the same company. For the most part that is true.

What is the Strike About?

One of the biggest changes in Chinese society since its reform and opening is that the two traditional sources of social welfare, especially for the elderly, have diminished because of privatization and population controls: state-owned enterprises and the children of aging parents. To help, officials passed a social insurance law in 2011, requiring that all employers in the country enroll staff in pensions, medical insurance, worker’s compensation, unemployment, and maternity insurance.

But because of weak oversight of the system, employers often don’t keep up with their obligations. In over 400 factory probes, none had fully complied with the law, according to China Labor Watch, a US-based nonprofit. Protesters in Dongguan, which started this week’s labor unrest, claim the Chinese firm Yue Yuen—famous for having basketball star Michael Jordan visit its factory in 2004— shortchanged workers regarding monthly payments into the social insurance scheme. The company employs about 40,000 people (another source says 60,000).
That is correct, Yue Yuen had not been funding its pension plan nor medical insurance nor worker’s compensation. With employees getting injured and with China’s aging population of workers, that money is needed now. And that is the reason for the strike.
A Yue Yuen spokesman has said the company can pay more for Social Security, but that will mean lower wages for the workers and net earnings for workers would be less than they are now.
I guess the factory workers didn’t take too kindly to the official word, but there has been no violence from protestors. Officials in seven Chinese cities or provinces have been trying to appease the workers by raising the minimum monthly wage (but by my looking at the maps, these cities do not effect Dongguan City or Ghangzhou). But if it did (like nearby Shenzhen), the minimum monthly wage would be $280 (Thousands of Chinese spent their “best years” making Nike shoes and now have no pensions story).
The Strike
The strike has been non-violent as far as the workers have been concerned. There have been well over 20 staff members arrested (much more but unconfirmed) and some who have held up banners have been beaten by the police. The common refrain from the workers is that they have been cheated for years. In a somewhat related story, 12 hospital security guards were sentenced to jail time for staging a protest last year in a dispute about wages and working conditions with Guangzhou Chinese University Hospital. They were jailed to send a message to the present day strikers (Yue Yuen Shoe Factory Workers’ Strike at Dongguan plants continues story). Congratulations China, you make our American capitalists forefathers proud.
The Alternate News Source
In a view different than the traditional news sources comes Bloomberg News. Bloomberg News says that strike just started on April 14th, and that Nike has offered a generous pay increase to the workers of 230 Yuan or $37 per month (it didn’t say whether this was the increase of the minimum monthly wage, I suspect that it is, and it would probably increase the monthly total from $243 to $280 per month). Bloomberg News adds that the company would start paying its Social Security benefits which were slated to start in 2015 to start earlier, like in May. Obviously, Bloomberg does not know why the workers are striking, nor do they care. Bloomberg is only worried that labor costs might be going up in China and that they may have to invest their money into different countries.
Isn’t a strike involving 40,000 workers in the number one manufacturing country in the world newsworthy? Why do we spend so much news on that capsized S. Korean ferry and maybe none on this story or one on China commandeering a Japanese cargo ship in retaliation for a debt they think they are owned from the 1930’s which is a definite mark of China’s new paramilitary stance? Who exactly runs our media service anyway? Randolph Hearst?! My advice: every so often, watch the BBC News, and get a fresh perspective.
As of April 24, 2014, the strike is still going on. Addidas has made noises about moving their production from Dongguan City.
It appears that the strike is over as of April 28, 2014. 80% of the workers at Dongguan City have returned to work after Yue Yuen has agreed to increase the minimum monthly wage by $36.78 per month (that would be a total of about $280 per month) , but more importantly Yue Yuen will start to pay into the underfunded programs on May 1st as they were legally required to do over the past 10 years, into the accounts of medical insurance, workman’s compensation and pensions. This was reported in the Wall Street Journal. Reports are that the company lost $27 million due to the strike. Estimated payment into the social programs is estimated to be $200 million Yuan, ($31 Million). Addidas said it plans on finding a new location for the manufacturing of its shoes.

How China Fooled The World With Robert Peston – BBC News

How China Fooled The World With Robert Peston – YouTube. In this BBC World News Special (58 min.) with Robert Peston entitled “How China Fooled the World”, Mr. Peston feels that China is on verge of economic collapse. With music and tone that makes it sound like it will happen at anytime, Mr. Peston does have a point. In 2008, the United States caused a worldwide recession due to the Big Bank failure. The U.S. compensated by a small stimulus to help the economy. Whereas, China did the bigger and bolder thing, they did a “Great Stimulus” with massive building in infrastructure: airports, freeways, high speed rail, skyscrapers and apartments. The problem is that after several years of rapid expansion financed by the Central Banks, the government ordered the slowdown of the expansion. But “shadow banks” – lenders from the local governments  (bypassing the government controlled central banks) lent even more money for more needless projects. This has left China with a debt twice of their GDP. And it is only a mater of time that Chinese real estate values will decrease (prices had been increasing by 10 – 20% per year) and the 30 year China Bubble will burst. (The only bright spot that might prevent this bubble from bursting is the fact that the Central Chinese Government has extreme financial control and control of its Great Banks -that’s right – it’s a knock on Free trade).

Robert Peston

Robert Peston

Will this happen,? I had predicted that it will. Some Free Trade magazines like Forbes, say, maybe, it won’t, but then they never predicted the Big Bank Failures either. The Chinese government has been hoping that their economy will gradually change from an export oriented economy to an economy based on spending like the Western Nations (spending accounts for 66% of the GDP in Western Nations). However, the Chinese people are notoriously frugal, and they save about one third of all they make. Spending makes up only 30% of Chinese economy (GDP) while investment presently makes up 50%. So, good luck Chinese government in getting your people to spend their hard earned money. What would happen if China goes into a recession? Just about every nation will be effected, and, that is correct, the US will have another recession.

But what if China does not go into a recession?  Then everybody will have learned a new way to build an economy. Results from the 2008 recession: Europe – austerity = prolonged recession; USA-tiny stimulus = slow recovery; China-massive stimulus = massive growth (and no backlash, yet).

If you are an Economics geek or if you want to see the amazing Chinese transformation, watch the video (click on the upper link).

how china fooled the world


Greenpeace: China-made kids’ clothes carry toxic risk

Greenpeace: China-made kids’ clothes carry toxic risk.

The study, citing laboratory analysis of 85 samples, many concern parents in the USA, as China is the world’s largest garment exporter.

Published in USA Today, December 17, 2013.

BEIJING – Kids’ clothes made in China’s two largest children’s wear production bases contain hazardous chemicals that pose potential health risks for children, says a new report by the environmental group Greenpeace.

The report urges Beijing to cut toxic residue in China-made clothes — many of which are exported to Europe and the USA — by establishing proper chemical management regulations.

The Greenpeace study, citing laboratory analysis of 85 samples, found that some of the clothing made by two garment makers contained NPE, a hormone disrupter, and antimony, a chemical element used in making bullets.

Authorities are not taking action to tackle the problem, said Lee Chih An of Greenpeace East Asia in Beijing.

“We want to put more pressure on the government, to tell them there is urgency for change,” Lee said.

China is the world’s largest garment exporter, and kids’ wear is one of its fastest growing sectors.

The two clothing centers investigated, Zhili town in eastern Zhejiang province, and Shishi city in southern Fujian province, account for 40% of China’s total production of children’s clothing, according to Greenpeace. Shishi exports up to 80% of its output, mostly to the Middle East, but also Africa, Southeast Asia, Europe and North America.

Even the Chinese government’s quality control watchdog agrees that kids’ clothes can be dangerous. The Defective Product Administrative Center of China’s General Administration of Quality Supervision issued a consumer guide to parents in May advising parents to “buy light-color kids’ clothes, without fluorescent brighteners or pigment printing.”

A sample survey by the Beijing Consumer Association in June found 38% of children’s clothes did not meet quality standards.

China’s management of textile chemicals lags the European Union’s by 20 years, said Zhang Miao, a toxics campaigner at Greenpeace. “We can’t say that any brand has zero problems” of toxic residue, she said.

Previous Greenpeace studies exposed larger Chinese and foreign brands; this report focused on small and medium-sized enterprises because they represent the bulk of the industry. Such enterprises supply increasingly popular online businesses such as the retail site, Zhang said.

Some of the tested samples illegally used images of iconic U.S. characters such as Mickey Mouse. The report said third-party, independent laboratories found more than half of the 85 tested samples, all made in Zhili or Shishi, contained NPE and nine in 10 items made of polyester tested positive for antimony.

Phthalates, known for their toxicity to the reproductive system, were found in high concentrations on two samples, according to Greenpeace.

An Yiheng, vice secretary general of the children’s wear committee at the China National Garment Association (CNGA), declined to comment when contacted Tuesday by USA TODAY. The CNGA is a state-run body for China’s clothing industry.

Beijing housewife Zhang Xue, whose daughter is 2½, said she feels “pain in her heart” whenever she reads about toxic children’s clothes in China.

“All I can do now is to wash my daughter’s new clothes many times and put them in the sunshine for several days, as well as buying more light-color clothes,” said Zhang, 28. “I wish the quality standard in China could be stricter like in foreign countries, so I could worry less about my girl’s chances of getting sick.”

Contributing: Sunny Yang


Xmas Without China | PBS

Xmas Without China | PBS. Documentary: Chinese Immigrant Tom Xia, who believes his homeland is misunderstood by the American people and media, challenges his neighbors in a Southern California suburb to avoid made-in-China products during the holiday season. (57 minutes). This premieres on PBS on Monday, December 16, 2013 on PBS. The whole video can be see on this link.

I feel this documentary by Tom Xia (Xmas Without China) is really a discovery of Mr. Xia’s ambivalent feeling towards both China and the United States. And the family that is selected to sacrifice their goods made in China for the month of December, similarly voice their ambivalence towards China, especially about poorly made or poisoned products. They are not sure if they should be blaming China for America’s declining economy and the loss of manufacturing jobs.

There are three stories here: One is Tom’s family who came from the mainland years ago,  now very successful, and visit their family back in mainland China at least yearly. In their story, there are brief glimpses of whether they would ever go back to live in China – the answer is definitely not. The backdrop to this story is the decorating of the parents brand new and very large house.

The second story, is not an unfamiliar story. ABC News did this experiment in 2011 – can you live in your house, if everything made in China was taken out? The family is very dumbstruck to find that 90% of their stuff is made in China and has to be put in a storage bin in the front yard.

The third story is the brief glimpses with Tom Xia himself. One telling scene is Tom playing cards with his friends, all naturalized citizens from China. One scene was quite telling, he said that when he was in China, people were always putting down America. And when he is in America, people are always putting down China. At the very end of the documentary, you see Mr. Xia becoming an United States citizen.

Maybe the most important statement

Late in the documentary, Tim, the father whose made in China items have been removed from his house is visiting Tom Xia and his parents at his parents home, and what he says is probably the mainpoint of the whole documentary,”I don’t blame China for its problems, (it’s) the person who has the company who went over to China and isn’t overseeing the product.”


Chinese government: smog has at least five benefits – Yahoo News

Air pollution in China

Air pollution in China

Chinese government: smog has at least five benefits – Yahoo News.

The Chinese government has come out and tried the Karl Rove approach to a solution. Either take a weakness and make it a strength, or take a strength of an opponent and make it their weakness. So, China is trying to convince their citizens that their insufferable pollution problem which decreases life and quality of life is actually a plus.

Here are the benefits of smog:

  1. It unifies the Chinese people.
  2. It makes China more equal.
  3. It raises citizen awareness of the cost of China’s economic development.
  4. It makes people funnier.
  5. It makes people more knowledgeable (of thing like meteorology and haze).

What next, cigarette smoking toughens your lungs?  The Chinese government has put their public’s health in danger for short term gains in manufacturing and money. So, naturally, the government is defensive about their horrendous pollution problem. Story from Yahoo on Dec. 10, 2013.


Santa’s Workshop – Inside China’s Slave Labour Toy Factories – YouTube

Santa’s Workshop – Inside China’s Slave Labour Toy Factories. Just in time (actually this documentary is a couple years old, much before the Bangladesh disasters) to put a damper on Black Friday comes this Swedish made documentary that I just discovered. It is about China’s slave labor called: “Santa’s Workshop – Inside China’s Slave Labour Toy Factories”.  It is 32 minutes long.

I know, you are thinking:”There is no way am I going to watch this  Swedish documentary and with subtitles? Yikes!!”  Let me first say that this documentary takes all of the most important documentation, the books, the articles, the blogs, the videos about Chinese labor practices and condenses it all into a very succinct 32 minutes and it is not over the top.  Santa’s Workshop covers all of these major problems in a very matter of fact approach.

Sweden is probably the most ethical country in the world, but even in this documentary, you can see how their company executives purposely look away at the abuses within their Chinese factories, which is quite disheartening knowing that many more countries and people who have much lower ethics. This film shows the problems with working conditions, how easily the Chinese companies  get around overtime rules and inspections (even Apple factories are unable to comply and their Foxconn factory is under constant scrutiny) and their reasons why these companies regularly break the rules. Also, the subject of an “authorized” union in China is briefly examined and then compared to an organized union in Thailand. The video, then, underscores the reasons why even unions in Thailand have no power either. One of one last topics of focus is the disregard of environmental regulations and the governmental apathy to their citizens health. This is a great documentary. If you had to see just one documentary about Chinese slave labor and what Americans are doing to promote these practices see “Santa’a Workshop – Inside China’s Slave Labour Toy Factories”. You can see it on YouTube (if you didn’t want to use the top link).

Chinese workers

Chinese workers sleeping after many hours at work.

Other Works

I am also adding a link to an  example physical torture employed on some workers in a Chinese factory. In this article, workers got electrical shocks, here is the link: Chinese police rescue tortured workers at kiln.

There was a series of episodes shown last year (2012) on Al Jazeera TV called Slavery: A 21st Century Evil – Prison slaves, 25 minutes. However, all attempts to see this episode are now blocked, most likely by the Chinese government. This show caused such a furor in China that Al Jazeera reporter, Melissa Chan was kicked out of the country and banned from coming back as reported by the New York Times, (if you will note the NY Times link to the episode does not work either). I did see the video last year, too bad I didn’t download and save it, who knew that it would not be allowed in America? It is very creepy the influence of Chinese totalitarian government seeping into the American freedom of speech. Some more paranoid people than I, really dislike that our Chinese-made computers could be easily be altered (at the factory) to track everything about us and could be a potential computer viral vector that can be unleashed by the Chinese government. (From the book “Cyber War: The next threat to National Security and What to do about it”  by Richard A. Clarke, former National Coordinator for Security, Infrastructure Protection, and Counterterrorism) There is speculation than computer hacking from China maybe even worse than our own NSA.  So, it is very rare for news stories that reflect badly on China, ever make it to the United States. Just something to think about for the holidays.

Future Movie

The Santa’s workshop is the best video to date on this subject, however there is a new project in the works, which will be a full length documentary: see my blog entry “True Cost” by Andrew Morgan which started as a Kickstarter project.

This Santa workshop documentary is being posted for those who believe there is no slave labor.

“Love makes the world spin clockwise. Greed makes it go counter-clockwise.” -Jack Ackerman

June 2018
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