Thursday, August 16, 2007

The Story Of Uncle Sam - Part 5

Uncle Sam was proud that the American consumptions led the global market to a much faster recovery. In other words, the single engine propelled the whole world to another take-off.

China's cheap labour provided another global force to lift the world up. Global manufacturers were attracted to outsource non-core operations to China to take advantage of its exceedingly low cost. Outsourcing by industrialised nations turned China into a "global factory".

With U.S. and China acting as global players in consumption and manufacturing respectively, together they put the world on the recovery track after the IT bubble burst.

As the global economy heated up, the fearful inflationary pressure also started to build up. With China fast rising up to become a world player, inflation caught up fast to be a global agenda - a concern that all central bankers had to take on.

China's massive demand and insatiable appetite for commodities ( for example, oil ) jacked up prices globally - and crazily!


traveller said...

Going to China and India really started to kill the American job markets. Those computer hardwares and softwares are not labour intensive jobs that Americans don't want to do, but they now don't find as many jobs. Computers are no longer a hot major in the school as it used to be until several years ago. The companies simply want to maximise their profit by making use of some one else cheap outside the country. This does not happen in America alone. It happened in Taiwan and Japan. Because of the loss of job and industries to China, these countries ran into recession. The small companies who were subcontractors had to close down. The structures of the local industries changed in Japan and Taiwan.

China and India may be able to determine the fate of these countries. So I felt like China cannot control Taiwan politically at the moment, but economically, Taiwan is already under control. Once China gained all these manufacturing skills, it will run the business on its own. Why does China need to let US or Japan or Taiwan to make money out of its land? Afterall patents and copyrights are not really safeguarded in China. That is why you find the same design of the Japanese and American cars, which are manufactured by the Chinese companies under a different brand and sold in China.

To me, going to China is like committing suicide for a country in the long run, although from an individual company view point, they gained some profit in the short run. This is a very short sighted move.

Tony Hii said...

The world has to acknowledge that China has risen up to be a global economiic power now. Accept China and integrate it into the global system is the most practical approach to ensure that it plays games according to rules. If we cast China outside the global mainstream, then a lot of pressing global economic issues (notably world economic imbalances that has long become a burning issue in U.S.) can't possibly be solved.

Globalisation has benefited both industralised nations and emerging markets ( of which China is one of them ). But there are prices to pay - labour rates and economic imbalances, just to name two. The United States is paying a heavy price now. But sooner ot later, China and India would pay their price also, if they choose to ignore crucial economic reforms.