Every car sold in the US contains Chinese-made components. But suddenly, in the middle of a heated presidential campaign, the White House decided to show its dentures. “We’re certainly looking at that,” said Tim Reif, general counsel in the US Trade Representative’s office, though he insisted that the election had nothing to do with it. Yet, the culprits for the horrendous migration across the Pacific are everywhere.
2010 was a magical year in China. Among the world records: 18 million new vehicles sold. Due to unprecedented stimulus, sales had skyrocketed 33% that year and 54% in 2009—mind-boggling. It catapulted China to the number one new-vehicle market in the world, far ahead of the US which had never sold that many units in a single year. And it gave rise to a surge in production capacity. But now, the China auto bubble is emitting a sharp hiss.
Huawei is a prime example of Chinese companies scaling the value chain through innovation and technology transfer—top priorities in China’s five-year plan. But its efforts to become a major player in the US give the US government, and anyone concerned about national security, the willies. And now, these concerns dissolved another deal, yet the root problem remains.
We’ve seen photos of apartment buildings and neighborhoods, lavishly laid out with avenues and shopping centers where the only missing element was human life. And we raised our eyebrows at the revolts in front of real-estate offices when prices crashed. And we marveled at booming luxury car sales or the blistering stock market that blew up. Now they have another hot investment. And they pushed the US into second place, again.
The latest success—I suppose you could call it that, at least for those involved on the financial end—was the Kiekert deal last week. The company was founded in 1857 near Düsseldorf, Germany, and became the largest manufacturer of automotive door-lock systems. Its customers are GM, Ford, VW, BMW, and other automakers around the world. But now a Chinese company bought Kiekert, the sign of a sea change.
The EU filed a laundry list of complaints against Chinese dumping, from shoes to fasteners. Take ceramics. Household ceramics got hit last week; in 2011, building ceramics; in 2010, ceramic tiles—led to a punitive tax of 69.7%. Now, it has another target: Chinese steel. But the industry is the bully on the block. And it flexed its pumped-up muscles—and put at stake the very manna that European officials have been praying for.
Europe returned from its begging expedition to Beijing. Well, they called it a summit, one more in a series. They were trying to lure China into plowing part of its hard-earned foreign exchange trillions into the European bailout fund, the EFSF, and they made that dreadfully convoluted and opaque creature smell like a rose. Even a small amount would have been something. Anything really.
There still are some economic numbers that aren’t seasonally adjusted or manipulated with fancy statistical footwork by governmental, quasi-governmental, or non-governmental number mongers. And they give us the true picture of the worldwide economy: beer, wine, mood, and San Francisco real estate—with more predictive power than is allowed by law.
150 factory workers in China threatened to jump off the roof of an iPhone factory unless they received a raise. Similar stories are accumulating. To make ends meet, desperate workers sometimes take drastic measures. These anecdotes underscore a major trend in China: skyrocketing cost of labor. But in the US, it’s the opposite—and now part of the official White House strategy.
Practically every car or truck sold in the US today contains Chinese-made components, though Chinese-designed vehicles haven’t made it yet. Chinese automakers scramble to move from nice-looking but shoddy copy-and-paste models to reliable products that would be competitive in the US. It’s a government priority. And they’re getting there through the back door.