Made in China - Economic Chaos and Disparity

I watched a BBC talk show (in English) about the world-wide recession yesterday. According to IMF, Europe is expected to have growth of 1.4%-1.8% in the next year, the U.S. (which cycles 40% of the world economy) will grow .8-1.2%, and Japan about 1%; China’s expected GDP growth is 6.8-7.4%! Is it because they have no toilets or despite it that theirs is the fastest growing economy, by far, among the 10 largest nations? You can think of some weird questions when left alone in a meat-locker-cold hotel room overnight.

China's dramatic relative growth is probably because of the current low socioeconomic status. If you start with little, it’s easier to move ahead by large percentages. Things in Nanning appear desperate for many people, and this is a somewhat modern city of 1-1/2 million people. In the rural areas, existence is hard. I don’t know what the average rural income is, but I image it would be difficult to buy an American priced bicycle on a year’s worth. I notice everyone locks theirs whenever parked. I also note that damned few U.S. farmers carry 300 lbs. of sugar cane on the back of their bicycle for 10-20 miles to sell his crop. Their kids have shoes and the daily/weekly trip to town is not a luxury foregone to save the 1 RMB ($.12 US) cost of transportation. There is definitely a disparity in quality of life between China and even the poorest American farmer. The farm work is done mostly by hand and on small patches of land. Even though vegetables are extremely cheap in China ($2 USD buys enough veggies to feed a family of 4 for 2-3 days), even the transient boat people plant a subsistence patch of garden between 10 and 20 square meters to raise fast growing vegetables and spinach-like greens. These plots are meticulously kept and orderly. Every morning the plank comes across to shore and the people follow. After them come the chickens that have roosted aboard for the night. While the people fish in the muddy water, the chickens eat all the bugs from the garden and the dog helps fertilize tomorrow’s lunch – everyone has a part to play in the business of life in China.

Small business promotion has become popular in the U.S. in recent years, but small business is the norm here in China. Many similar-type businesses seem to cluster along the same part of a street, as in the medieval guild days of Europe. There is electrical supply street, plumbing street, clothing street, etc.. This is not a rigid thing, by any means, but is very common. Some other things are widely dispersed across the city: food stalls, little convenience stands with cigarettes and candy, barbershops, and so on. Even in this large city of 1.5 million, the small stand-alone enterprise is much more numerous than his conglomerate chain-store cousin. When I say small, I mean really small. Many of the noodle stands are 5’ deep  from the sidewalk and, maybe, 10 feet wide with only two 3’ round tables. The food is cooked on a gas jet out on the sidewalk. The Chinese equivalent of a 7-11 might be no bigger than a bedroom  closet; miniscule business is more like it. Small Chinese businesses can be as small as the basket on the back of a bicycle from which bananas and steamed corn-on-the-cob are weighed and sold as snack food for about 12 cents a pound. Shoe repair is a sidewalk endeavor with available soles laid out for your selection. The stitching is done by a hand-turned machine humped to the spot each morning via a stick over the shoulder. Scooter drivers wait to take you anywhere in Nanning for about $1 USD.

Except in the larger Chinese department stores (and even there sometimes), prices are seldom fixed and haggling is expected. I always do so unless the price seems extremely reasonable. When I am asked 2 RMB for a light bulb (about 25 cents US), I seldom quibble; when the price is 5 RMB (60 cents US), I hold up 2 fingers and the clerk sighs in resignation to the fact that I know what a light bulb costs in Nanning. In the U.S., there is a de facto monopolization of product pricing, despite what the ‘free’ market enthusiasts will tell you. American retail prices are usually similar across stores and geography, with minor variations to spark customer interest, because the wholesalers and manufacturers all sell at an agreed upon price to the retailers. It’s the "agreed up" part that the antitrust folks need to have a closer look at. Why are vegetables, even in-season ones, so expensive in the U.S.? Sure, China has cheap labor, just as we have Mexican agricultural workers that cross the border by the millions to work for lower-than-minimum-wage in the Southwest and South. Why is meat about the same price in China as in the U.S.? China has little grazing land and livestock feed can be more efficiently used to feed people. It would seem that it should be relatively expensive to gnaw on a burger in China, when the U.S. has such efficient meat production facilities and more grazing land than you can shake a stick at. Just for parity’s sake, the meat processing plants and agricultural industries in the U.S. use cheap south-of-the-border labor and fuel costs about four times as much in China as in the US. I can think of many potential reasons why this apparent unfairness exists, they involve over-taxation, restriction and regulation of markets, and the waste of public resources in the U.S., but this is not the place to posit these maunderings and gripes. Bottom line is, something smells fishy to me, and it ain't the Yong Jiang River.