|LA Times, Oct. 20, 2002
People's Republic of Products
China's embrace of capitalism is making it the factory floor to the
world, posing a serious challenge to the U.S. economy.
By Evelyn Iritani and Marla Dickerson, Times Staff Writers
DONGGUAN, China -- Ten years ago, this southern Chinese city was little
more than vegetable farms and rice paddies. Today it is a teeming,
smoggy monument to manufacturing. More than 4 million workers toil in
22,000 factories, churning out everything from patio chairs to power tools.
Rows of industrial buildings the size of airplane hangars stretch on for
miles. Uniformed workers spill out of factory dormitories before dawn,
stopping for a quick bite of porridge before heading to the assembly
lines. Container trucks zip along modern superhighways to high-tech
ports, where cargo is loaded around the clock onto ships bound for Los
Angeles, Tokyo and Rotterdam.
Poor and isolated 30 years ago, China is emerging as the world's factory
floor. The country's embrace of capitalism, coupled with an abundance of
cheap labor, massive foreign investment and the collapse of
international trade barriers, has sparked an explosion of manufacturing.
The reverberations are being felt around the globe.
Shopping for a pair of shoes? Chances are that nimble Chinese hands
sewed them, along with nearly 80% of the footwear purchased in the
United States. That French provincial bedroom set on the showroom floor?
It's probably part of the $4.6 billion in furniture that China shipped
to the United States last year.
Computers? Factories in Dongguan, 50 miles north of Hong Kong, produced
37% of the world's disk drives and 10% of its computer monitors last
year -- not to mention tens of millions of scanners, printers and DVD
Though many of China's exports are familiar Western brands, made in
factories owned or run by foreigners, home-grown Chinese enterprises are
making refrigerators, microwave ovens and high-definition televisions
for customers worldwide.
"They're going to be a force to be reckoned with," entrepreneur George
Thomas said of the Chinese. Thomas heads an Illinois company that makes
computer networking equipment. He recently moved his manufacturing
operation to the Chinese city of Suzhou to take advantage of low wages,
tax breaks and inexpensive supplies.
"They're going to drive standards," he said. "They're going to drive
China is not the first developing country to become a center for
low-cost production. But the speed and scale of its emergence set it
apart. Until recently a minor player in the world economy, China now is
the sixth-largest trading nation. Experts predict that it will rank
second by the end of the decade, ahead of Germany and Japan and behind
only the United States.
"The pace of China's industrial development and trade expansion is
unparalleled in modern economic history," said Nicholas Lardy, a China
expert at the Brookings Institution in Washington and author of several
books on the Chinese economy. "While this has led to unprecedented
improvements in Chinese incomes and living standards, it also poses
challenges for other countries."
Despite its spectacular progress in recent years, China remains an
impoverished country: Two-thirds of its people live on less than $1 a
day. Its industries remain far behind their U.S. counterparts in
technology, innovation, managerial expertise and marketing know-how.
But international economists say China is advancing steadily and
eventually will compete with U.S. companies in making complex,
high-value products such as aircraft and semiconductors. Whether this is
to be encouraged or feared is a source of growing debate....