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April 23, 2008, Alex Harney: "The China Price"

(click to enlarge) Author Alexandra Harney, center, discusses her book, "The China Price," at a book discussion roundtable seminar at the East-West Center in Washington. Looking on are Kimberly Elliott (right), Senior Fellow at the Peterson Institute for International Economics, and Satu Limaye, Director of the East-West Center in Washington.

The China Price: The True Cost of Chinese Competitive Advantage

(WASHINGTON, DC) April 23 – Over the past decade, China has dominated the global manufacturing sector, defying conventional economic wisdom by posting staggering annual export growth figures while retaining a comparative advantage on everything from basic consumer goods to high-tech products. But while cheap Chinese goods save international consumers billions of dollars each year, they may also be exacting unseen costs on Chinese laborers and the environment.  Alexandra Harney, a former correspondent and editor for the Financial Times , calls this forgotten toll the “China Price,” and elaborated on what she deems “the true cost of Chinese competitive advantage” in a book discussion roundtable seminar at the East-West Center in Washington.

Harney, drawing from her new book The China Price , which documents some of her experiences as a reporter investigating China’s factories, argued that as China’s exports of consumer goods have skyrocketed, it has amassed an enormous “bill” of environmental, worker’s rights, and other human costs—a bill it has been able to defer for some time.  This “bill” manifests itself in poor product safety standards, the circumvention of government audits, corruption on factory floors, and immeasurable environmental damage, among other problems.

What is worrying for the global economy, noted Harney, is not only the speed and scale of growth in China’s exports, but the fact that “this bill is now beginning to catch up to China.” A younger, more informed generation of Chinese factory workers—which Harney terms “Generation Y”—is growing increasingly aware of its rights, while new labor contract laws, rising currency values and wages, and other shifts in the Chinese policy environment are forcing China to come to grips with its “deferred payments.”  “The China price,” said Harney, “has been rising since 2004,” and China is now facing increased internal and external pressure for more effective litigation and enforcement of labor laws. To sustain its economic growth, China now recognizes, it must reposition the economy away from such heavy reliance on exports and towards more domestic consumption.

Kimberly Elliott, Senior Fellow at the Peterson Institute for International Economics, served as a discussant for the program, and reiterated the idea that all involved parties—buyers, workers, activists, consumers, and the Chinese government—are both affected by and can affect the “China price.”  Workers must play a greater role in seeing that their best interests are represented, while buyers must beware of “audit fatigue” and build long-term, mutually accountable relationships with their suppliers. Anti-sweatshop activists, meanwhile, must avoid playing “gotcha games” and more closely monitor “indicators of seriousness” in the efforts of companies to improve labor standards in China. And the Chinese government, finally, must focus on stricter enforcement of its labor laws and eventually reorient its entire growth strategy to encourage greater consumption of public goods.

Ultimately, the “China price is something we all pay for,” said Harney, and it is everyone’s responsibility to ensure that China’s economic competitiveness is consistent with its enforcement of the law.

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