U.S. and China: Rivals or Partners?

Aug. 1, 2004
U.S. and China: Rivals or Partners? If your only source of information is the evening news, then you probably feel the end is near. Take the issue of

U.S. and China: Rivals or Partners?

If your only source of information is the evening news, then you probably feel the end is near. Take the issue of industrial jobs, for example. We hear that more and more work is being "exported" to China. We're told that manufacturing is moving overseas. We're doomed and destined to go back to the farms if we're lucky. Made in China is the future.

Let's toss some facts into this debate. Most Americans would be surprised to hear that our economy, at well over $10 trillion annually produced by 260 million people, is about eight times the size of China's at about $1.4 trillion turned out by its 1.5 billion people! More to the point, our manufacturing sector alone is larger than the entire Chinese economy. So, we can at least say the end is not so near.

Now I don't drop those numbers just to brag, although a little of that might be good for America these days. The numbers offer some needed perspective. This country is still the leading manufacturing country in the world — a status we have had for generations and, I believe, we will keep for many more. Why? Same reasons we've always led in manufacturing — innovation, creativity and the continued development of richer and richer automation and integration.

The evening news and, sadly, much of the academic world present the factory world to the young as a dismal and dark place full of drudge and pollution. It's where you might go if you have no options. It pays better than McDonald's but the work is dehumanizing, boring, dirty and low-class. Only losers go to work in factories.

What an image. Yet, that's a common picture. You and I know better. Modern manufacturing and material handling plants in this country and in Japan and Europe are high-tech, sophisticated and complex places requiring ever-higher skill levels. Not so in China.

Interestingly enough, the Chinese often use labor instead of capital in factories. Obviously, this is because they have so many people. They have more than 100 cities with more than a million people. Decades of communist-enforced discipline have created an enormous and reliable industrial workforce.

Some more numbers: Every month, some 5 million new mobile-phone subscribers sign up in China. Americans, on average, earn 36 times what the Chinese do. Put another way, we cost 36 times more than they do. Last year, according to the New York Times, China spent $60 billion on R&D. We spent $282 billion, Japan spent $104 billion. Yet, in terms of engineers, China will turn out 325,000 this year, five times the U.S. And, the NYT article adds, China is "in love with manufacturing like no other" country. Now that fact does make me worried and sad.

Everyone who visits China, as I have, sees this excitement, this pride in its emerging factory world. The Chinese are delighted to be involved in industry and production. You can feel it touring a plant and interviewing managers and workers alike. They do not call it drudgery or boring. The Chinese are delighted to be busy making things, all kinds of things. They even sing about it.

We had that spirit once, but we have let it slip away. We've become our own worst enemy when it comes to success in industry. We're not proud any more about our production or our productivity. We focus on movies and rock stars, Hollywood and Washington.

Our advanced technologies and modern factories are modern marvels. Yet, so are the Chinese people with their labor-intensive competition. Will they defeat us in the manufacturing marketplace? I doubt it, but they will continue giving us reasons to wonder at not only what we still have but also, perhaps, what we have really lost.

The global economy is an opportunity for all of us. China has learned how to play the game and is playing very well. Many Americans in industry are superb competitors. One major difference though should concern us all. The Chinese are proud and excited by the marvelous world that industry brings to people. Many of our people are almost ashamed of industry and can only criticize our own producer companies.

Rivals or competitors? Right now the Chinese are not only selling tens of billions of dollars in manufactured goods to us every year, they are also offering enormous investment opportunities to American companies and firms from all over the world. They have become, in effect, an engine of economic power for the rest of the global economy.

Are they damaging American manufacturing with their far cheaper labor? Are we going to have to go back to the farms? Unlikely. Yet, there is a bigger threat to American manufacturing, and it's our own attitude about it. With the amazing success of this country's industrial managers and workers, why is there so little pride among our people? How do we bring back that spirit that seems to have found a great new home among China's billions?