Jeremy R. Haft - Unmade in China: The Hidden Truth about China’s Economic Miracle

Ode to Joy.

And Charlotte and Alma.

Copyright Jeremy R. Haft 2015

The right of Jeremy R. Haft to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2015 by Polity Press

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Cambridge CB2 1UR, UK

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Malden, MA 02148, USA

All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.

ISBN-13: 978-0-7456-8401-7

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Haft, Jeremy, 1970

Unmade in China : the hidden truth about Chinas economic miracle / Jeremy Haft.

pages cm

Includes bibliographical references and index.

ISBN 978-0-7456-8401-7 (hardcover : alk. paper) ISBN 0-7456-8401-7 (hardcover : alk. paper) 1. ChinaEconomic conditions2000 2. IndustriesChina. 3. ChinaSocial conditions2000 I. Title.

HC427.95.H324 2015

330.951dc23

2015002742

Typeset in 11 on 14 pt Sabon

by Toppan Best-set Premedia Limited

Printed and bound in the UK by CPI Group (UK) Ltd, Croydon

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Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked the publisher will be pleased to include any necessary credits in any subsequent reprint or edition.

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US real GDP per capita, 18002014

US unemployment rate and US imports, 19812011

Apple iPhone major components and cost drivers

A weak yuan does not cause US unemployment

US manufacturing employment 19502014

US manufacturing employment 19982014

2013 EU safety warnings by country of origin

Number of consumer product recalls from CPSC (2000June 2014)

Total US food imports from China (billions of lbs)

Total US exports to China (US$ billion)

Growth in US exports to top ten markets, 200413

US exports to China by state, 200413

Construction of a rig in dry dock

A tough job without in-house engineering

Tank farms for petroleum refinery

China's bullet train network

A supply chain

Bad air: The regulatory structure for environmental protection 170

Before the government organization change in March 2008

Government organization change after March 2008

China's nuclear regulatory structure

Too many cooks in the kitchen

Reform of the Chinese Food and Drug Administration

Overview of China's pharmaceuticals distribution chain

China's healthcare regulatory system

Top five PRC import sources, 2013 (US$ billion)

There are so many people I wish to thank who have made this book possible. My family, first and foremost. To my wife Joy and my daughters Alma and Charlotte, whose patience and support have sustained me through it all, you have my undying love and thanks. Thanks also to my mother Joy Gillman, my sister Hilary and brother Adam, and Fred Drucker, Rhoda Sweeney, John Drodow, and in memory of Arthur Gillman and Sandy Drucker.

I also would like to thank the wonderful team at Polity, in particular Louise Knight and Pascal Porcheron, who have been at my side all the way.

Thanks, also, to my researchers. To Yue Sheng, your meticulous and thoughtful work has been invaluable to me. And thanks to Trip Taylor and Elizabeth Schieffelin, whose contributions are greatly appreciated.

I'd also like to thank Susan Golomb and Krista Ingebretson at the Susan Golomb Literary Agency for all your help and support to make this project a reality.

To my friends, who were a port in the storm: Jon Mozes, Glen Roberts, Gary, Cyndi, Max, and Sam Eisenberg, and Richard and Lenora Steinkamp. I thank you all.

I'd also like to acknowledge many people, mentors and friends, for all their insight, guidance, and support. Charles Freeman III, Marc Ross, Hani Findakly, Lisa Konwinski, Molly Wilkinson, Mike Stokes, Bernard Schwartz, Jim Sasser, Derek Scissors, William Reinsch, Jeff Bader, Ken Lieberthal, Douglas Paal, Daniel Ikenson, Elizabeth Economy, Dan Rosen, Chris Nelson, William Zarit, Victor Cha, Pietra Rivoli, Elaine Romanelli, Arthur Dong, Charles Ludolph, Chris Papageorgiou, Lisa Shields, Ted Alden, Wade Sheppard, Brent Franzel, Chris Lapetina, Dave Hyams, Matt Geller, Dave Evans, Adam Fels, Hanadi Shamkhani, Tony Clayton, and my original mentor, Ted Tayler. Thank you all.

To my friends at Bikram Tenleytown Elaine and Max Rosenberg, Debbie Nachmann, Adam Pearlstein, Barbara Ryan, and Ambiya Binta you kept me sane through it all.

A special thank you, as always, to Wang Feng, for your enduring friendship and wisdom.

And to my Georgetown writing group, Dr Carole Sargent at the helm with Tim Jorgensen and Anne Ridder, your support sustained me. Thanks, finally, to my friends at Cornell, James Manning, Marty Broccoli, Michele Ledoux, Chris Watkins, Lee Telega, and Max Pfeffer.

The proof of China's might is in your waistband. And in the collar of your shirt; the chair you're sitting on. The mug on your desk. The phone in your pocket. The toy your child is chewing on.

Just look around you. Everything seems to be Made in China these days. So it must be the China Century. And as China rises, America falls.

The logic goes something like this. It's a global economy, a flat world. If China can make anything we can, only cheaper and at the click of a mouse, then we surely haven't a prayer. We're on a race with China to the bottom in wages and, ultimately, quality of life.

The flat world is tilting east, and all our good jobs are flowing to China.

The pundits agree. Just look at today's paper. There's a story on the front page about surging Chinese imports, flooding our markets with cheap goods and killing US jobs.

Then there's an op-ed on the back page. It says that China is already the world's second-largest economy. And that major financial institutions like the International Monetary Fund predict China will overtake the United States economically in just a few short years.

Politicians agree too. In the 2012 presidential election between Mitt Romney and Barack Obama, both candidates trimmed their sails to the headwinds of China's economic power. In a contest that the pundits still insist had nothing to do with foreign policy Americans, they claim, were weary of wars in Iraq and Afghanistan and, with unemployment nearing 10 percent, were focused on kitchen-sink issues (like losing the kitchen sink) the election was actually dominated by foreign policy. The campaigns spent nearly US$50 million on ads about China. And China was a frequent theme on the stump, especially in bellwether Rust Belt states like Ohio hit hard by the recession. The candidates and their surrogates flogged China again and again.