One response to this is to point out that the shift of manufacturing to China is not a short-term problem. It is a long-term tectonic shift on a par with, or even more momentous than, the shift in textile manufacturing from England the United States in the 19th century and from the US to Japan in the early 20th century.
A revaluation of the Chinese currency is not going to change the trend, nor will stopping shipments of bras at Rotterdam revive an industrial model whose time has passed. The world needs to come round to accepting the reality of China as the factory to the world. It is not a matter of good or bad. Any protectionist measures would simply slow down an inevitable process.
In the disputes in 2005 over China’s surging textile exports, it was interesting to see that the howls in Europe and the US calling for protection for local industries were matched by other voices calling for continued flows of cheap, good-quality imports. In other words, the voters know where the cheap goods in the shops come from and they are aware at some level of the benefits that accrue from the shift in jobs and the changes their lives go through as a result.
There are cards for western politicians to play other than the crude anti-China one. The West can call on Beijing to better earn its place at the high table of global decision-makers by opening itself up to freer foreign trade. This would give western imports more of a chance to make an impact and balance off the continuing flow of Chinese exports. A little bit of leeway and the tensions caused by huge trade imbalances would be much reduced.
Currency revaluation remains a potent issue in America, less so in Europe where there appears to be a greater understanding that a revalued renminbi would not do much to reduce the trade surplus. There is still pressure for revaluation, of course, although it is not the hot topic it was 18 months ago. China needs to revalue – it is no longer just a western issue.
The fact is that it is still not so easy for foreign companies to do business in China despite the significant progress that has been made in "opening up." China’s complaints of blockages and stoppages of its goods in the West are well matched by tariff and non-tariff barriers here. If China were to take concrete and visible steps to remove regulatory and non-regulatory barriers, it would help right the imbalances, while at the same time sidestepping protectionism.
But the hard truth that must be faced by the West is that it has virtually no future in manufacturing. No one can rewind the movie; the march of the machine will continue – even within China, prosperous coastal regions now suffer from higher labor costs and are seeing growing competition from inland areas. Guangdong province in the south of China has recently seen a downturn in new foreign-invested factory earnings as a result.
The West must cope with these ever-changing economic realities, not simply resist them. In doing so, it would find the experience of the East most instructive. In the 1960s, Hong Kong was the world’s biggest manufacturer of textile products, and now produces almost none. In the 1980s and 1990s, South Korea was highly dependent on labor-intensive industries such as steel and shipbuilding, and has now retooled itself for the digital age. Individuals and companies in Hong Kong and Korea, faced with the prospect of unemployment and bankruptcy, found new ways to make money in the new economic environment in which they found themselves. The West must do the same.
But China must also be pressed to join the world as a fully engaged member of its governing elite, willing to be flexible and cooperative. Happily, the signs are promising. The China-West relationship is maturing fast with greater mutual understanding and less tough-talk than ever before. Each side is now aware that the issues at stake are far too complex and intermeshed for simple confrontation tactics.
Today, Beijing can no longer say, "We’re China and we’ll do what we want" any more than Washington can. There is evidence that such beliefs are shared. For example, both sides are being remarkably careful these days on the hot-potato Taiwan issue. While Taiwan President Chen Shui-bian pushes an ever-more extreme line, calling for Taiwan membership of the United Nations, China’s response has been relatively muted. Meanwhile, the United States has made it abundantly clear to Chen that he can expect absolutely no help from Washington.
With the Iran nuclear issue, China and the US have different energy and security positions, but Beijing has gone out of its way not to be too obstructive to the US. China also gives the appearance of being as helpful as it can be on North Korean diplomacy, as the US pushes to close down currency counterfeiting and other illegal activities that are widely believed to be a fundamental source of revenue for Pyongyang.
As China’s economy rises through the global ranks, so does its diplomatic clout. If this is implemented for the collective good, China will finally be able to shake off the suspicion with which it is still regarded by the West. In terms of trade, maybe they can then start talking partnership rather than protectionism.
Internet search engine Google has been the subject of much criticism in the West over its decision to filter search results, preventing certain website links being delivered to mainland subscribers, in return for government permission to operate in China.
Yahoo and Microsoft have also been pilloried, the former having disclosed information to the Beijing authorities that led to the imprisonment of two of its Chinese email users, while the latter complied with government requests to shut down a Chinese blog that discussed issues such as press freedom.
All three companies, along with Cisco Systems, were summoned to US Congress inquisitorial hearings last month, where they argued that private companies pursuing commercial ends are powerless against the might of Beijing. But they faced some tough opposition. Before the hearings had the chance to begin, the co-chair, Republican Congressman Chris Smith, denounced the companies as "a megaphone for communist propaganda and a tool for controlling public opinion".
This latest controversy revives memories of the debate in 2000 and 2001 over whether the 2008 summer Olympics should be given to Beijing. The Tiananmen Square crackdown was still a fresh memory, Falungong was a big issue, and there were strong views expressed that a China that jails bishops didn’t deserve the Games. The alternative view, that the Olympics would be a positive force for change in China, was the one that prevailed. The massive changes that have taken place in China since 2001 surely prove that the decision was ultimately correct.
Such a spirit should govern a judgment on Google et al’s decision to work with Beijing. It is depressing, of course, that a search on Google.com for "Tiananmen images" will return pictures of armored vehicles and the famous shot of the lone protester confronting a tank, while a search on Google.cn delivers sedate tourist images of the square.
But China with a Google that filters searches is better than a China without Google at all. In many ways the Google brand stands for the free flow of information. While its decision to adhere to Beijing’s demands does tarnish this reputation somewhat, the mere presence of Google in China – in Chinese – will add momentum to the freedom of speech philosophy being shaped by the country’s web users.
It doesn’t take much for the enterprising surfer to graduate from filtered Google.cn to an unfiltered search on Google.com. Chinese people are already discovering a world beyond that, accessed through proxy servers that spring up as fast as they are closed down.
The more choice of information sources that people have, be they students or upwardly mobile officials, the more refined their awareness of global issues. The whispers of the Web inevitably gravitate to where the demand for answers lies – filtered or not, Google will play a part in this.