The China Price | Alexandra Harney

Summary of: The China Price: The True Cost of Chinese Competitive Advantage
By: Alexandra Harney

Introduction

The China Price uncovers the true costs associated with the staggering low prices of Chinese-produced merchandise. The competitive advantage of low-wage workers, cheap land, and political stability in China have allowed it to achieve economic heights, displacing millions of jobs in other countries. This introduction to the summary will discuss how the ‘China price’ yields savings for consumers but extracts significant costs from exploited Chinese laborers, unemployed workers in other countries, and the environment. The book delves into China’s specialized industrial clusters, working conditions, the role of coal in China’s economy, and the awakening of Chinese workers.

The Rise of “The China Price”

China’s low-cost manufacturing industry, fueled by a massive low-wage labor force of 104 million workers, is changing the global economy. The “China price” of cheap goods has allowed the country to become a competitive manufacturer, sending shockwaves throughout the world’s economies. China’s laborers are mostly migrants, who live in crowded, squalid dorms and earn an average wage of $0.57 per hour in exchange for making a broad range of products that have overtaken their competition in the US. The book summary discusses the impact of the “China price” upon global manufacturing and reveals the dark side of China’s competitive advantages: exploited laborers, contaminated food and consumer products, pollution, and job losses for countries that can’t compete.

China’s ability to produce low-priced goods has turned it into one the world’s top economic powers. Walmart alone purchases $18 billion worth of goods from China every year. Western companies like Samsung, IBM, and General Motors do extensive business with China. However, China’s output comes at a cost – their economy is built on low-wage labor, with workers working in poor conditions for long hours with no benefits. The “China price” has been a game-changer in global manufacturing, leading to the closure of 2.3 million US jobs between 2001 and 2007. The low cost of manufacturing in China comes at the expense of the laborers, the safety of the consumer, and the environment, with pollution crossing the world.

The book summary delves into the disaster that struck the US when tainted Chinese pet food killed people’s pets and other animals. Similarly, 100 people died when Chinese-made cough syrup killed people in Panama, and toy recalls in the US occurred due to lead in the paint of Chinese-made toys. The China price’s impact on the environment is another major concern since the pollution created in China travels as far as the US’s Pacific Northwest, affecting global weather patterns and creating a strain on the world’s resources.

The Chinese government’s ability to keep its currency artificially undervalued and its impact on global climate change and dumping have widely been criticized. However, China’s well-developed infrastructure, government policies, low-cost labor, and political stability attract global businesses. The impact of “the China price” upon global manufacturing is not just a story of success; it has real-life implications for people around the world, from exploited workers in China to job losses in countries that can’t compete.

China’s Specialized Industrial Clusters

China’s economic growth has been rapid since the country emerged from decades of isolation in 1978. The government’s relaxation of restrictions on farming, currency, and industry, paved the way for significant advancements. These include the emergence of specialized centers, clustered within cities that manufacture specific products. Over 1,000 of these centers exist along China’s coastal export region. These centers allow for faster and more efficient manufacturing, which helps industries compete ferociously for Western customers demanding razor-sharp pricing. However, the competition has led to strenuous working conditions, including long hours, low wages, and child labor. Although Chinese law prohibits these conditions, enforcement is minimal. To comply with Western corporate codes of conduct, some Chinese factories create shadow factories that mirror the five-star factories audited by Western suppliers. These shadow factories run longer shifts, pay lower wages and offer poorer working conditions, enabling Chinese business owners to meet their corporate customers’ stringent demands. The critical factor allowing for China’s competitive pricing is coal, but the country pays a high price to sustain it.

The Dark Side of China’s Economic Growth

China’s economic boom has resulted in hazardous working conditions, leading to illness and death for millions of workers. Migrant workers, who lack health insurance and live in appalling conditions, spread disease. Some areas specializing in industries like mining are known as “cancer villages.” Although China has laws regarding worker safety, there are not enough inspectors. Recently, litigation in favor of workers has increased, leading to more formal grievance filings. The government is mandating greater access to health insurance for workers. Despite everything, a Chinese health official believes multinationals have brought “dangerous work and pollution” while walking away with the profits.

China’s Coal Dependency

China’s booming economy runs on coal, which produces massive pollution problems. Coal provides more than 60% of China’s energy, and the country is the world’s largest producer and consumer of coal. China’s reliance on cheap coal creates major environmental problems, including acid rain, smog, and mercury poisoning. It also spews more carbon dioxide and sulfur dioxide into the atmosphere than any other nation. The air pollution in some cities affects children similarly to smoking two packs of cigarettes a day. Only 20% of China’s largest cities have access to drinking water that meets minimum government standards. The country’s 16,000 coal mines, 90% of which are small and privately owned, cause numerous safety hazards for those working in them. While alternative energy sources can supply only a fraction of China’s current energy needs, pollution will continue until the country can shift away from coal. The future cleanup operations will cost the coal industry money, making energy more expensive and reducing China’s competitiveness in the global market.

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