The Environmental Cost of China’s Growth

The New York Times just published a great special report on the environmental cost of China’s growth. You can read the lead article here and watch the video below. There are also audio files and an interactive map.

When “Made in China” Becomes a Liability

As there has been several scandals about the quality and safety of Chinese products sold in Western markets, the label “Made in China” could become a liability. An article just published on the YaleGlobal website states that:

“According to a poll conducted by Zogby International in July, 82 percent of 4,508 Americans said they were concerned about buying Chinese products, and only 30 percent said they felt food imports from China were safe. Meanwhile, 51 percent said they were not convinced that China would follow through with its promise to improve its oversight of food producers.”

So far the Chinese government has responded to the situation with a blend of denial, scapegoating, and repression (like executing the head of China’s State Food and Drug Administration and shutting down hundreds of food manufacturers). It is now launching a public relations campaign to reassure Western consumers. However, as in the case of labor rights, things are unlikely to change until China has a free press able to report on working conditions, standard violations, and corruption. As Paul Mooney puts it in his article, “with the media’s hands tied, the best monitoring system and laws in the world will not work. Until China liberates the media – and no one expects that to happen anytime soon – product safety and public-health issues in China will continue to be a global concern.”

Could Globalization Actually Promote Wage Equality?

It is commonly argued that globalization increases inequality in advanced industrialized countries as low-skill workers in labor-intensive sectors are negatively affected by foreign competition (imports, offshoring, etc.) whereas high-skill workers take advantage of new opportunities. The solution to this rising inequality can thus be fiscal reform and targeted social policies, as many economists advocate, or protectionist barriers aimed at reducing the distributive effects of globalization.

However, according to two Scandinavian economists, Karolina Ekholm and Karen-Helene Ulltveit-Moe, that just published an article on VoxEu.org, globalization entails not only specialization, which fosters inequality according to the logic of comparative advantage, but also competition, which fosters firm concentration and affects those high-skill workers that until recently were not negatively affected by globalization. Insofar as there is downward pressure on the relative wage of these workers, wage inequality diminishes. According to Ekholm and Ulltveit-Moe,

“any policy initiative that would aim at dampening negative distributional effects of globalisation by impeding free trade is misguided. In fact, it may very well be that promoting globalisation is not only good for efficiency, but for equality as well. The increased competition that follows from further international integration affects the wages of those who so far have been relatively sheltered from competition. This involves skilled workers much more than unskilled workers, who are already exposed to fierce competition. Increased focus on abolishing remaining protective measures that impede the free movement of goods and services should therefore be the way ahead. Not only for the sake of economic efficiency, but also to promote equality.”

Although I agree that protectionism is not necessarily a solution to rising inequality, I find Ekholm and Ulltveit-Moe’s argument puzzling. I don’t see how the existence of downward pressures on the relative wage of high-skill workers is positive. Ekholm and Ulltveit-Moe’s advocacy for further globalization relies on the belief that it will reduce inequality not by lifting low wages but by reducing high wages. In other words, it indirectly supports the claim that globalization entails a race to the bottom wage-wise. This is not the best defense of globalization I’ve read. I still prefer to the Paul Krugman line.

Chinese Emigrants in Africa

We often hear about Chinese investments in Africa, as the Chinese want to take advantage of African natural resources and raw materials. In 2006, trade between China and Africa reached $55 billion.

What is seldom mentioned, however, is that the Chinese are not only investing but also moving to Africa. An interesting New York Times article reports that according to the Xinhua News Agency, at least 750,000 Chinese were working or living for extended periods on the continent. This Chinese immigration feeds the same kind of xenophobic sentiment that immigrants encounter in Europe and North America: The Chinese are accused of stealing jobs, refusing to mix, etc.

Capitalist Chinese entrepreneurs are picking up where the “solidarity brigades” of the socialist internationalism of the 1960s and 1970s left off. Thus, paradoxically, the ties built in the name of socialism are being used to foster capitalism and eventually integrate Africa to the world economy. As the saying goes, “One never knows for whom one is actually working in the end…”

For another look at Chinese emigration, you may want to read this article (“Chinese Migration Goes Global”) on the YaleGlobal website.

UPDATE: The New York Times article that I discuss above triggered an interesting debate on Dani Rodrik’s blog about the motivations of Chinese entrepreneurs in Africa. Look particularly at the comments.

Graduating with a Burka

Rue89.com published this disturbing picture of the graduation ceremony of female students in Yemen: