| Many people would think that trading raw | | | | discussion on human rights issues between |
| materials is mutually beneficial between | | | | both countries. China must immediately |
| countries. The US economy depends on | | | | suspend talks and discussion.' Yesterday, US |
| profiting globally, and we understand the | | | | State Department spokesperson, Richard |
| benefit of using cheap labor in foreign | | | | Boucher, expressed the American government's |
| countries through FDI. However, what happens | | | | disappointment with Beijing's inadequacies in |
| when a state financed enterprise in China | | | | improving human rights conditions in the |
| strategically buys up raw materials like iron | | | | country, after commitments it undertook in |
| and petroleum. I am not just talking about an | | | | 2002 and 2003. Boucher also stressed |
| even percentage, I mean "greater than 90% of | | | | Washington's concern about 'backward steps' |
| the world's raw supply of iron" and complete | | | | being taken by China, as reported in the |
| control over the U.S. petroleum supply.1 | | | | American government's world human rights |
| Fortunately, the US government noticed what | | | | report released last Feb. Last year the |
| they were up to and made it illegal for | | | | United States asked for a resolution, stating |
| another county to purchase a controlling | | | | that Beijing had made limited, though |
| interest in the U.S. petroleum supply. On a | | | | significant progress in the sphere of human |
| side note, it was only five years ago that | | | | rights. The resolution was presented each |
| the North Korean government financed a | | | | year after the brutal repression of the |
| massive plant to produce billions in | | | | student protestors in Tiananmen Square in |
| counterfeit U.S. currency. Everyone knows | | | | June 1989. This year various human rights |
| that the U.S. military forces are superior to | | | | organizations, like Human Rights Watch, asked |
| any other country, but there is one thing | | | | that the United States to put back a motion |
| that we do not have. China has a "population | | | | to blacklist Beijing. Even American trade |
| of 87 million exceeds most European | | | | union representatives requested that their |
| nations".2 Many of these people are living in | | | | government condemn China for the way it |
| less fortunate conditions. You might even | | | | trades its labor force. Meanwhile Amnesty |
| assume that they would prefer a better life, | | | | International called for a moratorium on the |
| and the right leader could influence them to | | | | death penalty on China, reporting that the |
| do so at the expense of other nations. | | | | Chinese legal system does not guarantee fair |
| | | | trials and often punishes innocent persons. |
| We are vastly out numbered, so what makes our | | | | Yesterday the AI published a report titled |
| military forces superior? | | | | 'Executed according to law?' 'The report was |
| | | | released following statements made by a |
| The answer is technology, industry, | | | | member of Chinese Parliament who said that |
| petroleum, and iron. Technology is always | | | | every year there are at least 10,000 people |
| either for sale, or it can be gathered | | | | sentenced to death in China 5 times more than |
| through espionage. China can buy the same | | | | all cases of capital punishment registered |
| level of technology from intermediaries or | | | | worldwide'."8 |
| allied governments. Industry can be built | | | | |
| with economic growth. Currently China is the | | | | The Chinese people are very much like our own |
| number one growing economy in the world. It | | | | with the exception that they communicate more |
| nearly controlled our petroleum supply | | | | through context and women are not valued very |
| domestically and failed, so China decided to | | | | highly in their society. They also have four |
| buy petroleum from Saudi Arabia through | | | | different cooking styles based on the four |
| German intermediaries. Now our gas prices are | | | | different regions. They speak different |
| going through the roof and stock analysts are | | | | languages in each region, and they have a |
| saying its some kind of market fluke created | | | | wide array of different traditions based on |
| by a belief that oil prices will continue to | | | | the former cultures that lived there before. |
| soar. | | | | China does not tolerate freedom of speech and |
| | | | they frequently kill anyone who is suspected |
| Iron, the main export that I would like to | | | | on saying negative things about the current |
| discuss, is five times its original price | | | | government. There is no defense orfair trial, |
| four years ago when China started buying up | | | | and basic human rights are not valued by |
| the world's supply of raw iron. Right now, | | | | their government. Their economy is state |
| they are using this iron to create cranes and | | | | controlled, but they are slowly changing into |
| other machinery to export to the US and other | | | | a free enterprise economy. |
| nations, but most of the iron is being | | | | |
| stockpiled in China for future use. What | | | | I think that trading with China is mutually |
| future use? We can only speculate. Why would | | | | beneficial as long as they are not buying up |
| China stockpile their ever-increasing supply | | | | significant amounts of raw materials that |
| of iron and still buy more, regardless of the | | | | affect our national security. After the "911 |
| price (literally)? What big plans do they | | | | attacks on New York and the Pentagon", |
| have for such an immense stockpile of iron? | | | | security measures at the ports are very |
| Aren't bullets, guns, factories, and tanks | | | | strict in the US.9 The Port of Tacoma and the |
| made out of iron? Absolutely, here is a piece | | | | Port of Seattle have cameras, tall fences, |
| of an article on the Chinese economy. | | | | and security personal strategically placed. |
| | | | They also conduct more customs inspections |
| "In recent years China's booming economy, | | | | than before, and canines are commonly used to |
| fueled by large inflows of foreign direct | | | | find people and contraband. The US also has a |
| investment (FDI) and rapid export growth, has | | | | satellite system that detects nuclear |
| emerged as a significant force in the global | | | | radiation, infrared (heat signatures), |
| economy. This year, China surpassed the | | | | records and filters every electronic |
| United States as the world's largest | | | | conversation in the US, and video records the |
| recipient of FDI, and its bilateral trade | | | | activities of the world's ports. They also |
| surplus with the United States reached $117 | | | | pay very close attention to refrigerated and |
| billion in the 12 months up through August | | | | abnormally heavy containers for biological |
| 2003. Both inward investment and export | | | | weapons and shielded nuclear material. |
| growth create strong demand for China's | | | | |
| currency, the Yuan. All things being equal, | | | | China does not perform any significant |
| such demand pressures should cause the Yuan | | | | security measures other than custom |
| to appreciate relative to the U.S. dollar and | | | | inspections accompanied by armed guards. |
| cause China's external position to return to | | | | Custom inspectors frequently accept bribes to |
| balance."3 | | | | expedite export and import processing, which |
| | | | creates a huge delay for companies who did |
| Since China is the number one growing economy | | | | not pay bribes or paid less. Dogs are also |
| on the planet, they also have the number one | | | | used for detecting contraband, but they use |
| growing currency relative to the US and other | | | | german sheppards instead of beagles. German |
| nations. Everyday China is become more | | | | sheppards are know to be effective in chasing |
| industrialized. They used to be a purely | | | | down people and enforcing security. However, |
| state controlled economy, but they are | | | | beagles have two hundred times the ability to |
| starting to develop into more of a free | | | | smell contraband. This means that their port |
| economy in some areas. Overall, they are not | | | | security is seriously lacking unless they |
| shutting down as many businesses that do not | | | | physically inspect every crate, which they do |
| pay the government officials regular bribes, | | | | not normally do whenever a bribe is taken to |
| which is definitely a move in the right | | | | expedite the customs process. |
| direction. | | | | |
| | | | Recently, the Port of Tacoma purchased three |
| The US wants to encourage free trade with | | | | cranes from China to unload containers off |
| China because of their enormous population. | | | | the ships. They purchased scrap iron from |
| This means that US companies would have | | | | suppliers in Washington State, melted the |
| access to a huge new market of consumers. It | | | | iron down, manufactured the cranes, and sold |
| also means improving the quality of life in | | | | them back to us for less than domestic |
| China. It is also widely known that many | | | | companies could make them. |
| native Chinese women perform acts of | | | | |
| prostitution or marry solely to support their | | | | Inventories of iron are currently state |
| family. It is also common in China to see | | | | managed and exceed "70% of iron imports |
| people walking barefoot because they cannot | | | | internationally".10 US laws regarding customs |
| afford sandals, or seeing people including | | | | are identified as governing security measures |
| children who are starving. China also has | | | | domestically. Otherwise, maritime laws apply |
| more than 300 organized crime syndicates with | | | | to shipments. |
| a history that goes back to the Shaolin | | | | |
| Monks. China is a desperate nation, so | | | | The political ramifications of cutting off |
| desperate that they engage in foreign | | | | certain resources to China will make them an |
| currency scams to inflate the value of the | | | | enemy. In order for the US to be effective at |
| Renminbi (pronounced Yuan). In 2000, the | | | | cutting off the massive purchasing campaign |
| exchange rate was 8.3 Yuan per U.S. dollar. | | | | of iron by China, it will need allies who are |
| Today, the exchange rate is 7.6 Yuan per US | | | | all the current trading partners to do the |
| dollar. Here is the second piece of the | | | | same thing. However, this would also make |
| article above. | | | | them enemies of China, and suppliers are |
| | | | becoming very wealthy by selling their raw |
| "But all things are not equal: China pegs the | | | | materials for a higher price to China. This |
| Yuan to the dollar at a fixed rate and | | | | means that international trading partners |
| strictly regulates imports and the allocation | | | | must have a significant reason to cut China |
| of foreign exchange. In order to maintain the | | | | off or limit them other than the US's |
| Yuan's fixed value, China must create a | | | | economic prosperity. |
| residual supply of Yuan to counter growing | | | | |
| demand for its currency; China achieves this | | | | Culturally we also have to consider that the |
| by buying dollars in foreign exchange | | | | Chinese want a better life, and they want |
| markets. Between December 2000 and July 2003, | | | | independence. It is unlikely that the US will |
| China more than doubled its foreign reserve | | | | be able to push the Chinese government into |
| holdings from $168 billion (16% of its GDP) | | | | giving their people human rights without |
| to $361 billion (31% of its GDP)."4 | | | | completely replacing their government or |
| | | | waiting a significant number of years for |
| "How should the United States respond? On | | | | their human rights policies to catch up with |
| nine occasions between 1988 and 1992, the | | | | the rest of the civilized countries in the |
| U.S. Treasury found that similar external | | | | world. |
| surpluses accompanied by much smaller | | | | |
| accumulation of foreign reserves constituted | | | | Geographically, China has taken over Hong |
| evidence that countries-including China-were | | | | Kong, which is the largest shipping location |
| manipulating their currency's value for | | | | of Chinese imports and exports. The decision |
| competitive trade advantage. When such a | | | | of the Chinese government to take over Hong |
| finding is made, U.S. law requires the | | | | Kong assures their ability to distribute |
| Treasury Secretary to undertake negotiations | | | | goods internationally without major changes |
| to end such manipulation. Current evidence | | | | in worldwide distribution. Economically, we |
| indicates that China is engaged in just such | | | | must understand that China has a lot to offer |
| a manipulation of the Yuan for competitive | | | | in terms of cheap labor and outsourcing, but |
| gain."5 | | | | it may come with a steep cost in the near |
| | | | future. |
| Today, foreign "investment, combined with | | | | |
| China's swelling export earnings, have pushed | | | | Letters of credit are guaranteed by |
| the country's foreign exchange reserves | | | | international banks in Malaysia and China |
| beyond $600 billion".6 | | | | based on current deposits. This insures |
| | | | payment on receipt of goods for both imports |
| One thing that I learned from experience is | | | | and exports. The global marketing process for |
| that desperate people and people that try to | | | | government contracts is the same as it is in |
| steal from others generally cannot be | | | | the US. Foreign bidders are required to send |
| trusted. This is why, among all the other | | | | a proposal to the government authority |
| evidence I provided above, I do not think we | | | | issuing the contract. Whether they choose to |
| should let the Chinese government do whatever | | | | buy or not from a foreign source is a balance |
| they want. They should not have a majority of | | | | between price driven economics and supporting |
| the world's iron, petroleum or our country's | | | | local companies. |
| economic and physical security in the palm of | | | | |
| their hands. What good are tanks and supply | | | | China has no restrictions on the treatment of |
| trucks that do not have gas? This may seem | | | | their employees, the ages of workers, the |
| silly today, because we are not at war with | | | | hours they work, the healthcare of employees |
| China. | | | | or their working conditions. US employers |
| | | | must abide by laws concerning the treatment |
| In support of this opinion, many nations like | | | | of minors, paying overtime, paying wages, |
| Japan learned long ago that warfare in the | | | | paying health and unemployment benefits, |
| physical sense is foolish and destructive, | | | | discrimination, etc. |
| because it diminishes the productive capacity | | | | |
| of the nation unless they can build new | | | | Foreign investment in China is carefully |
| factories just as fast as their enemies can | | | | controlled in specific sectors and |
| blow them up. | | | | industries. Foreign investment in the US is |
| | | | allowed as long as it does not negatively |
| Today, the real modern warfare is economics. | | | | impact our national security. This is why the |
| If China shuts down U.S. companies that | | | | US government stopped China from purchasing a |
| depend on buying iron at a certain price in | | | | controlling position in the U.S.'s primary |
| order to earn a profit after U.S. labor | | | | oil supplier. However, it is almost a |
| costs, then they take our market share and | | | | guarantee that they will try again. |
| our productive capacity depends on whether | | | | |
| China will sell us what we need. Prices are | | | | If you choose to do business in China, please |
| good today because Chinese labor costs are | | | | carefully consider the implications of your |
| low, but it will not stay that way according | | | | actions. Making a great profit is very |
| to economic theory. Eventually the FDI, which | | | | important, but it can never come at the |
| exceeds our nation, will create even more | | | | expense of our lives, the lives of our |
| jobs and economic prosperity in China. The | | | | children or the world's stability and |
| end-result will increase wages, and hopefully | | | | security. I think the world has a great |
| it will improve working conditions. | | | | opportunity everyday to change for the |
| | | | greater good, maybe our enemies will decide |
| However, if China does not sell to us anymore | | | | that building a better world for everyone is |
| and they do the same bullying routine in | | | | better than petty arguments over land, money |
| other international markets, then we could be | | | | and religion. |
| at a serious economic and military | | | | |
| disadvantage. Should we trust China and | | | | Bibliography |
| believe that they want to change for the | | | | |
| better? Here is an article that may shed some | | | | Flannery, Russell. At Your Service, China! |
| light on that question. | | | | New York, NY: Forbes, 2007 |
| | | | |
| "China wants to suspend human rights talks | | | | Goodman, Peter S. China Ends Fixed-Rate |
| with the United States. The news came after | | | | Currency. Washington DC: Washington Post, |
| Washington said yesterday that it will | | | | 2005 |
| condemn Beijing's serious violations with a | | | | |
| resolution at the UN Human Rights Commission | | | | Hersh, Adam S. China's currency manipulation |
| currently underway in Geneva. The Chinese | | | | and U.S. trade. Washington, DC: Economic |
| foreign minister called the action taken by | | | | |
| the Americans a 'serous meddling in China's | | | | Policy Institute, 2003 |
| internal affairs.' China's Vice Foreign7 | | | | |
| Minister said the 'clash intentionally | | | | Hill, Charles W.L. Global Business Today 5th |
| provoked by the United States has now | | | | Edition. |
| seriously damaged any basis for dialog and | | | | |