Scott: We are continuing our series looking at China and its rise in the world. And today, Shelby Holliday is exploring the impact of China’s economy, both locally and globally.
Paxton Hall: If you want to be in international business, this is the market to come to.
Shelby: Paxton Hall is a student from the United States but he traveled all the way to China for an internship.
What is it like doing business in China?
Paxton: Being an American, you are always told, ‘oh, everything is made in China’. So it’s really fascinating to actually go to see where all your goods are made.
Shelby: Paxton’s employer, Dunn Global, works with a number of Chinese factories producing everything from bottles to building materials for businesses around the world.
So this is the ac unit?
Jim Dunn: That’s the ac unit. It goes in the house.
Shelby: The company was founded by Jim Dunn, who moved to China to help North American businesses find cheaper and faster ways to manufacture goods.
Jim: So this might be something similar to what you find in your walls back at home.
Shelby: Jim says he can produce just about anything at a lower cost and faster pace here in China, including these pre-made houses called modular homes.
So this is where you really see the benefits of Chinese manufacturing. We are in a factory right outside of Shanghai, and it is actually cheaper to construct a home here and ship it to the United States than it is to build that same exact home in America.
Chinese factories like this – full of cheap labor and low production costs – have helped fuel the nation’s rapid growth. They have also helped American businesses cut costs. And no country relies more on Chinese products than the United States. In 2013, we imported more than $400 billion worth of goods from China.
But some say the low cost of manufacturing here is taking millions of jobs away from the U.S., and China has been criticized for cheating the system. The U.S. has accused China of manipulating its currency so that the yuan stays weak. But why would China want to do that? Well, if the value of the currency stays low then the price of goods made here stays cheap and that encourages more foreign companies to buy more goods made in China. Chinese officials have denied these claims, but whether or not they are true, the country has benefitted from the manufacturing of cheap goods. And some economists predict that the Chinese economy will pass America’s in the near future.
Professor: I think that at some point in time, yes, it will happen. It’s just a matter of time.
Shelby: It doesn’t seem unreasonable given the fact that in just a few decades, China has risen to become the world’s biggest trading nation. It now makes and sells more cars than any other country, it boasts the largest PC and smartphone markets, and is on track to import more oil than their global counterparts. For the first time ever, Chinese consumers are expected to spend more money online than their American peers this year. But all of this economic strength has exposed some great weaknesses.
Professor: Well, yeah, there are some costs you have to pay. I think it’s quite common for developing countries.
Shelby: Because of pressure to keep costs low, Chinese factories have been criticized for unsafe working conditions, pollution problems, unfair wages, and even illegal child labor in the past.
Jim: There has been a big change in the last ten years. China understood that it had to change, that these sweatshops – quote endquote – and children working. You know, a factory would get closed down right now if it has a child working there…closed down.
Shelby: For now, Chinese leaders are working to address the nation’s problems, but they aren’t showing any signs of slowing down. So as China continues to expand, business opportunities continue to grow, and so does the importance of collaboration between the U.S. and China.
Paxton: They need us just as much as we need them right now. Each country has something to offer each other. At the end of the day, it really is dependent on the leaders of both of these countries and the leaders of my generation.
Shelby: Shelby Holliday, Channel One News.
Scott: To keep up with our complete series on China, head to ChannelOne.com.