China Bull

We have all heard the old saying, "like a bull in a china shop."  This post is about the recent activity involving the country China, and its bullying methods to Western nations.  U see China as a hybrid type economy involving aspects of both communism and capitalism.  What is most unique is that is under the control of a totalitarian regime.  Many of its large companies are state owned.  China is also a bully  as it realizes the importance to markets of its population.  This allows the Chinese government to make demands on companies few other countries would even think about.

China President

First, what political website had this to say during the 2016 Presidential election:  "Our current trade policy with China is detrimental to American workers."  If you guessed then Candidate Donald Trump, you would be wrong.  It was U. S. Senator (Feel the Bern) Bernie Sanders.  Angst is present among many Republicans and Democrats, not to mention the stock market investors about the sanctions placed on China by the United States, and sanctions placed by China on the United States.  Some blame Apples poor performance on the sanctions, and that the sanctions led to the recent poor iPhone sales forecast in China. However, some financial experts blame Apple.  They note Apple reduced investment in Europe to concentrate on China; it also placed the price of its products out of reach to many consumers. Chinese wannabee phone makers become the phone of choice. China is great at being a copy cat, and Western manufacturers pay the price.  Apple also failed to properly secure the rights to names of its signature products in China.  Registration is probably purposefully made difficult in China due to their desire to copy.  

Apple Production Plant in China

For years China has dumped look alike products on the U.S. market, demeaning the value of the actual product.  For years, to do business in China, many U.S. companies have had to give up trade secrets.  For years, China has been stealing U.S. military technology and secrets. For years, China has been bullying to get its way.  Disconcerting, is that China is purchasing mines and mineral deposits, including rare earth mineral deposits, in far off lands to control the flow of these materials.  Even more disconcerting is that Chinese companies, such as Alibaba, are required to spy on the United States.  Alibaba's CEO is a member of the communist party in China, which he "failed" to mention in the paperwork  in applying to do business in the U.S.  

US Travel Warning to China

A slow down in China may be starting to occur due to U.S. sanctions and other factors.  Did China realize too late that its one child policy would affect long-term growth?  One problem is that since so much is under state control they can easily play with their numbers, so one really does not know the truth about their economic growth and output.  It was probably about 30 years ago that much U.S. manufacturing started to move overseas to China due to its cheap labor pool. Let me tell the story of two Dane County companies, who both have their home base just south of Madison in the same community.

Company A, is a large manufacturer of plastic containers, such as, but not limited to the plastics containers used to for bolts and nuts at the hardware store.  This company had long-term plans for expansion in their home city, but many years ago put that on-hold to move some manufacturing to China.  Why?  The CEO said, "everybody needs a presence in China."  Company B, located right near company A, had a CEO who took a different tack.  This company manufactures bike racks, and exercise machinery.  A few years ago, all but one part was made in the United States.  The part not made here, was made in Europe, but they had then found a U.S. manufacturer for that part.  The CEO said of their lack of doing business in China was related to a few main items: 1. difficulty of quality control; 2. the distance, being on the other side of the world, meant too much time in travel and potential disruption to the supply chain.  He noted that if a problem arose it would take a day over and a day back and probably a day or more at the site.  A drive to Iowa would be much quicker and easier to sort out than a trip to China, he noted.  Company A no longer has a presence in China.  Last spring I took a part of a saw, where the weld had broken.  The welder looked at it for less than 2 seconds and said, "It was either welded in China or South Korea."  It was a poor initial welding job.  You get what you pay for.  

China Three Gorges Dam

China, apparently aims to make other nations pay for not doing what they want. For years Taiwan has been a separate nation, but Chinese President Xi Jinping, recently declared:  "that independence is not an option for Taiwan."  Just before Christmas the head of the Chinese military academy noted that they should destroy two U.S. Carriers, which he said would kill about 10,000 naval personnel. His justification was that the United States would not stand for the casualties and China would have free reign.  China has recently developed a portable land-based missile, the DF-21d, which they say, can strike and destroy U.S. aircraft carriers. 

China DF-21d Missile to Attack US Aircraft Carriers

What China also likes to do is destroy lives.  It has been placing individuals under arrest for a long time, particularly human right supporters, and those who may disagree with their message.  They have a habit of incarcerating individuals on false charges. Human Rights Watch had this to say in 2017: 

The broad and sustained offensive on human rights that started after President Xi Jinping took power five years ago showed no sign of abating in 2017. The death of Nobel Peace Prize laureate Liu Xiaobo in a hospital under heavy guard in July highlighted the Chinese government’s deepening contempt for rights. The near future for human rights appears grim, especially as Xi is expected to remain in power at least until 2022.

What Human Rights did not know in 2017 is that the Chinese Constitution was changed to allow Xi rule for life, so their expectation will extend beyond 2022.  Of course, some U.S. companies have no gumption about giving into China.  Facebook, as an example, created a censorship tool in order to let it do business in China. However, that must not have been enough for China as they were once again kicked out of the country.  Although censorship is apparently nothing new to Facebook, who, with Twitter, and others have became the thought police in the United States, but this has drawn little interest from groups such as the ACLU.

Rhino missing Horn.  China has recently allowed Rhino horns to be
used in traditional medicine.  Although the black market has long existed

China has been in an odd sort of symbiotic relationship with U.S. businesses and consumers for too long, and it has hurt the American economy.  Many complain about the current U. S. sanctions against China, but did not the U.S. bring this about themselves with trade agreements too friendly to China?  Let me once again quote from former 2016 U.S. Presidential Candidate Senator Bernie Sanders: “Let’s be clear: one of the major reasons that the middle class in America is disappearing, poverty is increasing and the gap between the rich and everyone else is growing wider and wider is due to our disastrous unfettered free trade policy.”  Chinese President Xi Jingping seems to believe the statement often attributed to Karl Marx and Lenin:  "the last capitalist we hang shall be the one who sold us the rope."  China has reinvented Capitalism, not with the standard democracy to overlay the economy, but having economic control under that of a totalitarian regime.  It is a regime that controls not only mineral deposits in the world, but also thoughts of its citizens and beyond.