James Fallows asserts that because China’s rise has lifted millions of Chinese out of poverty while providing U.S. consumers with cheap goods, it must be a win-win for both countries (“China Makes, the World Takes,” July/August Atlantic). The more complex reality is that China’s rise is imposing great costs on countries around the world—and within China itself.
China’s competitive advantage in world manufacturing markets is largely due to a web of illegal export subsidies, rampant counterfeiting and piracy, a grossly undervalued currency, and lax environmental and health and safety regulations. While they have benefited the American firms and other multinational companies that are offshoring to China, these mercantilist practices have put tens of millions of people out of work around the world—from the American Rust Belt to Mexican maquiladoras to the markets of Lesotho.
While the tens of millions of Chinese peasants flooding into coastal Chinese factories may indeed be better off than they were on the farm, more than a billion Chinese are left paying a very heavy price. China is now the most polluted and dangerous place to work in the world, and unscrupulous developers in league with Communist Party apparatchiks regularly seize peasant land without just compensation.
China continues to build one new coal plant every week to feed its heavy-manufacturing model, and its toxic Chinese smog, or “chog,” regularly rides the jet stream to visit Americans as they leave their Wal-Marts with cheap Chinese goods. And it is no small irony that Fallows’s Panglossian ode came out at the same time as a raft of news stories about the contaminated, cancerous, and defective Chinese products now flooding the world.
Meanwhile, China’s imperial misadventures in Africa and Latin America—to obtain oil, timber, and other natural resources—have been well documented. So, too, has China’s facilitation of genocide in Darfur and nuclear proliferation in Iran in exchange for access to oil and natural gas. Last, but hardly least, China is using its economic gains to fuel a military buildup and develop an increasingly sophisticated array of “asymmetrical weaponry” aimed at the U.S. satellite system that for the last several decades has allowed U.S. military forces to hold the ultimate strategic high ground: space.
Laguna Beach, Calif.
James Fallows’s “China Makes, the World Takes” misleads readers by arguing that the “smiley curve” indicates that a revaluation of China’s yuan [also known as the RMB] would have little effect on the U.S. trade deficit with China. According to that polemical concept, each $2 worth of Chinese labor supports products valued at about $30, with the balance of the value added being contributed by U.S. capital, technology, and skilled labor. Therefore, Fallows argues, revaluing the yuan and removing all Chinese subsidies to manufacturing, and raising the cost of Chinese labor to $4, would raise the price of Chinese exports to the United States a negligible 7 percent.
While such math might apply to a few products, it cannot be typical of all imports from China. In 2006, total U.S. goods imported from China were $288 billion, and applying Fallows’s math would imply that Chinese imports are supporting 14 times that value to the U.S. gross domestic product. That comes to $4 trillion, or 31 percent of the U.S. GDP. In 2006, the GDP generated by all U.S. goods-producing industries (agriculture, forestry, fishing, mining, and manufacturing) came to less than $2 trillion. Either the U.S. GDP is grossly undercounted, or Fallows is wrong.
If the exchange rate did not matter, Chinese authorities would be happy to revalue the yuan. Even if one accepts the argument that China requires a managed exchange rate to promote stability within its rickety financial sector, the Chinese government could peg the yuan at 4 to the dollar instead of 7.6. Exchange rates are prices, and prices do matter. If they didn’t, Beijing wouldn’t cling so tightly to its present policies.
Robert H. Smith School of Business
University of Maryland
College Park, Md.
After noting the competition faced by some rich-world workers from their developing-world counterparts, James Fallows concludes: “With no trade barriers, there would be no reason why the average person in, say, Holland would be better off than the average one in India.” But there is. An average Dutch person is more productive in the marketplace due to his or her better education, health, institutional environment, and access to capital, and so he or she will always earn a higher wage.
Later in the article, Fallows discusses European subsidies to Airbus, and urges Americans to be aware that “Boeing sells fewer airplanes and employs fewer engineers than it presumably would without competition from Airbus.” True, but that says very little about the overall employment prospects for American engineers. In fact, the demand for them has constantly outstripped supply. Instead of being alarmed, Americans should send a thank-you note to European taxpayers for subsidizing world airplane production, so that America is able to allocate its scarce engineering talent to other uses.
James Fallows’s take on China is based on the same underlying assumption that clouds much of the debate over whether globalization is good for the developing world’s poor—namely, that if peasants are to achieve a higher quality of life, they themselves will have to purchase it, with the money they earn from “paying jobs.” While a bit of pocket money can bring with it better access to housing, health care, education, and sustenance, philanthropic efforts can achieve the same basic advancements—and without the added costs associated with large-scale, semi-forced migrations to urban ghettos. I’m not qualified to say how much more expensive it would be for the developed world to simply give away a better quality of life for the undeveloped world’s peasants, but given the high costs that come along with the benefits that Fallows describes, finding out would seem worthwhile.
La Crosse, Wis.
The caption for the photograph on page 68 refers to “chip resistors displayed in martini glasses,” but the photograph doesn’t show any chip resistors. Chip resistors, which have contributed to the miniaturization of all sorts of electronic devices for more than 30 years, look like tiny ceramic tiles; the photograph shows axial-lead resistors, which are tens or even hundreds of times more voluminous than chip resistors. These have been around since vacuum-tube days, when miniaturization didn’t matter so much. (The identification of the containers as martini glasses, however, is consistent with my experience.)
Peter M. Jacobson
James Fallows replies:
Peter Navarro’s letter is a summary of the argument in his recent book, The Coming China Wars. Without giving a book-length answer, let me say: I agree, and said in the article, that environmental devastation is the most ominous part of China’s industrial rise. I agree, and said in the article, that economic interactions are not always “win-win,” and that the relationship with China holds perils for America in the long run. But I presented the evidence for thinking that so far, the China-U.S. interaction has been beneficial overall for both sides. I disagree with most other assertions in Navarro’s letter and his book, including his claim that China’s success is “largely” due to illegal subsidies. That may be a comforting view for Americans, but based on what I have seen, it is a simplistic one. Readers should certainly read Navarro’s book to see his argument in its full version. The notes section of his book begins, “Much of the research conducted for this book was done over the Internet.” All of the research for my article was done on-scene in factories and trading companies in China.
I also agree with Peter Morici that one example I gave—Ethernet cables that cost $2 from the factory in Shenzhen but sell for up to $30 in America—is not statistically representative of all China-U.S. trade. And it certainly is true that a continued rise in the RMB’s value against the dollar (it has gone up by about 6 percent in the year-plus I have been in China) would have some effect on trade flows. The question is whether the likely effect is big enough to justify a focus on this as a main matter in U.S.-China trade.
Would a stronger RMB move manufacturing jobs “back” to the American heartland? I have asked this question now of nearly 100 U.S., Taiwanese, and mainland-Chinese company officials running factories here, and not a single one has said yes. Instead, they say they would move factories from “expensive” locations in coastal China to cheaper non-U.S. sites: inland China, Southeast Asia, India, in some cases eastern Europe, the Caribbean, or Mexico. That would reduce China’s global trade surplus but not necessarily improve the U.S. trade situation. Obviously, American exporters— from Boeing to MGM to Napa Valley wineries—would do better in China with a weaker dollar and stronger RMB. But these same companies don’t say that exchange rates are the main obstacle they are coping with. The U.S.-China Business Council, which represents all major U.S. firms doing business in China, polls its members each year on the main problems they have in China. In recent surveys, exchange rates have not been among the top 10 issues of concern. (Companies say that counterfeiting, “rule of law” issues, etc., matter more.)
To be clear: The RMB is now undervalued, and the Chinese government is artificially slowing the currency’s inevitable rise. But while American politicians act as if this were the main reason for unbalanced China-U.S. trade, people actually buying from and selling to China say it’s a secondary issue.
Nimish Adhia’s point about Airbus brings us back to the first-principles question of whether expanded trade is always and necessarily “win-win,” even when one side is deliberately subsidizing high-tech industries. That can’t be resolved here: I’ll simply say that I think the effects are more complicated than the letter suggests. As for Holland versus India, my point was that in earlier times, simply being born within an advanced nation entitled most residents to a permanently higher living standard than a person of the same skills, education, ambition, etc., in a poorer country. More and more, that advantage has to be earned—which is good in a moral sense but is disruptive in the richer countries.
Meanwhile, the issues Josh Miner raises are important but are beyond what I could deal with in the article, or here.
As for Peter Jacobson, his complaint is with the Chinese merchants who labeled the items “chip resistors” in the sales tags shown in our photo. I assure him that this is very far from the most egregious case of imprecise English labeling in China.
Kudos to Caitlin Flanagan for her thoughtful and well-researched article “Babes in the Woods” (July/August Atlantic). As a parent of two young children and a co-founder of Club Penguin, a children’s Web site referenced in the article, I share her commitment to keeping children safe online. In fact, the decision to build Club Penguin grew out of a desire to create a fun, virtual world that I and the site’s other two founders would feel safe letting our own children visit.
Although Flanagan mentions that Club Penguin has “paid professionals” who monitor activity and chatting on the site, she fails to explain some of the other safety features that make Club Penguin unique. When parents register their child(ren) on Club Penguin, they choose one of two chat options: “Ultimate Safe Chat” limits online conversation to a predefined menu of greetings, questions, and statements; “Standard Safe Chat” allows players to type their own messages, but each one first goes through a sophisticated filter that blocks inappropriate words, phrases, and personal information such as names and phone numbers.
Although we recognize that no system is perfect, we take pride in our record. Since we launched, in October 2005, we have recorded no incidents of predatory behavior and have received high praise from children, parents, educators, and Internet-safety experts around the world.
Lane Merrifield, CEO
Kelowna, British Columbia
Nowhere does Caitlin Flanagan’s lengthy piece about MySpace predators tell us why this phenomenon is important. There are 40-plus million regular MySpace users, but how many actual cases exist of teens being killed, seduced, or otherwise harmed by predators they met online? In a country in which 4,500 teens ages 12 to 17 were murdered in the last five years, Internet predation is so vanishingly rare that police, news reporters, and Net Nanny hawkers have to recycle the same few cases over and over. Teens encounter far more danger in church (where in recent years hundreds were sexually abused) and from adults who supervise them (100,000 12- to 17-year-olds were confirmed victims of violent, sexual, or psychological abuse in 2005, and 100 were murdered by parents and caretakers) than from anyone they might meet online.
Refuting the panic that cyber-messages are destroying girls’ psyches, long-term surveys find girls themselves saying they’re happier, less lonely, less depressed, physically safer, more optimistic about the future, and more eager to assume leadership roles than their mothers’ generation said it was 30 to 40 years ago. Measures of violent death, suicide, rape, early pregnancy, and educational achievement confirm that girls have never been safer or better behaved.
Santa Cruz, Calif.
Caitlin Flanagan replies:
A variety of law-enforcement agencies, rape-crisis centers, and child-safety organizations are struggling to get exact statistics on how many sexual assaults result from contact initiated on the Internet. In reporting the essay, I attended an eye-opening presentation at my children’s elementary school. The subject was Internet safety, and the presenters were two FBI agents and two attorneys from a rape-treatment center. I encourage parents of school-age children to consider hosting a similar event. Protecting children begins with understanding the danger the Internet poses. We have no control over the content that profiteers and pornographers put on the Web, but we have complete control over our children’s access to it.
In “Who’s Your Daddy?” (July/August Atlantic), Steve Olson makes an irresponsible leap: “In graduate school,” he writes, “genetics students typically are taught that 5 to 10 percent of the men on birth certificates are not the biological fathers of their children,” and then goes on to say “in other words, as many as one in every seven men who proudly carry their newborn children out of a hospital could be a cuckold.” Given that one-third of children in the United States are born to unmarried women, and that nearly 21 percent are being raised by single mothers, it would be safer to assume that a large proportion of those children aren’t being carried out of the hospital by any man, proud or not.
It was heartening to read that Senator Harry Reid’s office was immediately available to help Harlan Coben get a VIP check-in and room upgrade at Las Vegas’s Luxor Hotel (“Paperback Writer,” July/August Atlantic). I assume this service, subsidized by taxpayers, is available to citizens who are not famous writer friends of the senator?
New York, N.Y.
Ann Patchett’s “The Love Between Two Women Is Not Normal” (Atlantic Fiction Issue) quotes me as saying, “The love between two women is not normal,” which was taken out of context and omits a word from the original quote in the Anderson Independent-Mail. What I said, as quoted in that newspaper’s story, was, “The friendship and the love portrayed in the book are not exemplary. The love between the two women is not normal. We should have a broader range of books to choose from. We should be able to make our own choices.”
The omission of the definite article the before the words two women changes the entire meaning of the quote from a specific reference to the unhealthy nature of the friendship between Patchett and Lucy Grealy portrayed in the book to a blanket statement against lesbianism. Patchett writes, “Ms. See had finally come out and said the thing that no one else had the nerve to mention: Lucy and I must have been having sex with each other.” This was not my view, and I never said or implied anything along those lines.
There is no mistaking this as anything other than a purposeful misrepresentation of what I said and who I am. Ironically enough, Patchett expresses my feelings about this misrepresentation best in the Atlantic article itself: “To be charged with a crime you’ve committed is one thing, but a special kind of bewilderment comes of being wrongly accused, and I believed I had been wrongly accused.”
Mt. Pleasant, S.C.
Ann Patchett replies:
I apologize to Amanda See for misquoting her in my essay. The elimination of the article the from her sentence was careless on my part, and the responsibility for the mistake is entirely my own. What she did say—“The love between the two women is not normal”—speaks directly to the point of the piece, and I’d have surely used that sentence. I am glad to know that See does not stand in judgment of lesbians, but I still find it troubling that she sees herself fit to publicly judge the normalcy of the deep love my friend Lucy Grealy and I shared.