The other side of belt-tightening

The other side of belt-tightening

At age 50, the average American man weighs about 185 pounds. If he gains 9.9 percent in a year, he's now up to 203.

If you put on that much weight in that short a time, your clothes don't look good on you, and you're uncomfortable in your own pants. If your job involves walking the plant floor, your feet ache by lunchtime. Your wife is unhappy, your friends are worried and your doctor if you've bothered to see him is ready for some kind of dramatic intervention.

Joe Brower Minnoch, who died in 1983, was known as the world's heaviest man; he peaked in 1978 at 1,397 pounds.

What does this have to do with you? It's another way to look at the perceived threat from China. Measured by its Gross Domestic Product, China grew 9.9 percent in 2005. For the last 25 years, China has grown at an average annual rate of 9.6 percent. To put that in human terms, it's gone from 185 pounds in 1979 to a crushing 1,829 pounds today.

OK, so economic health and human health scale differently. But is it out of line to think that there might be some strain from China's amazing growth that goes well beyond the human equivalent of an uncomfortable waistband?

When I talk with readers, they often say their big challenge is to compete with China's low cost of labor. They do it with high-end, low-touch machine tools. The complaint is that Chinese companies are buying the same machine tools.

Maybe that's good news. They're buying those tools, in part, because China's industrial sector has grown so quickly there aren't enough skilled workers to go around. So high-productivity machines are doing the same thing in China that they are here: reducing employment costs as a percentage of production. China is literally outgrowing part of its competitive advantage.

China has another cost advantage in the dearth of environmental regulation and/or enforcement. That too will inevitably fade away. In December, a benzene spill in the Xiang River raised strong concern from Russia and much of the rest of the world. At about the same time, according to The Washington Post, 12,000 pounds of diesel fuel spread for 40 miles on the Yellow River; three weeks earlier, high levels of cadmium forced the government to stop pumping drinking water from the Bei River.

The Post cited an internal study by the Chinese government that recently concluded 70 percent of the country's water supply is critically polluted. And I recently heard an estimate that 30 percent of mercury levels in U.S. water and soil can be attributed to pollution in China. The world is about to get engaged in this issue.

Even the Chinese culture is being tested. Most of the country is still an agrarian society, and peasant farmers such as the 1.9 million whose land is being flooded by the ultimate industrial project, the Three Gorges Dam are being overlooked. The government which historically has not provided them with health care or other expensive (don't we know it) support systems is under increasing pressure to do so.

I'm not denying the challenge that China represents for you. I'm simply pointing out that its amazing growth should not be confused with amazing health.

Whatever competitive advantage you ascribe to China, it's not as insurmountable as you might think.

It will be less so in the future.

Bob Rosenbaum
Publishing Director
[email protected]

TAGS: Editorial
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