If you look carefully at how things are actually made in China - from shirts to toys, apple juice to oil rigs - you see a reality that contradicts every widely-held notion about the world's so-called economic powerhouse. From the inside looking out, China is not a manufacturing juggernaut. It's a Lilliputian. Nor is it a killer of American jobs. It's a huge job creator. Rising China is importing goods from America in such volume that millions of U.S. jobs are sustained through Chinese trade and investment.
In Unmade in China, entrepreneur and Georgetown University business professor Jeremy Haft lifts the lid on the hidden world of China's intricate supply chains. Informed by years of experience building new companies in China, Haft's unique, insider's view reveals a startling picture of an economy which struggles to make baby formula safely, much less a nuclear power plant. Using firm-level data and recent case studies, Unmade in China tells the story of systemic risk in Chinese manufacturing and why this is both really bad and really good news for America.
Jeremy R. Haft has been starting and building companies in China for two decades across the breadth of China's economy - from light and heavy industries to agriculture. Haft is the author of All the Tea in China: How to Buy, Sell, and Make Money on the Mainland (Penguin, 2007), which presents best practices for importing, exporting, and doing business in China.
An adjunct professor at Georgetown University who lectures in both the Walsh School of Foreign Service and the McDonough School of Business, Haft's analysis on China trade has been featured in such media as National Public Radio, The Wall Street Journal, The Financial Times, Forbes, The Huffington Post, CNN, CNBC, Fox, NBC, CBS, and ABC.
The proof of China's might is in your waistband. And in the collar of your shirt; the chair you're sitting on. The mug on your desk. The phone in your pocket. The toy your child is chewing on.
Just look around you. Everything seems to be "Made in China" these days. So it must be "the China Century." And as China rises, America falls.
The logic goes something like this. It's a global economy, a flat world. If China can make anything we can, only cheaper and at the click of a mouse, then we surely haven't a prayer. We're on a race with China to the bottom - in wages and, ultimately, quality of life.
The flat world is tilting east, and all our good jobs are flowing to China.
The pundits agree. Just look at today's paper. There's a story on the front page about surging Chinese imports, flooding our markets with cheap goods and killing US jobs.
Then there's an op-ed on the back page. It says that China is already the world's second-largest economy. And that major financial institutions like the International Monetary Fund predict China will overtake the United States economically in just a few short years.
Politicians agree too. In the 2012 presidential election between Mitt Romney and Barack Obama, both candidates trimmed their sails to the headwinds of China's economic power. In a contest that the pundits still insist had nothing to do with foreign policy - Americans, they claim, were weary of wars in Iraq and Afghanistan and, with unemployment nearing 10 percent, were focused on kitchen-sink issues (like losing the kitchen sink) - the election was actually dominated by foreign policy. The campaigns spent nearly US$50 million on ads about China. And China was a frequent theme on the stump, especially in bellwether Rust Belt states like Ohio hit hard by the recession. The candidates and their surrogates flogged China again and again.
Romney's refrain: Obama is too soft on China's "cheating," its undervalued currency that keeps the prices of its exports artificially low.
Obama's refrain: Romney is an "outsourcing pioneer," sending jobs to China while he ran Bain Capital.
The implicit message in both campaign themes? If China can steal our jobs out from under us, through currency manipulation and outsourcing, America must be losing the competition for the next century.
Interestingly enough, before 2012, the typically pro-labor Democratic candidates were the China hardliners and the pro-trade Republicans the China softies. Now, talking tough on China was the bipartisan goose that laid the golden eggs. In both Democratic and Republican campaigns, the focus-group Svengalis told the messaging mavens to hit China early and often.
The polls show why. A recent Pew survey asked which is the world's leading economic superpower - today, not at some point in the future. More Americans than not said China.
Think about that. More Americans today believe that China, not America, is the world's leading economic superpower. You may be nodding your head in agreement. So you probably won't be surprised to learn that nearly 60 percent of British said China, too. And across 21 countries, the majority of respondents voted China over America as the world's leading superpower.1
No surprise, right? China's might, and its dominance in the coming century, are just obvious. The ubiquitous labels on our products are proof enough of this irrefutable truth.
And if you square that truth with America's jobless recovery, our cratered-out industries, shrinking middle class, crumbling infrastructure, paralyzed government, uncompetitive wages, and thicket of regulations, then the corollary to China's rise is also an irrefutable truth. America is in decline.
But you don't need a poll to tell you which way the wind is blowing. At your next family get-together, try saying "My (fill in the blank) was 'Made in China.' "
How did they reply? I'm guessing you didn't all join hands and sing "We are the World."?
Did you get an earful of invective? Outsourcing, currency-cheating, idea-stealing, cyber-spying Commies!
To be sure, China's rise is an emotional issue. Millions of Americans have lost jobs, homes, and pensions since the Great Recession of 2008. When the news media, politicians, and pundits almost universally blame China, it's hard not to get angry.
But something deeper is at play here, too. There's a thought-provoking psychological study that was conducted during the 2004 US presidential election between George W. Bush and John Kerry. Scientists wired electrodes to the skulls of Republicans and Democrats and showed them left- and right-leaning political statements, monitoring their brain functions. Each time a partisan statement was flashed on the screen, the areas of the subjects' brains that lit up were not the centers of reason, as you'd expect. They were the emotional centers.2 Feelings, not logic, tend to drive our responses to political issues.
So it goes with China. One mention of "Made in China," and the feelings just come spilling out. The problem with basing beliefs on feelings, of course, is that feelings are sometimes immune to facts. Just ask the Chinese. Remember that Pew poll? The one that asked which is the world's leading superpower? The only country that overwhelmingly replied that China is not the world's leading economic superpower today.was China. They said America.
Could the Chinese know something about their fabled rise that we don't?
Yes. Because to stand on the ground in China and actually make things - make shirts and toys and apples and oil rigs - there is a reality that contradicts every widely held notion about China's so-called rise. Seen from the inside looking out, China is not a manufacturing juggernaut at all. It's a Lilliputian. China is not a lethal competitor. It's an economic helpmeet. China is not a killer of American jobs. It's a big job creator.
That's right. China actually supports millions of jobs in the United States.
But in order to see this, you've got to do more than watch the news or visit a couple of factories or talk to some Chinese businesspeople. You must walk the line where raw materials are formed into products. You must see for yourself how these products are made, step by step, from inputs to outputs. And ideally, you must try to wring safe products out of this system.
What you'd see would surprise you. You'd discover that nearly everything we're told about China's rise is wrong; that, in fact, the very core of China's supposed might - how China makes things - is riddled with risk.
Now in any human endeavor there's always risk. It's a law of nature. Things fall apart. So the science of making things is to minimize risk. Of course, risk can't ever be completely eliminated. But you strive to achieve a successful outcome again and again, reliably, not randomly, as often as possible. An airplane that flies. A bridge that holds firm. A medicine that cures, not kills.
China is deceptive that way. It looks like a manufacturing powerhouse until you draw back the curtain. Then, you see risk everywhere.
Consider the "Made in China" safety scandals. In the past few years, we've seen baby formula spiked with melamine, an industrial chemical that caused renal failure in over 300,000 Chinese infants and killed six. We've seen melamine-laced pet food, too, that killed hundreds and injured thousands of dogs and cats in the United States. We've seen bad batches of the blood thinner, heparin, administered in American hospitals, killing 81 patients and sickening hundreds more. We've seen lead paint on Mattel toys. We've seen rotting Chinese drywall, installed in tens of thousands of US houses. We've seen exploding tires; faulty ignition switches; poison toothpaste and cough syrup; cracked welds on the San Francisco Bay Bridge; even "honey laundering," in which more than one third of the honey that Americans consume is now deemed counterfeit - smuggled from China and laced with unsafe additives.
Whether it's food, drugs, toys, tires, or bridges - pick any Chinese import - there have been big safety breaches. And this is not to mention the safety lapses in China - which are even more frequent, widespread, and deadly. Exploding watermelons, glow-in-the-dark pork, resold gutter oil, tainted seafood, scraps of animal skin in milk, arsenic in soy sauce, cadmium in rice, paraffin and ink in noodles, bleach in mushrooms, resin and starch to make fake eggs, poison gel caps and lethal antibiotics, collapsing roads and bridges.
There have been thousands of safety scandals in China just over the past few years. You can track them on a popular iPhone app called "The China Survival Guide" and on the website "Throw it out the window" (http://www.zccw.info).
Most of the "Made in China" safety scandals go unnoticed in the United States. But when a story is newsworthy enough, our media tend to seek a villain - a nefarious criminal ring, a factory with lax quality control, a corrupt bureaucrat. When the Mattel lead paint story broke, for...