Why is the NYT Anti-China?

On Friday the New York Times ran a fear-mongering story on the prospect of a Chinese company acquiring Seagate Technology, a leading manufacturer of hard drives:

SAN FRANCISCO, Aug. 24 — A Chinese technology company has expressed interest in buying a maker of computer disk drives in the United States, raising concerns among American government officials about the risks to national security in transferring high technology to China.

The overture, which was disclosed by the chief executive of one of the two remaining drive makers in the United States, William D. Watkins of Seagate Technology, has resurrected the issues of economic competitiveness and national security raised three years ago when Lenovo, a Chinese computer maker, bought I.B.M.’s personal computer business.

The NYT is late to this party. Hard drives have been manufactured overseas for many years now and China is a leading supplier if not the primary supplier. Engineering has followed manufacturing, first to Taiwan and now, increasingly, to China (where a lot of Taiwanese companies do their manufacturing). Is it a surprise that management would follow engineering and manufacturing? What did you think the Chinese would do with all the dollars they’ve been accumulating?

My expanded thoughts on this story are here.

Yesterday the Newspaper of Record painted a horrifying picture of environmental degradation in China:

BEIJING, Aug. 25 — No country in history has emerged as a major industrial power without creating a legacy of environmental damage that can take decades and big dollops of public wealth to undo.

But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.

To the paper’s credit the article obliquely suggested that market forces be harnessed to gain control over the situation. Little was said about the political, social, and legal reform that would make that possible.

I’ve posted further thoughts on this story here.

China isn’t our friend, nor are they our enemies. China poses little military threat to the U. S. (Check out our relative military capabilities and relative levels of annual expenditures.) Their military is mostly land-locked. They don’t have much in the way of a blue water navy. Our military aircraft capability is several times theirs and we have a fleet of aircraft carriers without peer anywhere. Our nuclear capability is orders of magnitude greater than the Chinese.

China isn’t an economic threat, either, unless we’re planning on being the low-cost provider of labor. A far greater threat is the lag of U. S. companies in capital spending which has been remarkably low for an economic recovery. Have we forgotten that entrepeneurialism means taking risks?

IMO we need to make realistic and pragmatic assessments of China’s capabilities and problems some of which, like China’s air and water pollution, affect us all. They’ll need our help and encouragement in overcoming those problems to all of our benefits. Antagonizing and demonizing the Chinese doesn’t help.

FILED UNDER: Economics and Business, Environment, , ,
Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.

Comments

  1. Bithead says:

    The fact of the matter is that China, be they are friend or our foe…(And I think them neither) is probably the best example in the world today of what happens to both freedoms, and standard of living, once you start swinging away from socialism. Their rate of success has been directly connected to the rate of that swing away from socialism. Entrepreneurship has to a large degree taken over in China, and their massive economic might these days is a direct result of that swing. I see no signs of that stopping. I suggest that eventually China will become a more democratic state than are many of the nation’s whom we are pleased to call friends today.

    I am by no means suggesting that China is without problems in these regards. Nor am I suggesting that the swing toward entrepreneurship and increased individualism is without problems, either. The recent abuses as regards Fisher Price, for example. The recent pet food scandal, for another. I am suggesting, however, that these will be resolved as a matter of course , not as a matter of edict, either internally or externally.

    All this represents a threat to the leftists everywhere, not least of which at the New York Times. The success story that China has become stands in direct opposition to that kind of world that the Times and it’s ardent readership has been striving for for the last 60 years.

    By the same token, the New York Times flat out loves the mess that Fidel Castro has made of Cuba. Thus the Times fawning over Castro each time the subject comes up. He provides no challenge to socialism. Of course, he provides no bettering in the standard of living for the Cuban people either, but that’s inconsequential to the Times.

    Where freedom proves successful, even when applied in limited amounts as in China, it’s a sure bet that the New York Times is not going to look favorably on it.

  2. Matthew Stinson says:

    The Seagate story struck me as a knee-jerk pander to the Lou Dobbs crowd, but the environmental story is serious and worth contemplating. If any country in the world can justify a push for new nuclear power technology, it’s China. Their addiction to coal is literally choking the country to death.

    Ironically, though lawyers more often than not irk me back home, while living in China I’ve a new respect for the role of lawyers and NGOs in restraining corporate excess. China is trying to do an end-run around creating a modern legal system by executing bureaucrats who fail to regulate corporations properly (or take bribes in lieu of regulating), but that hardly motivates the companies themselves to do right by society. At most, companies will be afraid that the guanxi network they established with the pols they’ve paid off will be unstable and so make attempts to secure their market and reputation by legitimate means, but the majority of companies will just spread the bribes around to avoid this problem.

    At the same time, as hinted at in the environmental article, China suffers from what might be called bizarro-federalism, federalism without the rule of law or constitutional protections, where local officials simply make up the rules as they go along, setting confiscatory tax rates, seizing property from farmers and selling it to developers, allowing companies to pollute at will, and busing in thugs to put down anyone who tries to resist. In this case, China would be helped if it actually functioned closer to the strong central government that most Westerners perceive it to be, but Hu and Wen are not quite ready to rock the “harmonious society” in that fashion.

  3. yetanotherjohn says:

    10-15 years ago, when I was marketing components into the hard drive industry (and other market segments), it was determined that as an industry, hard drives had never made money. Individual companies had made a profit for a time, but all companies integrated over the life of the industry showed a net loss. Part of this was the rapid change in the industry. As those I supplied told me at the time, if they were a quarter late shipping the latest density, they would lose all profit for that generation of hard drive. If they were two quarters late, they would likely sink there company. This of course put pressure on suppliers as they wanted increased capability to keep on the increased density/decreased access time treadmill, but also looked for low cost, assured supply and no surprises (like a component being late).

    China has been taking on several market segments, but it is the low innovation/clean up markets for the most part (e.g. microwaves). And that is all part of free trade.

  4. PJens says:

    I question why anybody reads the New York Times. The paper has repeatedly lost credibility, and accuracy is always questionable.

  5. floyd says:

    The article has an element of myopic naivete. China is a willing partner in America’s apparent mission of self destruction. The results of which won’t be entirely evident until the balance has been tipped.
    Caution is certainly the order of the day when dealing with China or assessing her intentions.

  6. Alan Kellogg says:

    It’s not what China might do to us that worries me, it’s what China’s doing to herself.

  7. Dave Schuler says:

    That’s a perfectly reasonable point, Alan. I wonder if it’s more effective to influence China’s policy by antagonizing them or by considering the Chinese situation soberly and pragmatically and making policy accordingly.

  8. John425 says:

    Others have suggested that China’s military expenditures are several times the amounts given out for public consumption. Much money is being spent on her Moon landing efforts and if you don’t think that has military implications then I have a bridge I’d like to sell you.

  9. Alan Kellogg says:

    Dave Schuler,

    But are we ready to spend the resources necessary to provide security for the Chinese as they recover from the upcoming collapse? Can we afford to let China collapse without a response of any kind?