DECEMBER 2005
Can Anyone Compete with China? Lessons from Japan,
by Eamonn Fingleton
August 08, 2005
http://www.unsustainable.org/view_art_un.asp?Prod_ID=5
Americans believe that the United States is in good company in being hollowed out by China. After all Japan is also suffering badly from Chinese industrial competition -- or so the American press reports. Actually Japan's trade strategy sacrifices neither workers nor high-tech leadership. This article by Eamonn Fingleton was first published in August 2005 in **The American Conservative**.
For more than a decade now we have been told that the world's most advanced economies face a common fate in this era of Chinese economic expansion: massive layoffs in manufacturing and ever-rising trade deficits. Indeed, if American press reports are to be believed, Japan has even more to fear from the Chinese economic threat than the U.S. Supposedly, key Japanese industries such as electronics are being rapidly eviscerated by low-wage Chinese competition. Such reports, suggesting that there is something inevitable and inexorable about the decline of manufacturing in advanced nations, have served powerfully to tranquilize American public opinion at a time when America's trade deficits have gone from merely horrendous to truly disastrous.
It is past time these reports were exposed for the propaganda they are. No nation's trade position has suffered as much from China's rise as the United States. Quite the reverse. Many of America's key economic competitors have, on balance, strongly benefited from China's industrialization. Of these the most notable example is, oddly enough, Japan.
Consider this little publicized fact: Japan's current-account surplus last year totaled $181 billion. This was a record for any nation in world history. It was more than 2.5 times China's 2004 current-account surplus. More to the point, it was three times Japan's surplus of 1989, the peak year of American concern about Japan's "juggernaut" trade policies.
The truth is that Japan has closely co-operated with China's desire for export-led growth yet it has found ways of doing so that also boost its own exports. Hence another rather significant unpublicized fact: Japan exports more to China than it imports. Its surplus with China in 2004 ran to nearly $14 billion, up 17 percent from 2003.
Just as in the case of the United States, outsourcing to China has played a major role in corporate Japan's production arrangements in recent years. There the similarity ends. Unlike the United States, Japan believes in managing its trade. Although Japanese officials recognize that consumers can benefit from trade, they also recognize that people need jobs and incomes before they can
consume. Thus where imports might pose a significant threat to Japanese jobs, the Japanese government works to minimize the damage.
Besides influencing the pace of outsourcing, Japanese policymakers ensure the trend does not entail the leakage abroad of the nation's key production technologies. Thus individual corporations are not permitted unilaterally to transfer advanced technologies to foreign operations.
If this seems impossibly complicated to administer, it isn't. Much of the control stems semi-automatically from Japan's distinctive labor regulation. In principle, employers are foresworn from making layoffs. This principle is applied flexibly: exceptions are permitted in the case of struggling small firms as well as corporate dinosaurs in near-terminal financial difficulties. But as a practical matter, layoffs are not an option for any healthy mainstream Japanese corporation.
Whereas American chief executives are much concerned with pandering to the whims of securities analysts, a typical Japanese chief executive is necessarily focused on long-term production planning. His principal concern is to create new and ever more productive work for his Japanese colleagues at every level, not least the newest recruits who can be expected to be on the payroll 30 years hence. To this end, he will make sure that, among other things, the corporation spends heavily on research and development.
He will also probably try to focus this spending mainly on developing efficient new production technologies, which provide a much more lasting benefit in terms of secure long-term jobs than, say, designing new products.
All this means that a Japanese chief executive's attitude to outsourcing will almost automatically be closely aligned with the Japanese national interest. Because he cannot easily shed labor at home, he will move production activities abroad only after he has lined up new and better work -- either more capital intensive or more know-how intensive or both -- for his domestic workers.
By way of example, a Japanese television manufacturer might move assembly operations to China only after redeploying its domestic assembly workers to make liquid crystal displays. This latter activity can be at least 10 times as capital intensive as assembling television sets.
As a practical matter, in the early stages of the trend for American corporations to outsource to China, Japanese corporations held back. But lately they have caught up and now outsource almost all routine assembly work. For both Japan and China, this is win-win. In a textbook illustration of the principle of comparative advantage, Japan does the capital-intensive work supplying high-tech components to China's low-wage assembly plants. The net effect has been a huge increase in global output of everything from mobile phones to game machines -- with a resulting benefit to the world's consumers in ever lower prices and ever greater functionality.
In geopolitical terms, the result is that Japan is now far more securely in the lead in advanced manufacturing than it ever was in the late 1980s. This does not show up in American trade statistics because much of what Japan sells to the United States these days comes via final assembly plants in China and thus is counted for American statistical purposes as "Made in China."
While Japan is the most spectacular example of a nation that has secretly leveraged Chinese industrialization to the advantage of its export industries, it is hardly alone. This should be obvious from the fact that China's surplus with the United States exceeds its surplus with the world as a whole. In other words, while China is a huge net exporter to the United States, it is actually a
major net importer from the rest of the world.
It is fair to say that, in common with Japan, many of the world's other advanced manufacturing nations are using China as an export pipeline through which to sell to the United States. It is also fair to say that, not for the first time, Uncle Sam is being treated as the world trading system's ultimate patsy.
Why isn't all this better understood? A key factor is the Washington trade lobby. So skilled has it become in spinning the story that it has succeeded in pulling the wool over the eyes of countless analysts at supposedly independent think tanks.
Another factor is the perennial naivety of American foreign correspondents. The problem is particularly acute in Tokyo, where the local English-language press functions shamelessly as the Japanese Foreign Ministry's propaganda arm. The message in recent years has been that Japanese industry is almost ludicrously dysfunctional -- and therefore is quaking in its boots at the rise of Chinese manufacturing. The tone of desperation was nicely encapsulated in an op-ed article recently by corporate chieftain Nobuyuki Idei. Under the headline "Nation's competitiveness must be recovered," Idei bemoaned Japan's allegedly widespread economic inefficiency and a general decline in competitiveness. But how inefficient can a nation be if it boasts the largest trade surplus in world history and pays some of the world's highest wages? (Japanese wages now run about 20 percent higher than American levels.) Idei, of course, did not mention these points. Also left unsaid was the fact that Idei's own corporation has multiplied its dollar-denominated sales nearly fourfold over the last 15 years.
What should the United States do? Clearly it cannot -- and should not -- attempt to emulate everything a highly regulated nation like Japan does. But it could make a start by doing some things that, until recently at least, have always been in the best American traditions -- like being honest with itself.
*Eamonn Fingleton is an Irish Tokyo-based economic commentator and author most recently of Unsustainable: How Economic Dogma Is Destroying American Prosperity (New
York: Nation Books, 2003). This article is based on a presentation he made to
the United States-China Commission.*
chiang.d@worldnet.att.ne
Man on the Moon
04 Nov 2005 09:21:42 GMT Source: Reuters
http://www.alertnet.org/thenews/newsdesk/PEK20844.htm
BEIJING, Nov 4 (Reuters) - China, which launched its
first manned space mission just two years ago, plans to
put a man on the moon around 2017 and investigate what
may be the perfect source of fuel, a newspaper reported
on Friday.
Two Chinese astronauts orbited Earth for five days last
month in the Shenzhou VI and China was now developing new
craft up to the Shenzhou X, eyeing a permanent space
station and an eventual moon mission, state media said
this week.
"China will make a manned moon landing at a proper
time, around 2017," leading scientist Ouyang Ziyuan
was quoted by the Southern Metropolis News as saying.
The project also includes setting up a moon-based
astronomical telescope, measuring the thickness of the
moon's soil and the amount of helium-3 on the moon -- an
element some researchers say is a perfect, non-polluting
fuel source.
Some scientists believe there is enough helium-3 on the
moon to power the world for thousands of years.
"We will provide the most reliable report on
helium-3 to mankind," Ouyang said.
The United States unveiled a $104 billion plan in
September to return Americans to the moon by 2018. Its
Apollo programme carried the first humans to the moon in
1969.
China's first lunar orbiter could blast off as early as
2007, coinciding with its third manned space trip in
which possibly three men would orbit Earth in Shenzhou
VII and conduct a space walk.
China was designing a rocket that could carry a payload
of 25 tonnes, up from a present limit of eight tonnes,
the Beijing News reported this week, though it would
unlikely be ready for another six-and-a-half years.
from P.Myers
David Chiang
<sino.economics@verizon.net> wrote:
0
Siemens
Wins Order from China for 60 High-Speed Trains
http://www.azom.com/details.asp?newsID=4308
0
Siemens
Transportation Systems will work
with its Chinese partner company, Tangshan Locomotive
& Rolling Stock Works, to build 60 high-speed trains
for China. The order content share allotted to
Siemens is worth 669 million euros. A contract with
the Chinese Ministry of Railways was signed today in
Berlin by Siemens President and CEO Klaus Kleinfeld and
Railway Minster Liu Zhijun on the occasion of a state
visit to Germany by China's President Hu Jintao.
"This contract means that China will be supplied
with the most up-to-date technology for high-speed
trains. This underlines the leading role of Siemens
as a driver of rail technology. We are expecting
that, with this project, we will be able to expand the
long-term strategic partnership between the German and
Chinese rail industries" declared Kleinfeld at the
contract signing ceremony.
The
trains, which can travel at speeds of up to 300
kilometers an hour = 187.5 miles/hours, are to be
used initially on the Beijing-Tianjin route as of 2008
and will be deployed on other high-speed routes later on.
The trainsets have a total length of 200 meters and have
seats for a total of more than 600 passengers.
The design and planning work for the Chinese high-speed train (the "CRH 3") will be carried out at the Siemens plants in Erlangen and in Krefeld-Uerdingen, Germany. Production of the first three trains and several important components will likewise take place in Germany. The rest of the trains will be built in China by Tangshan Locomotive & Rolling Stock Works, a production plant of the China Northern Locomotive & Rolling Stock Industry (Group) Corporation (CNR). Part of the contractual terms and conditions involves support and technology transfer in connection with production of the trains. Also involved in the project and in technology transfer are numerous German and European suppliers of subsystems and components for the high-speed trains and they will also be cooperating with their Chinese counterparts.
The CRH 3 is based on the "Velaro", a Siemens platform for high-speed trains and a development which began with the ICE 3 for Deutsche Bahn (DB AG). The advantage of the Velaro platform is to be found in its use of distributed traction technology. All the equipment is accommodated under the floor of the high-speed train so that the trains have approximately 25 per cent more seats for the same length of train, a uniform exterior design for all parts of the vehicle and also low infrastructure maintenance costs due to lower axle loads.
Owing to its economic efficiency and use of top technology, this "Velaro" concept for high-speed trains has generated a lot of interest among a number of railways around the world. In the meantime, Deutsche Bahn has ordered 63 ICE 3 trains, which could, for example, enable passengers to travel between Frankfurt and Cologne in just one and a half hours at top speeds of up to 300 km/h and thus provide an attractive alternative to air travel. For cross-border transport to France, Siemens is currently equipping five ICE 3 trains on behalf of Deutsche Bahn. Siemens is also building 26 "Velaro E" type high-speed trains for the Spanish railways which will be used on the new 625 kilometer-long high-speed line between Madrid and Barcelona from 2006 onwards.