The ethnic Tibetan farmer carves up yak meat for a barbeque our group of visiting Americans is about to share with local villagers in Shangri-La, China. Suddenly, we hear a strange chirping sound, like an exotic bird trapped in a tin can. The farmer puts down his knife and pulls out a better quality cell phone than any we’ve ever seen.
On a recent two-week Reality Tour to China, Global Exchange met with workers, students, intellectuals, farmers, small businesspeople, and a growing class of nongovernmental organizations (NGOs) that building grassroots movement for economic justice and environmental sustainability.
China is full of contradictions. The booming economy has lifted several hundred million people out of poverty, yet inequality has worsened and labor abuses are rampant. Rapid economic growth has made China a serious global competitor with the United States. Yet that economic success has also produced severe environmental problems, including a sharp rise in energy consumption. There is now a significant middle class, but the government does not seem to be ready to offer the kinds of political freedoms that educated people usually expect.
China’s emergence in the global economy is defined both by its recent entrance into the U.S.- and European Union-dominated World Trade Organization (WTO) as well as by increasing integration with other developing countries in Latin America and Africa.
This July, Chinese oil giant CNOOC made an $18.5 billion bid to buy Unocal, setting off a strong reaction in Congress that resulted in the passage of legislation that would have retaliated against Chinese goods unless China floated its currency. Then in mid-September, the Financial Times reported that China is well-poised to become the world’s largest exporter and 4th biggest economy by 2010, as it will likely continue its incredible 9.5% growth rate. At the same time, talks broke down between the U.S. and China to regulate Chinese textile exports to the U.S., which may lead to a colossal trade dispute within the WTO.
What will be the response of the U.S. government to this serious competitor for global economic dominance? Already, several pieces of anti-China legislation have been introduced in Congress. As the WTO meets this December in Hong Kong, China, U.S. citizens must play a role in shaping a global economy, and a policy towards China, that guarantees opportunity – and justice – for working families in both our nations.
China’s Economic Boom – And Challenge to U.S. Economic Hegemony
These days it is rare to walk into a retail outlet without seeing the "Made in China" label, especially in low-cost outlets like Wal-Mart. On January 1, 2005, the World Trade Organization abolished the global quota system that regulated the trade in textiles. Since then, imports of Chinese textiles have surged in the U.S., swelling even more our ballooning trade deficit with China and putting thousands of jobs in the U.S. textile industry at risk.
Most of the news we get in the U.S. is about China's phenomenal economic development. While the U.S. runs massive trade and budget deficits and is sinking deeper into debt, China has accumulated a cash reserve of more than $700 billion. The combination of a well-educated but low-paid workforce and a large internal market attracts more than $55 billion per year in new foreign investment.
China is a rising superpower that will soon surpass the U.S. in sheer economic size. There are now some 350 million cellular phone users in China — more than the entire population of the United States. China's passenger car market sold three million cars this year, which ranks them third in the world. China is also graduating four times as many engineers as the United States.
At the same time, concerns about labor practices in China are growing. On September 15th, the International Labor Rights Fund filed a lawsuit against mega-retailer Wal-Mart, alleging abuse of workers in factories across China and other countries. More than 80% of Wal-Mart’s factories are in China, where a population of 1.3 billion people compete for jobs lacking enforced labor protections or the freedom to organize.
Yet in August, Business Week reported that in China, “a grassroots movement of activists and lawyers is helping increasingly assertive workers get their due.” Robin Munro, Research Director of the China Labour Bulletin, a Hong Kong human rights organization, told Global Exchange that "It's a de facto labor movement happening in China."
China's industrial and textile development is lifting millions out of poverty, but is also causing a race-to-the-bottom globally as factories shift production to find the cheapest wages and fewest labor rights. And institutions like the WTO are setting up the race, by implementing policies that promote global outsourcing and wage depression.
That’s why advocates of fair trade and labor rights should be setting their sights to the WTO negotiations, where we can organize to turn back the erosion worker’s rights worldwide.
Future of Corporate Globalization: WTO Negotiations
This December 13-18, the World Trade Organization will hold its 6th Ministerial Conference in Hong Kong, China. Ten years of experience with the WTO show that rather than promoting economic prosperity, the WTO has opened up a giant corporate power grab threatening democracy, natural resources, and labor rights across the globe.
The Hong Kong People’s Alliance has organized a wide coalition of organizations concerned about the damage wrought by the WTO. Members like Globalization Monitor are increasingly troubled by the growing income gap. According to Apo Leong, “the income of the 20,000 top-earning households comprises 50% of Hong Kong’s total income while income of the 20,000 lowest-earning households comprises only 4.3% of total income.” Within Hong Kong, the selling off of public assets and services under WTO rules – like the postal service, subsidized housing, and social security – top the list of activist concerns.
Negotiations are slogging along after the July meeting of the General Council of the WTO. The U.S. and EU are making a massive push to force developing countries to agree to privatization of a wide variety service industries like transportation, telecommunications, and banking. And they are pressuring developing countries to drastically reduce industrial tariffs that protect domestic infant industries from foreign competition, a key tool of development. At the same time, developing country powerhouses like Brazil are pushing hard to get access to U.S. and European markets for their industrial agricultural production.
A meeting of the WTO’s General Council this week is attempting to smooth out these differences. But the U.S. and Europeans are showing no interest in reducing massive farm subsidies. The global agricultural rules are a serious concern for million of rural Chinese: a World Bank study recently showed that China’s rural poverty rate has increased since China joined the WTO a few years ago.
China is the host to the meeting – but is also a member of regional power blocs aimed at countering rich country dominance. At this December’s WTO meeting, China will be at the center of the debate, as it is the primary future challenge to global U.S. economic hegemony.
Economic Growth, Environmental Implications
China's phenomenal economic growth is racking up a severe environmental and social price tag. Pollution costs the country more than $54 billion per year; six of the world's ten most polluted cities are in China; and acid rain falls on one-third of the country. Chinese offices of groups like Pacific Environment link academics and activists to address issues such as the trade in endangered marine species and unsustainable fishing methods that are depleting China's waters.
Pollution is a serious concern, but the fundamental issue facing soaring Chinese economic growth will be energy consumption. Growth brings electricity and cars to millions of Chinese people, yet threatens massive increases in global warming. Given the opportunities of an economy with a strong state intervention, China can pursue ecologically damaging coal, oil, and massive hydropower energy supplies, or choose a path to sustainable development and alternative energy sources.
According to a recent investigation by the San Francisco Chronicle, the Chinese government is spending billions of dollars to increase energy conservation, shut fume-belching factories and reduce power plant emissions. Yet economic growth is still outpacing conservation and efficiency improvements.
China is scouring the globe to seal oil deals with Latin American, Middle Eastern, African, and other Asian governments. And although it failed, the Chinese state-owned oil company’s attempt to take over UNOCAL this summer leaves no doubt as to the future of Chinese commitment to its future oil security.
This massive growth in oil consumption is of even greater concern considering the efforts of the U.S. government to “liberalize” global oil supplies in the WTO negotiations this December.
This WTO disaster would allow the privatization of about 80% of global oil supplies that are currently restricted by governments – usually with some modicum of public oversight – by handing them off to transnational corporations for private profit. It would forever impede the public’s ability to impose life-saving environmental oversight, vastly increase global oil production, and prohibit new strategies desperately needed to save our planet from global warming.
Time for Citizen Action: With the Chinese People, Against the WTO
China's incipient people's power movement is impressive, but it is confronted by major obstacles: a repressive government, massive natural resource constraints, and a population that is just now becoming aware of the environmental costs of their newfound economic prosperity.
Everywhere Global Exchange went in China, people were very eager to engage us and learn more about the United States (the Chinese symbols for America transliterate as "beautiful country"). We were surprised by how many people in China can speak some English and want to learn more.
While standing on the banks of the churning Yangtze River at Tiger Leaping Gorge in Yunnan province, a middle-aged Chinese woman asked our group, "Are you from America?" Telling her about our Reality Tour group touched off a congenial dialogue about how the average citizens of our two countries need to unify in order to keep our governments from generating hostility toward each other.
In our meetings in China it was clear that this growing movement for workers’ rights, civil rights, and environmental protection could blossom into a powerful force. These community organizations would benefit from more people-to-people exchanges with U.S. citizens and grassroots groups. The Americans visiting China would get a much more realistic understanding of the Chinese people than they will ever get from the U.S. media. And people from both the U.S. and China can unify against a global corporate system that pits workers against each other instead of working for our common interest.
Now is the time to travel to China to understand this emerging global superpower, challenge corporate globalization in the WTO, and build a global economic policy based on our shared values of fairness, human rights, and economic opportunity for all.
Deborah James is the Global Economy Director of Global Exchange. Kevin Danaher is a Founder of Global Exchange and the author of numerous books on globalization. For more information on traveling to China for the World Trade Organization meeting, please see http://www.globalexchange.org/tours/734.html.