UK Assessment of the China Situation

Here are some good clips that size up where things are in China today:

"The boom is a Chinese achievement, of course, but it has only been made possible by the actions of the West, in particular by the United States. The key driver of the boom has been exports to the US. Without those exports - and the flow of investment and expertise from abroad - China would not be able sustain its present growth. Hardly a day goes by without a new announcement about a trade deal. Some 60 per cent of the exports of the Shanghai region are either from foreign investors or from joint ventures with local companies. Those exports go to the entire developed world and are not just the cheap Christmas-cracker products - check the label next time you buy a fridge.

"From the point of view of a US manufacturing company it is a no-brainer to outsource some of its production to China. Labour costs are one 10th of their US equivalents, and workers are highly motivated and don't strike or sue for stress. Plants, because they are new, are often better fitted out than those in the States. And the Chinese authorities are less rigorous in their environmental and other regulations."

"The result is more than an annual trade deficit of more than $100bn a year with China and an exodus of manufacturing jobs. China gets the most modern plants and all the know-how of advanced American production techniques. In return, the US consumer gets cheap goods, which hold down US inflation rates, and US companies get, they hope, early access to the world's fastest-growing market. But you don't have to listen very hard to hear disquiet in America about the deficit, the export of jobs and the fact that companies are giving away their know-how for free."

Source.