A lot of factories in China are disappearing. Here's part of a sad and probably ominous story in the L.A. Times about the perils of rapid growth in and a sharp recession:
Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year's end, he said, more than 100,000 plants will have closed.
As more factories in China shut down, stories of bosses running away have become familiar, multiplying the damage of China's worst manufacturing decline in at least a decade.
Even before the global financial crisis, factory owners in China were straining under soaring labor and raw-material costs, an appreciating Chinese currency and tougher legal, tax and environmental requirements. When the credit crunch took hold -- prompting Western businesses to slash orders for Chinese goods and bankers to curtail loans to factories -- many operations were pushed over the edge.
China. China. China. You could put most other foreign policy issues facing the United States over the next few decades, and they wouldn't add up to the importance of China. It is a country feared deeply on the right and left in America, and many hope America can navigate a course between the opportunity and danger of its inevitable rise. Now one of the tests has come, it appears.
The challenge of a growing China was tame compared with what the world will witness if China's economy is ravaged. And I cannot help but wonder what will happen when its go-go statist capitalism is exposed, and beneath is revealed a socio-cultural structure that can only handle an economy that moves in one direction.
Don't get me wrong. History will see China in the late 20th century through the lens of Maoism versus Dengism, and I am very much in favor of the market reforms of Deng. The nation has been a case study in growth, and an inspiration, but now we must all experience its weaknesses as well.
Ironically, Mao Zedong described America in 1946 this way: "In appearance it is very powerful but in reality it is nothing to be afraid of; it is a paper tiger. Outwardly a tiger, it is made of paper, unable to withstand the wind and the rain. I believe the United States is nothing but a paper tiger."
Who is the paper tiger now?
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