China: The Deadly Dragon

Around 5:30 a.m., on August 24, 2012, in Harbin City, Heilongjiang province, Manchuria, a ramp leading to the main roadway of the 9.6-mile Yangmingtan bridge collapsed, as did a 130-foot long section of the main roadway, depositing four trucks onto the road below; killing three and injuring five. Pictures of the accident showed the 130-foot long main roadway section dangling downward at a 45-degree angle, while one of the trucks lay on its side, looking as if it had been crushed by a giant foot. Dubious reasons were offered for the bridge collapse. Huang Yusheng, Deputy secretary of Harbin’s municipal government, blamed the collapse on overloaded trucks. Nevertheless, the bridge design and construction materials have come under intense scrutiny, and evidence points to culpability on the part of Harbin city officials.

Construction of the $294,000,000 (1.88 billion yuan) bridge was supposed to take 3 years, but was rushed to meet an 18-month deadline, imposed by Harbin authorities. A comment by Harbin’s construction committee is telling, “Because the commanding office for the construction of the Yangmingtan bridge dissolved (after the completion of the project), we can’t track down the specific unit that was responsible for the segment of the bridge.”[1]

However, stories of injuries and fatalities resulting from shoddy Chinese workmanship and materials reverberate far beyond China. In May 2006, an ambulance in New Mexico, riding on Chinese-made tires, went out of control when the tires blew out. In August 2006, a van using Chinese-made tires crashed on the Pennsylvania turnpike, killing two passengers and causing serious brain damage to another. The American retail distributor, Foreign Tire Sales, Inc, (FTS) inspected the shredded tires. They found that the Chinese manufacturer, Hangzhou Zhongce Rubber Company(HZ), had removed a .6 millimeter thick gum strip, which prevents a tire’s steel belts from separating from the rubber, to save money on production costs. However, because the cost might put them out of business, FTS postponed asking the National Highway Traffic Safety Administration (NHTSA) to issue a recall. When FTS failed to submit all of its test results until June 2007, the victims’ attorney sued them.

However, FTS pressed HZ about the missing gum strips; the Chinese company issued a boilerplate denial, effectively stating that the tires were not a problem. At a face to face meeting in Hangzhou, China, FTS pressed the Chinese importer to take responsibility for the recall, and replace the defective tires. Admitting they had removed the gum strips, HZ was nevertheless noncommittal on replacing defective tires; and silent on which tires lacked gum strips. After issuing a recall on June 11, 2007, the NHTSA sent HZ a letter, effectively stating that their inability to afford a recall wasn’t acceptable. The Chinese importer then questioned the needed recall, reiterating that the tires weren’t defective. As a result, FTS now routinely tests tires, and is considering new contracts; that would obligate Chinese manufacturers to pay for future recalls. New contracts would also obligate the Chinese to settle disputes in Hong Kong, where the legal system is better adapted to American commercial interests. Subsequently, in the case of McCulley v. General Motors, HZ motioned for a protective order from the plaintiff’s discovery requests, which sought “tire specifications, formulas, and change orders.” HZ asserted “…that the information constituted trade secrets, and was irrelevant to pending disputes….” The motion was dismissed on May 6, 2008, when the trial judge characterized it as “an improper attempt to circumvent a judge of co-equal jurisdiction.” [2]

However, Chinese criminal negligence and penny pinching practices include the manufacture of food and medicine. Zhao Lianhai, a well-known activist who had participated in the June 1989 demonstrations in Tiananmen square, was jailed for 2 ½ years in 2010, for campaigning for compensation for victims of a 2008 contaminated baby milk scandal. It was found that the manufacturer had laced the milk formula with melamine, a toxic industrial chemical, to give it a high protein content reading; resulting in the deaths of 6 infants, one of whom was Zhao’s child. Melamine is usually used to make plastics, concrete, and fertilizers; but when added to food, it can cause kidney stones and kidney failure. 300,000 children were sickened by melamine tainted milk; and in 2008, melamine was found in the products of one of every five dairy suppliers in China.

From defective building materials to defective consumer goods, to industrial waste chemicals in manufactured food, to dimethyl fumarate in furniture; to cornering and manipulating the world market in rare earths and industrial metals; to rapacious practices in space exploration; to keeping the value of the yuan artificially low; China is indeed out to impoverish and poison its neighbors, and seemingly itself.

Included in this laundry list of predatory practices, should be stealing American trade secrets, product designs, and top secret military intelligence; in the name of economic domination. Along the way, China has amassed a huge reserve of foreign capital, mostly in U.S. dollars, and they’ve used that reserve to buy U.S. treasury bonds, and strengthen their military. China now owns at least one-third of the $16.3 trillion U.S. debt, and at least 50% of America’s trade imbalance is from China. China has increased its defense budget “by double digits” every year for the past 20 years.[3] The Chinese Navy is now strong enough to challenge the U.S. Navy in the waters off the Chinese mainland, in Indonesian waters; off of Taiwan; and in the Yellow Sea, off Korea. China is arguably the world’s most dangerous nation. What is to be done?

A recent book, “Death by China: Confronting the Dragon—a global call to action,” by University of California economists Peter Navarro and Greg Autry, answers this question admirably. (Prentice-Hall 2011) The authors carefully break down the debilitating economic effects of trading with China, on their terms, and the health risks to those who buy Chinese consumer goods, in chapters titled, “Death by Chinese Poison,” “Death by Chinese Junk,” “Death to America’s Manufacturing Base,” and “Death by Currency Manipulation.”

They also mention that since 1999, China has systematically destroyed America’s manufacturing base, with the U.S. economy growing at a paltry 2.4% per year, on average; while simultaneously, China’s economy has grown, on average, at 10% annually. America’s rate of growth during the first decade of the 21st century was 25% below the 3.2% average growth rate of 1946-1999. [4]

In “Death to America’s Manufacturing Base,” Navarro and Autry explain how China has accomplished this destruction; by several unfair trade practices, which they call “Eight Weapons of Job Destruction.” These include export subsidies, currency manipulation, theft of American corporate product ideas/designs; lax health and safety regulations—which result in untold numbers of injuries and deaths of Chinese workers; restricting the export of necessary industrial materials, such as bauxite, fluorspar, silicone carbide, and zinc; jealously guarding their domination of the world rare earth market (China accounts for over 90% of world rare earth production); and high tariffs on imports. [5]

More specifically, the authors emphasize that “America imports almost $1 billion a day more than it exports to China every business day,” and then explain exactly how China’s currency manipulation has devastated American manufacturing. They then mention that as a candidate, President Obama repeatedly promised to pressure China on unfair trade practices. As President, Obama has not only refused to brand Chinese currency manipulation, he has “wrongly put politics and his administration’s short-term financing needs ahead of America’s prospects for long term economic recovery,” by encouraging China to keep buying U.S. Treasury bonds, without taking meaningful action on trade reform. They are also concerned that “President Obama seems totally incapable of connecting the increasingly obvious dots between America’s economic malaise and China’s Weapons of Job Destruction.” [6]

Equally important, the authors emphasize American corporate complicity with outrageous Chinese trade practices. They assert that our current problems with China began partly as a result of “ideological rigidity” on the part of President George W. Bush, who had serious misconceptions about China’s responses to American trade initiatives. Bush was convinced that making China a normal trade partner would mean “much lower trade barriers and enormous opportunities for U.S. exporters.” However, Navarro and Autry further assert that much of America’s trade problem with China results from a lack of patriotism on the part of many American CEO’s, as evidenced by three waves of offshoring. When American CEO’s realized that production could be accomplished cheaply in China, they began to enter into draconian trade agreements with Chinese companies; that often require American companies to surrender control of the enterprise, and mandate forced technology transfers. These transfers have resulted in the “forced export of Western research and development facilities to China,…a gross violation of World Trade Organization rules,” which result in job creation in China, not America. Information contained in these unconscionable and self-destructive transfers is often conveyed to the Chinese government. Specific examples are given, such as GE CEO Jeffrey Immelt transferring GE’s “entire global avionics business” to China, so GE could participate in the development of a Chinese passenger jet. [7]

However, the best part of Death by China is the final chapter, “_Life with China: How to survive and prosper in the Dragon’s Century._” It includes practical suggestions as to how America can combat and solve the problems listed above; and how America can reduce China’s cyber warfare, aggressively prosecute Chinese spies, and meet China’s challenge in space. The solutions they offer include: putting Chinese consumer goods back on the shelf, unless absolutely needed; demanding more specific ingredient labeling; tort reform that makes Chinese importers liable, and legislation that foils China’s “Weapons of Job Destruction.” Death by China is an easy read, for the layman wanting a straightforward explanation of American-Chinese trade problems; and for the legislator wanting a comprehensive guide to solving a large chunk of America’s unemployment problem.

Notes:

[1] www.ministryoftofu.com/2012/08/Another-tofu-dreg/tag/Yangmingtan-bridgeproject.

[2] Opinion of Judge William Manfredi, Court of Common Pleas, Philadelphia County, Pa.; October 15, 2008; David Welch, “An Importer’s Worst Nightmare,” at www.businessweek.com/stories/2007-07-22/an-importers-worst-nightmare

[3] “Morning Bell,” Heritage Foundation Newsletter, 11/17/2011; Death by China: Confronting the Dragon, a global call to action; by Peter Navarro and Greg Autry (New York: Prentice-Hall 2011), 68.

[4] Death by China, 52.

[5] Ibid., 55-66.

[6] Ibid., 68, 73-74, 224.

[7] www.ontheissues.org/George_W_Bush_Foreign_Policy.htm; Death by China, 81, 87.

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