| Many people would think that trading raw materials is | | | | seriously damaged any basis for dialog and discussion |
| mutually beneficial between countries. The US | | | | on human rights issues between both countries. China |
| economy depends on profiting globally, and we | | | | must immediately suspend talks and discussion.' |
| understand the benefit of using cheap labor in foreign | | | | Yesterday, US State Department spokesperson, |
| countries through FDI. However, what happens when a | | | | Richard Boucher, expressed the American |
| state financed enterprise in China strategically buys up | | | | government's disappointment with Beijing's |
| raw materials like iron and petroleum. I am not just | | | | inadequacies in improving human rights conditions in the |
| talking about an even percentage, I mean "greater than | | | | country, after commitments it undertook in 2002 and |
| 90% of the world's raw supply of iron" and complete | | | | 2003. Boucher also stressed Washington's concern |
| control over the U.S. petroleum supply.1 Fortunately, the | | | | about 'backward steps' being taken by China, as |
| US government noticed what they were up to and | | | | reported in the American government's world human |
| made it illegal for another county to purchase a | | | | rights report released last Feb. Last year the United |
| controlling interest in the U.S. petroleum supply. On a | | | | States asked for a resolution, stating that Beijing had |
| side note, it was only five years ago that the North | | | | made limited, though significant progress in the sphere |
| Korean government financed a massive plant to | | | | of human rights. The resolution was presented each |
| produce billions in counterfeit U.S. currency. Everyone | | | | year after the brutal repression of the student |
| knows that the U.S. military forces are superior to any | | | | protestors in Tiananmen Square in June 1989. This |
| other country, but there is one thing that we do not | | | | year various human rights organizations, like Human |
| have. China has a "population of 87 million exceeds | | | | Rights Watch, asked that the United States to put |
| most European nations".2 Many of these people are | | | | back a motion to blacklist Beijing. Even American trade |
| living in less fortunate conditions. You might even | | | | union representatives requested that their government |
| assume that they would prefer a better life, and the | | | | condemn China for the way it trades its labor force. |
| right leader could influence them to do so at the | | | | Meanwhile Amnesty International called for a |
| expense of other nations. | | | | moratorium on the death penalty on China, reporting |
| We are vastly out numbered, so what makes our | | | | that the Chinese legal system does not guarantee fair |
| military forces superior? | | | | trials and often punishes innocent persons. Yesterday |
| The answer is technology, industry, petroleum, and iron. | | | | the AI published a report titled 'Executed according to |
| Technology is always either for sale, or it can be | | | | law?' 'The report was released following statements |
| gathered through espionage. China can buy the same | | | | made by a member of Chinese Parliament who said |
| level of technology from intermediaries or allied | | | | that every year there are at least 10,000 people |
| governments. Industry can be built with economic | | | | sentenced to death in China 5 times more than all |
| growth. Currently China is the number one growing | | | | cases of capital punishment registered worldwide'."8 |
| economy in the world. It nearly controlled our petroleum | | | | The Chinese people are very much like our own with |
| supply domestically and failed, so China decided to buy | | | | the exception that they communicate more through |
| petroleum from Saudi Arabia through German | | | | context and women are not valued very highly in their |
| intermediaries. Now our gas prices are going through | | | | society. They also have four different cooking styles |
| the roof and stock analysts are saying its some kind | | | | based on the four different regions. They speak |
| of market fluke created by a belief that oil prices will | | | | different languages in each region, and they have a |
| continue to soar. | | | | wide array of different traditions based on the former |
| Iron, the main export that I would like to discuss, is five | | | | cultures that lived there before. China does not tolerate |
| times its original price four years ago when China | | | | freedom of speech and they frequently kill anyone |
| started buying up the world's supply of raw iron. Right | | | | who is suspected on saying negative things about the |
| now, they are using this iron to create cranes and | | | | current government. There is no defense orfair trial, |
| other machinery to export to the US and other nations, | | | | and basic human rights are not valued by their |
| but most of the iron is being stockpiled in China for | | | | government. Their economy is state controlled, but |
| future use. What future use? We can only speculate. | | | | they are slowly changing into a free enterprise |
| Why would China stockpile their ever-increasing supply | | | | economy. |
| of iron and still buy more, regardless of the price | | | | I think that trading with China is mutually beneficial as |
| (literally)? What big plans do they have for such an | | | | long as they are not buying up significant amounts of |
| immense stockpile of iron? Aren't bullets, guns, | | | | raw materials that affect our national security. After |
| factories, and tanks made out of iron? Absolutely, here | | | | the "911 attacks on New York and the Pentagon", |
| is a piece of an article on the Chinese economy. | | | | security measures at the ports are very strict in the |
| "In recent years China's booming economy, fueled by | | | | US.9 The Port of Tacoma and the Port of Seattle |
| large inflows of foreign direct investment (FDI) and | | | | have cameras, tall fences, and security personal |
| rapid export growth, has emerged as a significant | | | | strategically placed. They also conduct more customs |
| force in the global economy. This year, China | | | | inspections than before, and canines are commonly |
| surpassed the United States as the world's largest | | | | used to find people and contraband. The US also has |
| recipient of FDI, and its bilateral trade surplus with the | | | | a satellite system that detects nuclear radiation, |
| United States reached $117 billion in the 12 months up | | | | infrared (heat signatures), records and filters every |
| through August 2003. Both inward investment and | | | | electronic conversation in the US, and video records |
| export growth create strong demand for China's | | | | the activities of the world's ports. They also pay very |
| currency, the Yuan. All things being equal, such demand | | | | close attention to refrigerated and abnormally heavy |
| pressures should cause the Yuan to appreciate | | | | containers for biological weapons and shielded nuclear |
| relative to the U.S. dollar and cause China's external | | | | material. |
| position to return to balance."3 | | | | China does not perform any significant security |
| Since China is the number one growing economy on | | | | measures other than custom inspections accompanied |
| the planet, they also have the number one growing | | | | by armed guards. Custom inspectors frequently |
| currency relative to the US and other nations. | | | | accept bribes to expedite export and import |
| Everyday China is become more industrialized. They | | | | processing, which creates a huge delay for companies |
| used to be a purely state controlled economy, but they | | | | who did not pay bribes or paid less. Dogs are also |
| are starting to develop into more of a free economy in | | | | used for detecting contraband, but they use german |
| some areas. Overall, they are not shutting down as | | | | sheppards instead of beagles. German sheppards are |
| many businesses that do not pay the government | | | | know to be effective in chasing down people and |
| officials regular bribes, which is definitely a move in the | | | | enforcing security. However, beagles have two |
| right direction. | | | | hundred times the ability to smell contraband. This |
| The US wants to encourage free trade with China | | | | means that their port security is seriously lacking unless |
| because of their enormous population. This means that | | | | they physically inspect every crate, which they do not |
| US companies would have access to a huge new | | | | normally do whenever a bribe is taken to expedite the |
| market of consumers. It also means improving the | | | | customs process. |
| quality of life in China. It is also widely known that many | | | | Recently, the Port of Tacoma purchased three cranes |
| native Chinese women perform acts of prostitution or | | | | from China to unload containers off the ships. They |
| marry solely to support their family. It is also common in | | | | purchased scrap iron from suppliers in Washington |
| China to see people walking barefoot because they | | | | State, melted the iron down, manufactured the cranes, |
| cannot afford sandals, or seeing people including | | | | and sold them back to us for less than domestic |
| children who are starving. China also has more than | | | | companies could make them. |
| 300 organized crime syndicates with a history that | | | | Inventories of iron are currently state managed and |
| goes back to the Shaolin Monks. China is a desperate | | | | exceed "70% of iron imports internationally".10 US laws |
| nation, so desperate that they engage in foreign | | | | regarding customs are identified as governing security |
| currency scams to inflate the value of the Renminbi | | | | measures domestically. Otherwise, maritime laws apply |
| (pronounced Yuan). In 2000, the exchange rate was | | | | to shipments. |
| 8.3 Yuan per U.S. dollar. Today, the exchange rate is | | | | The political ramifications of cutting off certain |
| 7.6 Yuan per US dollar. Here is the second piece of | | | | resources to China will make them an enemy. In order |
| the article above. | | | | for the US to be effective at cutting off the massive |
| "But all things are not equal: China pegs the Yuan to | | | | purchasing campaign of iron by China, it will need allies |
| the dollar at a fixed rate and strictly regulates imports | | | | who are all the current trading partners to do the |
| and the allocation of foreign exchange. In order to | | | | same thing. However, this would also make them |
| maintain the Yuan's fixed value, China must create a | | | | enemies of China, and suppliers are becoming very |
| residual supply of Yuan to counter growing demand | | | | wealthy by selling their raw materials for a higher price |
| for its currency; China achieves this by buying dollars in | | | | to China. This means that international trading partners |
| foreign exchange markets. Between December 2000 | | | | must have a significant reason to cut China off or limit |
| and July 2003, China more than doubled its foreign | | | | them other than the US's economic prosperity. |
| reserve holdings from $168 billion (16% of its GDP) to | | | | Culturally we also have to consider that the Chinese |
| $361 billion (31% of its GDP)."4 | | | | want a better life, and they want independence. It is |
| "How should the United States respond? On nine | | | | unlikely that the US will be able to push the Chinese |
| occasions between 1988 and 1992, the U.S. Treasury | | | | government into giving their people human rights |
| found that similar external surpluses accompanied by | | | | without completely replacing their government or |
| much smaller accumulation of foreign reserves | | | | waiting a significant number of years for their human |
| constituted evidence that countries-including | | | | rights policies to catch up with the rest of the civilized |
| China-were manipulating their currency's value for | | | | countries in the world. |
| competitive trade advantage. When such a finding is | | | | Geographically, China has taken over Hong Kong, |
| made, U.S. law requires the Treasury Secretary to | | | | which is the largest shipping location of Chinese |
| undertake negotiations to end such manipulation. | | | | imports and exports. The decision of the Chinese |
| Current evidence indicates that China is engaged in | | | | government to take over Hong Kong assures their |
| just such a manipulation of the Yuan for competitive | | | | ability to distribute goods internationally without major |
| gain."5 | | | | changes in worldwide distribution. Economically, we |
| Today, foreign "investment, combined with China's | | | | must understand that China has a lot to offer in terms |
| swelling export earnings, have pushed the country's | | | | of cheap labor and outsourcing, but it may come with |
| foreign exchange reserves beyond $600 billion".6 | | | | a steep cost in the near future. |
| One thing that I learned from experience is that | | | | Letters of credit are guaranteed by international banks |
| desperate people and people that try to steal from | | | | in Malaysia and China based on current deposits. This |
| others generally cannot be trusted. This is why, among | | | | insures payment on receipt of goods for both imports |
| all the other evidence I provided above, I do not think | | | | and exports. The global marketing process for |
| we should let the Chinese government do whatever | | | | government contracts is the same as it is in the US. |
| they want. They should not have a majority of the | | | | Foreign bidders are required to send a proposal to the |
| world's iron, petroleum or our country's economic and | | | | government authority issuing the contract. Whether |
| physical security in the palm of their hands. What good | | | | they choose to buy or not from a foreign source is a |
| are tanks and supply trucks that do not have gas? | | | | balance between price driven economics and |
| This may seem silly today, because we are not at | | | | supporting local companies. |
| war with China. | | | | China has no restrictions on the treatment of their |
| In support of this opinion, many nations like Japan | | | | employees, the ages of workers, the hours they work, |
| learned long ago that warfare in the physical sense is | | | | the healthcare of employees or their working |
| foolish and destructive, because it diminishes the | | | | conditions. US employers must abide by laws |
| productive capacity of the nation unless they can build | | | | concerning the treatment of minors, paying overtime, |
| new factories just as fast as their enemies can blow | | | | paying wages, paying health and unemployment |
| them up. | | | | benefits, discrimination, etc. |
| Today, the real modern warfare is economics. If China | | | | Foreign investment in China is carefully controlled in |
| shuts down U.S. companies that depend on buying iron | | | | specific sectors and industries. Foreign investment in |
| at a certain price in order to earn a profit after U.S. | | | | the US is allowed as long as it does not negatively |
| labor costs, then they take our market share and our | | | | impact our national security. This is why the US |
| productive capacity depends on whether China will sell | | | | government stopped China from purchasing a |
| us what we need. Prices are good today because | | | | controlling position in the U.S.'s primary oil supplier. |
| Chinese labor costs are low, but it will not stay that | | | | However, it is almost a guarantee that they will try |
| way according to economic theory. Eventually the FDI, | | | | again. |
| which exceeds our nation, will create even more jobs | | | | If you choose to do business in China, please carefully |
| and economic prosperity in China. The end-result will | | | | consider the implications of your actions. Making a |
| increase wages, and hopefully it will improve working | | | | great profit is very important, but it can never come at |
| conditions. | | | | the expense of our lives, the lives of our children or the |
| However, if China does not sell to us anymore and | | | | world's stability and security. I think the world has a |
| they do the same bullying routine in other international | | | | great opportunity everyday to change for the greater |
| markets, then we could be at a serious economic and | | | | good, maybe our enemies will decide that building a |
| military disadvantage. Should we trust China and | | | | better world for everyone is better than petty |
| believe that they want to change for the better? Here | | | | arguments over land, money and religion. |
| is an article that may shed some light on that question. | | | | Bibliography |
| "China wants to suspend human rights talks with the | | | | Flannery, Russell. At Your Service, China! New York, |
| United States. The news came after Washington said | | | | NY: Forbes, 2007 |
| yesterday that it will condemn Beijing's serious | | | | Goodman, Peter S. China Ends Fixed-Rate Currency. |
| violations with a resolution at the UN Human Rights | | | | Washington DC: Washington Post, 2005 |
| Commission currently underway in Geneva. The | | | | Hersh, Adam S. China's currency manipulation and U.S. |
| Chinese foreign minister called the action taken by the | | | | trade. Washington, DC: Economic |
| Americans a 'serous meddling in China's internal affairs.' | | | | Policy Institute, 2003 |
| China's Vice Foreign7 Minister said the 'clash | | | | Hill, Charles W.L. Global Business Today 5th Edition. |
| intentionally provoked by the United States has now | | | | |