And what of the generation the one-child policy has spawned? Children from the biggest 40 cities are living in the three-screen world (television, computer and mobile), wearing global designer brands, travelling first class, and buying houses and cars for their one or two years’ study overseas. For these young “super-rich”, price has become no object, some even flying to and from Hong Kong for a day’s shopping.
It’s hard to conceive of them becoming China’s next generation of entrepreneurs, when, unlike their parents and grandparents, many have never touched a cooker and barely know how to make their own beds. They may have had superior schooling but many critics believe China’s education system – with its obsession with test-taking and rote memorisation – stifles rather than encourages creativity. Indeed, today’s entry exam for China’s universities, the “gaokao”, has its origins in a recruitment test devised by the imperial government in the sixth century, and, according to Jiang Xueqin, a Yale-educated school administrator in Beijing, rewards “very strong memory; very strong logical and analytical ability; little imagination; little desire to question authority”. China could be seen as a brilliant imitator but a poor innovator – its talents for replicating anything the Western world has to offer evidenced by the recent uncovering of 22 fake Apple stores across Kunming, the capital of Yunnan Province in south-west China. So convincing were the stores that even staff members believed they were working for Apple. Genius, in a way. But misdirected genius.
US Treasury Secretary Tim Geithner blasts China for ‘systematically stealing’ US intellectual property
US Treasury Secretary Tim Geithner has accused China of “systematically stealing” American companies’ intellectual property in an unusually blunt attack.
By Richard Blackden
7:06PM BST 23 Sep 2011
“They have made possible systematic stealing of intellectual property of American companies and have not been very aggressive to put in place the basic protections,” Mr Geither said on Friday at a conference in the US capital, where finance chiefs from the G20 countries are meeting this weekend.
The directness of Mr Geithner’s comments reflect the administration’s rising frustration with some of China’s politics, as well as the pressure Congress is exerting on the White House to act on the issue.
Earlier this week, Gary Locke, the US Ambassador in China, told an audience in Beijing that the Chinese government must accelerate its reforms. Chinese Premier Wen Jiabao, in turn, said this month that the country has reformed enough to merit “market economy status” under World Trade Organisation rules.
Mr Geithner said China’s approach was “you want to sell to our country, we want you to come produce here. If you want to come produce here, you need to transfer your technology to us.”
With the US and several European economies coming close to recession again, policymakers, including World Bank President Robert Zoellick, have warned of the dangers of protectionism as countries battle for a share of a shrinking pie.
In the US, anger is typically focused on Beijing’s policy of holding down its currency to help China’s manufacturers. But this week a coalition of more than 50 US business groups told Congress that trying to force China to ditch its currency policy may be counter-productive. Energy should, instead, be focused on safeguarding US intellectual property in China and doing more to lift the restrictions for foreign companies, they said.
Lawmaker calls for international pressure to stop China’s cyber-espionage
By Ellen Nakashima, Published: October 4
The chairman of the House Intelligence Committee spoke in unusually sharp terms Tuesday about China’s alleged efforts to steal American commercial data online, saying Beijing’s cyber-espionage campaign has “reached an intolerable level” that demands action.
“Beijing is waging a massive trade war on us all, and we should band together to pressure them to stop,” said Rep. Mike Rogers (R-Mich.) at a hearing on cyber-threats and national security. “Combined, the United States and our allies in Europe and Asia have significant diplomatic and economic leverage over China, and we should use this to our advantage to put an end to this scourge.”
He acknowledged that it might seem odd that a lawmaker charged with overseeing the U.S. intelligence community should lament spying by another government. But he said that China’s espionage targets go beyond the U.S. government and military to include scores of private American companies.
The Chinese government has vociferously denied accusations from security experts and other nations that it has engaged in a cyber-campaign to steal intellectual property.
“Allegations of China conducting cyberspace espionage are unwarranted and irresponsible,” Chinese Embassy spokesman Wang Baodong said in an e-mail. “As a victim of international cyberspace hacking activities, China is firmly against such criminal acts, and it has been working hard together with the international community for a more secure cyberspace. Facts should be respected, and accusations against China should be stopped.”
But security experts have long said that hackers supported by or linked to the Chinese government exploit system flaws to sneak into the networks of major financial, defense and technology companies and research institutions in the United States.
Lawmakers, too, have raised concerns.
Rogers said the United States could use trade or diplomatic avenues in response to Chinese cyber-espionage. He and others have suggested pursuing the issue at the World Trade Organization or in other international forums.
He said that although some companies, most notably Google, have come forward to allege that they suffered attacks originating in China, others have stayed silent for fear of provoking further attacks or jeopardizing access to that nation’s vast market.
“When you talk to these companies behind closed doors . . . they describe attacks that originate in China, and have a level of sophistication and are clearly supported by a level of resources that can only be a nation-state entity,” Rogers said.
Michael Hayden, a former director of the CIA and the National Security Agency, said at Tuesday’s hearing that the scope of China’s efforts to spy on the United States is stunning. “I say that as a professional intelligence officer, I step back in awe at the breadth, depth, sophistication and persistence of the Chinese espionage effort against the United States of America,” he said.
Arthur W. Coviello Jr., executive chairman of RSA, a security company whose proprietary data was stolen this year in a cyber-heist that experts say may have originated in China, said, “There were some elements of an advanced, persistent threat that hadn’t been seen before.” Such language is often used to describe hacker groups linked to the Chinese government.
James A. Lewis, a cyber-expert at the Center for Strategic and International Studies, said the United States should not be afraid to apply pressure. “You could begin to release details of cases where we have strong pointers towards Chinese cyber-espionage. You could expel an attache. You could say you’re reviewing provisions of agreements or treaties. You could impose tighter requirements on Chinese coming to the United States to study,” he said.
But the president of the National Foreign Trade Council, William Reinsch, expressed doubt that, for instance, bringing a case to the World Trade Organization would prompt a change in China’s behavior.
“The only thing they ever respond to is a very clear, detailed explanation of why what you want them to do is in their interest,” said Reinsch, a former Commerce Department undersecretary for export controls. “You can come in and talk about why espionage and cyber-activity isn’t good for them because it makes the world suspicious of them and it brings opprobrium down on their shoulders. But at the end of the day, you’ll have people say, ‘Yeah, but we get all this neat stuff, and it helps us grow.’
Our one-sided trade war with China
By Robert J. Samuelson, Published: October 7
Just how many American jobs have been lost to subsidized Chinese exports is unclear. Economist Robert Scott of the Economic Policy Institute, a liberal think tank, estimates the number at 2.8 million from 2001 to 2010. A study by three academic economists concludes that imports from China account for about a quarter of lost U.S. manufacturing jobs from 1990 to 2007; that’s almost 1 million jobs. These are both large declines, but they are only a modest fraction of America’s present jobs shortfall. The recession cost now before the Senate is mostly symbolic. It would allow U.S. companies facing Chinese imports to cite the undervalued renminbi (RMB) as an illegal subsidy in petitioning the Commerce Department for relief. If Commerce agreed that imports were subsidized, it could impose “countervailing duties” that offset the subsidy.
Even if this becomes law — not certain — it wouldn’t work for two reasons. In 2010, our imports from China totaled $364 billion. (American exports to China were $86 billion, leaving a deficit of $278 billion.) To be effective, countervailing duties would need to apply to most Chinese imports, but in practice, companies bring cases only for individual products, affecting millions, not billions, of dollars. The process would be cumbersome and time-consuming.
Worse, China might protest any countervailing duties to the World Trade Organization, and it might win. WTO rules permit subsidies that are broad-based rather than those benefiting specific firms or industries, say lawyers. The undervalued RMB might pass muster. If so, China could then retaliate by imposing duties on U.S. exports to China.
Both the George W. Bush and Obama administrations have pushed China to let the RMB increase enough to reduce its huge export surpluses. Negotiations have failed. True, the Chinese did permit the RMB to rise beginning in July 2005 but only at a pace that, given productivity gains, didn’t much change their competitive advantage. The only way to get them to do more is to threaten an increase in U.S. tariffs of 25 percent or more, says the EPI’s Scott. The idea is to pressure China to revalue its currency. He’s right.
What’s at stake is not just the U.S. trade balance with China but the nature of the global trading system, as economist Arvind Subramanian of the Peterson Institute shows in his book “Eclipse: Living in the Shadow of China’s Economic Dominance .” Since World War II, the United States has presided over an open, non-discriminatory global trading system. It’s been a big success: From 1950 to 2009, world exports increased by a factor of 26.
But, writes Subramanian, China might supplant this system with one focused on its needs. It might pursue preferential access to needed raw materials (oil, grains, minerals); it might discriminate in favor of its friends and against adversaries; it might subsidize its exports and seek protected markets for them. It already does all these things — and as its power grows, it may do more.
And that power will grow. By Subramanian’s calculations, the U.S. economy is now 50 percent larger than China’s; in 20 years, that will roughly reverse. From 1990 to 2010, China’s share of global trade rose from 1.6 percent to 9.8 percent. By 2030, that will reach 15 percent, twice the American share.
No one should relish threatening China with a 25 percent tariff. It would be illegal under existing WTO rules; to save the postwar trading system, we’d have to attack it. This would risk an all-out trade war just when the world economy is already tottering. There’s no guarantee that China would respond as hoped. Initially, it might retaliate. Cooperation on other issues would collapse. Prices of Chinese exports (consumer electronics, shoes) that we barely make would probably rise. Other countries might adopt protective measures.
All this is dangerous stuff. The policy’s only recommendation is that it might be slightly better than the alternative: condoning China’s ongoing assault on our industry. In the past, it’s been clothes and furniture; in the future, it will be cars and commercial aircraft. China’s policies assail other countries, too, and its trade surpluses destabilize the global economy. There’s already a trade war between them and us; but only one side is fighting.