Even as China was wowing the world with its spectacular showmanship and athletic prowess at the Beijing Olympics, there were increasing indications its long run of prosperity is being throttled by the economic and financial woes of its top customers, the United States and the European Union, and the worldwide impact of skyrocketing oil costs.
While China’s communist leaders could open the treasury and spend the $40 billion to $45 billion the Olympics are reported to have cost, they are less able to offset the sharp downturn in orders for their goods and increased labor/manufacturing/shipping costs.
To keep its factories humming, managers have had to pay significantly higher wages to attract workers, resulting in some manufacturing moving from China to lower wage countries.
Costs for transporting a standard 40-foot shipping container to the United States have more than doubled, from $3,000 to around $8,000, making it more expensive to ship everything from toys to steel.
In a carrying coals to Newcastle scenario in which it was cost-effective for American companies to send bulk raw products such as poultry or lumber to China for processing, then re-ship the finished products back to the United States, high transportation costs are stopping that.
All this, analysts say, could result in a decline in China’s recent 11 percent annual growth rate of as much as 1.5 percent to 2 percent. Ironically, the higher manufacturing and shipping costs could spur the movement of some production back to the United States, neighboring Mexico, to European Union nations or nearby Eastern European countries.
China’s economic boom has been built on its vast pool of cheap labor, sucking manufacturing jobs out of the United States and other high wage countries — hundreds of thousands of textile jobs have been lost in the United States over the past 10 years, and China has become the dominant force in the manufacture of the majority of the non-food items at your local Wal-Mart.
They’ve done this while trampling on virtually every concept of human rights and personal freedoms, keeping their currency artificially devalued against the dollar and Euro to make their goods cheaper and imported goods more costly, ripping off companies around the world by counterfeiting everything from designer bags to Hollywood movies to prescription drugs, skirting safety standards to churn out baby products and toys containing lead and animal/human products contaminated with harmful chemicals, and becoming one of the world’s major environmental polluters (seven of 10 cities on the World Health Organization’s worst polluters list are in China, and a World Bank report says some 760,000 Chinese die prematurely each year from air/water pollution).
China is nothing if not determined, however, when it comes to attaining goals, as amply demonstrated in their campaign to be chosen as the location for the 2008 Olympics; in their concentrated training of athletes, starting almost as toddlers, that allowed them to sweep the gold medals; and in putting on a happy face for the world.
It remains to be seen whether the goodwill from the games can be expanded upon as China tries to continue its economic growth and win acceptance in the world’s eyes.