Banging the Drum on China

NEW YORK — The chorus of voices complaining about China's trade practices has grown in recent months to include a diverse range of labor activists,...

with contributions from John Zarocostas

NEW YORK — The chorus of voices complaining about China's trade practices has grown in recent months to include a diverse range of labor activists, Southern mill owners and U.S. senators.

The criticism has focused on two aspects of China's commercial policies: the fixed exchange rate for the yuan to the dollar, which experts assert gives Chinese goods a 10 to 40 percent price advantage, and the explosive growth of its textile and apparel exports following the dropping of quotas, which shot up 60.5 percent on a dollar basis through the first three months of the year and has contributed to the growing trade deficit of the U.S.

But for all the talk surrounding Beijing's approach to business, even domestic manufacturing executives acknowledge it's easy to understand China's motives.

"China is pursuing a strategy that is in its national interest," said Wilbur Ross, chairman of International Textile Group, based in Greensboro, N.C. "They have a great need for job creation because you have huge numbers of people each month emigrating from the extremely impoverished countryside into the cities. They have to create a lot of jobs every month to avoid social disorder."

Many economists see nothing unusual in China's approach.

"China is going through the same cycles of industry that other countries, especially in Asia, have gone through," said Andrew Bernard, professor of international economics at Dartmouth's Tuck School of Business, located in Hanover, N.H. "It's trying to do the same thing that governments in Japan and [South] Korea have done, which is moving their industry up into higher-value goods and employing as many people as possible."

The comparison with Japan is apt, in that much of the current talk about China in U.S. business circles evokes memories of the Eighties, when "Japan Inc." was the bugbear that kept executives up at night. While Japan remains an economic powerhouse — per-capita gross domestic product there is $29,400, making Japanese consumers among the wealthiest in the world — it has been mired in recession over much of the past decade, and American workers now view low-wage competitors in China and India as more threatening than the Japanese.

Many economists argue that over the coming decades, China will follow Japan's path, becoming wealthier and producing a formidable consumer class. Experts see many similarities between the current outcry over China and the past focus on Japan.

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