China Today: A creation of western greed and shortsightedness and lessons for India

Discussion in 'International Politics' started by Yusuf, Jun 17, 2012.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    My latest piece on my blog.

    China Today: A creation of western greed and shortsightedness and lessons for India | Sarvatra Vijay


    China has rapidly grown both economically and militarily in the last 20 years. Decades of double-digit growth has propelled China to being the second largest economy in the world and is on track to become the largest overtaking the US.

    What helped China attain this high economic growth, advancement in science and technology, creation of a military industrial complex which has reached such advances that China built its own fifth generation fighter aircraft? The answer lies in Chinese smartness and Western greed.

    Before 1979 when china started embracing capitalism with Chinese communism traits, it was a backward third world country just like india which under Mao saw the great leap forward which actually resulted in 45 million dead due to hunger. Early seventies saw the US under the Nixon regime develop relations with China with an eye on the Soviet and use it as a counter weight. The Chinese realized the benefit of such a move and quickly embraced the US leading to the US diplomatic relations with China and a shift from its recognition of Taiwan as the real China to Beijing. Though it was a communist country, China saw a pretty peaceful cold war as the US thought it had a friend in China. The US probably didn’t benefit immensely from its relations with China as China continued its support to North Vietnam and North Korea.

    The US directly invested in wide range of manufacturing sector in China, created joint ventures and also contract ventures which led to substantial transfer of industrial know how to the Chinese. American multinational corporation quickly moved manufacturing out of the US to China to cut its costs and maximize profits and today it is fully depended on Chinese manufacturing for even its basic needs. The Chinese were good enough to learn the latest manufacturing process to quickly establish vast industrial base with large capacities to become the center of world manufacturing. The Chinese learned to make advanced machines and machining technologies which have helped her in the military sector. China similarly benefited from the Europeans who increased their dependence on China for manufactured goods.

    The objective was simple, to cut costs and shift lower end jobs to China and maximize their profits. China was all too happy to accept and absorb all that came its way. This has actually turned into a major problem now for the west as they run huge trade deficits with China and also let China become its major source of debt with a severe erosion in their own manufacturing capacities though they remain premier nations for research and development and high-end manufacturing.

    Although trade has prospered between the west and China, arms and related technology was embargoed on China which is where the Russians stepped in. Benefiting from denial by the west, Russia supplied China with advanced weaponry and technical know how which bought it billions of dollars. But this has proved to be a disastrous and shortsighted policy. China has now learned a lot from Russians arms and its technology and violated intellectual property to develop its own military industrial complex. China now makes fighter jets that are rip offs of Russian ones which they have reversed engineered. Today Chinese arms purchases from Russia has declined rapidly. The manufacturing capability for this was derived from years of US and European shift in manufacturing industrial products to China. China benefited from the learning about the latest manufacturing, machines and machining technology from the West and arms purchases from Russia to develop its own large-scale military industrial complex which it is using to rapidly modernize it’s over 3 million strong Peoples Liberation Army. China is making advanced missiles, fighter jets, ships, submarines which has led it to develop capabilities to rival the west and Russia which have long been its benefactors. Chinese are not known to be benevolent and pursue their ambitions with impunity. China does not want to share its space with anyone and in fact create more space for itself. Even if it means confronting the very nations which helped it attain the position it is in today.

    China’s rise has been aided largely by the west whose greed and shortsightedness is coming back to haunt it. This is where there is a lesson for India as it pursues its relations with the US. Given the right policies, India can do what the Chinese did with the US during the cold war by pretending to be with the US against the Soviets. While the US and China slug it out, India can position itself owing to its geography, its large population, is large labor force, its large middle class to become a hub for investment and manufacturing and absorb advanced technologies to create a better future for itself and secure its interests. The US is already willing to help India rise. It depends on India as to how it grasps the opportunity.
     
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  3. satish007

    satish007 Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    But American are yelling bring job home
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    Now they realize that. China has already benefited and will not mind any american pull out.
     
  5. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    Yusuf your article is focussed only on the Cost cutting measures adopted by US companies

    US investments in ASEAN tiger economies such as Thailand South Korea Malaysia
    Philipines Indonesia and Taiwan PRE DATES investment in China
    And was always with this very purpose in mind

    ie NEW markets for US goods and buying products for which the
    Cost of production is High on US mainland

    But you have failed to answer why the US corporations had to take such a step

    The answer is not just greed

    The answer is Japan and Germany which by the 80s had become industrial and manufacturing
    powerhouses

    Especially Japan which was running 100s of Billions of trade surplus with USA

    USA had realised long back that it cannot beat Japanese efficiency in mainland USA

    Thus began outsourcing
     
    Last edited: Jun 17, 2012
  6. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    China is a Bigger version of Japan

    Its low cost and large scale manufacturing is both a boon and bane for US corporates
    and people

    Without cheap Chinese imports many low income US households would suffer

    But the rising incomes of the Chinese is also a source of demand for US exports

    SO it works both ways
     
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  7. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    USA was very much focussed on containing Communism in all developing countries

    And during the Cold war both superpowers were looking for allies

    US trade aid and investments were NOT just economic tools but also tools for political influence

    We can say that the US model of democracy and capitalism won over the Soviet
    model of Socialism
     
    Last edited: Jun 17, 2012
  8. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    US alone can’t pop up a country like India. Her economy and investment capacity are relatively declining over years. Majority of Chinese FDI comes from Asia and other traditional Chinese areas like Hong Kong, Taiwan. Instead of solely counting on US, India should focus more on attracting investment from East Asia: China, Japan, South Korea and other countries. It’s close to India and a more reliable source. Don't forget overseas Indian is also a big force
     
    Last edited: Jun 17, 2012
  9. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    US wanted to wean away China from USSR and it did so successfully using
    trade and investment as a tool

    Simultaneously Thousands of Chinese immigrated to USA post 1978 Chinese reforms

    USA never really bothered about the CCP and democracy in China

    The post Tinanmen massacre arms embargo which remains till date
    was to maintain the balance of power in Asia

    SO China had to turn to Russia for arms which the "broke " Russians happily obliged
     
  10. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    Chinese are realising that HAVING 2.5 TRILLION in RESERVES will not make China
    a Super power

    The key has ALWAYS been technology

    US has always been obsessed about its technological leadership
    for which it has always spent very liberally AND its BEST Manpower
    works in High Tech industries

    China is NOT even close to Japan in technology and infact South Korea too is
    ahead of China in many fields

    As long as there is a big gap in technology between the USA and China ; China can
    keep its surpluses and reserves

    US superpower status is because of its technology for which there is NO Chinese threat
    for 25 Years at least
     
  11. Yusuf

    Yusuf GUARDIAN Administrator

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    It started with strategic reason. China as a counter to Soviets. Then economics targeting china's huge population apart from finding a place to manufacture goods very cheaply.
     
  12. Yusuf

    Yusuf GUARDIAN Administrator

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    Investment in money as well as technology. We need high end technology from the US.
     
  13. Ray

    Ray The Chairman Defence Professionals Moderator

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    Yusuf,

    A nice analysis.

    Would it be greed or a natural outcome of the capitalist economic philosophy?
     
  14. Yusuf

    Yusuf GUARDIAN Administrator

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    Thanks Sir.

    Greed goes with capitalism.
     
  15. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    USA took the political step to befriend China in 1971 with the Nixon trip to China
    And also to wean away the Chinese from the Soviets

    But China as an economy started its liberalisation in 1978

    Till the mid 80s the Asian Tiger economies such as South Korea and Thailand were
    the main interests of US companies

    The interest in China developed not immediately in 1978 when China OPENED up but
    it happened only gradually

    After 1985 China benefitted from US investments in a big way and since then has not looked back

    Even the Tinanmen massacre didnt stop the party
     
  16. Yusuf

    Yusuf GUARDIAN Administrator

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    Well the crux of the article is US fed a snake knowingly. China realized that being counterweight to Soviets for the US will help it. It played very well and there in lies the lesson for India which finds itself in a similar position.
     
  17. pankaj nema

    pankaj nema Senior Member Senior Member

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    Greed is not the right word The global Capitalist economy has to evolve and adapt

    And USA is the powerhouse of the Global economy

    When US gets into recession all other economies suffer

    SO this consumerism helps in KEEPING jobs of the developing world's population
     
  18. Ray

    Ray The Chairman Defence Professionals Moderator

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    The majority of FDI in China has originated from elsewhere in developing Asia (i.e., not including Japan). Hong Kong, now a largely self-governing “special autonomous region” of China itself, has been the largest source of record. The dominance of Hong Kong, however, is somewhat illusory in that much FDI nominally from Hong Kong in reality is from elsewhere. Some of what is listed as Hong Kong-source FDI in China is, in fact, investment by domestic Chinese that is “round-tripped” through Hong Kong (see footnote 2). Other FDI in China listed as Hong Kong in origin is in reality from various western nations and Taiwan that is placed into China via Hong Kong intermediaries. Alas, no published records exist to indicate exactly how much FDI in China that is nominally from Hong Kong is in fact attributable to other nations.

    According to official sources, in the period 1992-96, FDI from developing Asian nations dominated total FDI flows into China, but since 1996 a growing portion of these flows has come from other sources (i.e., Europe, North America, and Japan). This latter FDI generally has been of a different character than FDI from developing Asian nations. While the latter has been concentrated in exportprocessing activities in sectors in which China has revealed comparative advantage, much of the former has been directed more toward the domestic market in sectors in which China has no revealed comparative advantage. Thus one consequence of a rising percentage of FDI from Japan, Europe, and North America has been that overall the activities of foreign-invested enterprises 2 in China have become
    somewhat more focused on the domestic market, and less on export markets, in the la te 1990s relative to the mid-1990s.

    More at:
    http://www.iie.com/publications/wp/01-3.pdf
     
  19. Yusuf

    Yusuf GUARDIAN Administrator

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    Let me talk about the items that I deal with. Fasteners. The Americans and Europeans source from China.

    One of the largest selling size of a particular is $7-9 per thousand CIF from China. I did a study in US, UK and Australia. It's sold for between $150-300 per thousand. Same thing if manufactured in US would have cost what? Even 5 times the price would give handsome returns. Going to china was greed.
     
  20. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Re: China Today: A creation of western greed and shortsightedness and lessons for Ind

    The US benefits from Chinese support of North Korea today because that support serves as a restraint on NK which no other country can exert.
     
  21. Yusuf

    Yusuf GUARDIAN Administrator

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    What restraint? They tested nukes twice and well on their way to third. Wonder what restraint you are taking about.

    Don't tell me that they didn't attack SK as a restraint because of Chinese effort. That would be giving credit where nine is due.
     

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