How the U.S. Lost Out on iPhone Work

By CHARLES DUHIGG and KEITH BRADSHER
SolidarityEconomy.net via New York Times

Jan. 21, 2012 - When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.

Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.

This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.

Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

‘I Want a Glass Screen’

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.

In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.

But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

In Foxconn City

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.

Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Foxconn, in statements, declined to speak about specific clients.

“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”

The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.

Foxconn employees, in interviews, have challenged those assertions.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.

But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.

“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.

But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.

“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”

Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”

Middle-Class Jobs Fade

The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.

It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.

“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”

At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.

“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”

Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.

But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.

Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.

There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.

After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.

Paydays for Apple

As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.

Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.

The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.

A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.

While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.

After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.

Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.

“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”

Innovation’s Losers

Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.

Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”

At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.

Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.

What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.

In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.

“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”

The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.

Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.

There wasn’t even a tiny scratch on the screen.

David Barboza, Peter Lattman and Catherine Rampell contributed reporting.

By Adam Browning and Jigar Shah
SolidarityEconomy.net via Politico.com

Nov 8, 2011 - The German company SolarWorld recently filed a trade complaint against China. The claim: China’s government has unfairly supported its domestic solar industry, and the U.S. solar industry can’t compete.

If there’s wrongdoing afoot, it should be addressed. But it is important to remember the big picture—the solar industry exists in a globalized market, and solar’s market growth depends on continuing to bring down costs. A trade war with China could close off America’s $1.9 billion net solar exports, raise prices for local solar markets (reducing U.S. solar demand) and hurt consumers and the more than 5,000 U.S. companies that support solar installation.

Countries around the world have cumulatively invested tens of billions of dollars in solar energy over the last five years — a tremendous increase over the previous decade. That’s true of China — just as it’s true of Spain, Taiwan, Malaysia, India, Germany, Italy, Japan and the U.S. This investment has paid off in spades — global manufacturing capacity has soared. In the United States, solar is the fastest growing energy source.

It’s true that the U.S. share of solar investment lags behind China’s. Sadly, Uncle Sam’s investment in solar also falls far short of its support for fossil energy resources — which have a century-long history of continuing federal support. U.S. government subsidies for nuclear, oil, coal, gas and fossil fuels add up over $380 billion over the next five years, according to the Green Scissors report. Historically, fossil fuels receive annually about 13 times more than incentives going to all renewables, according to a recent report by DBL Investors.

The U.S. solar industry has been riding the on-again, off-again “solarcoaster,” though it most likely wants a clear and unwavering commitment from Washington.

The desire for incubation incentives is not unwarranted. Many fledgling U.S. industries have only reached mass commercialization because of a nudge — or the case of oil and gas, a century-long shove — from the government. Especially for an industry like solar, which promotes clean air, achieves a greater level of energy security and supercharges the local economy – more than $5 billion in 2010 alone.

Even with this backdrop of lean federal support here in the U.S., efforts in other countries and state-level solar policies here have consistently driven down the cost of solar. So much so that it can now be called “affordable” solar electricity. Through economies of scale and technological innovation, the global solar industry has achieved 70 percent cost reduction in solar panels since 2008.

In California, for example, utilities have signed over eight gigawatts of contracts for solar generation — of which four came in at rates below supposedly “unbeatable” new natural gas-fired power plants.

It’s a tremendous achievement—massive amounts of solar cheaper than the fossil-fuel alternative. But the industry’s ability to scale across the U.S. depends on being able to continue to drive costs lower.

This 70 percent cost reduction has helped create a U.S. solar industry that employs more than 100,000 Americans, with growth rates that far outpace the general economy. The vast majority – about 75 percent – of solar’s job and value creation is in project development and installation. These non-manufacturing jobs are inherently local to the market they’re serving – and so non-outsourceable.

Building U.S. demand for solar power is a sure way to create jobs at home. But market expansion depends on costs continuing to fall.

At the same time, the U.S. is also a net global exporter of solar products—in 2010, our trade surplus reached $1.9 billion. We are even a net exporter to China, with sales of commodity products, precision equipment and, yes, cutting-edge solar panels.

A trade war with China risks disrupting these supply chains and driving up solar prices at home—and thereby constraining expansion—while at the same time reducing exports.

Andrew Liveris, the chairman and chief executive officer of Dow Chemical Company, recently wrote a book, “Make it in America: The Case for Re-Inventing the Economy.” He makes the case for rebuilding the U.S. through manufacturing — by focusing on mastering the technologies of tomorrow.

Liveris’s suggested blueprint? Copy what works, instead of punishing those that do it better. Adopt a national energy strategy, like Germany and China. Recognize that creating the energy technologies of the future are a national imperative, and put together a comprehensive suite of supportive policies for manufacturing in America. Tap into our traditional strengths: innovation, entrepreneurialism and competitive spirit.

“The opportunity is America’s to lose,” Liveris writes, “The strengths it will take to seize the opportunity are strengths this nation has in abundance: mastery in science and engineering, an entrepreneurial spirit, and an unrelenting desire to lead the world.”

Arizona provides a good case study. The state has established a strong local market, with a requirement that 15 percent of the state’s energy comes from renewable energy. And the state legislature took a leadership role in creating a welcome environment for manufacturing. The Arizona Renewable Energy Tax Incentive Program offers a refundable credit equal to up a maximum 10 percent of investment. These new companies have a 75 percent reduction in property taxes for up to 15 years.

As a result, dozens of manufacturing companies have set up shop in the state — creating about 6,000 jobs and $1.8 billion in local investment, according to the Greater Phoenix Economic Council.

We need more supportive policies, not a trade war. There are only losers in a trade war. That’s particularly true when the battlefield is a burgeoning new solar industry that’s offering a rare bright spot in our troubled national economy.

Adam Browning is the executive director of Vote Solar, a nonprofit focusing on solar energy. Jigar Shah is the chief executive officer of Carbon War Room, a nonprofit supporting market-driven solutions to climate change.

© 2011 POLITICO LLC

Huaxi Coop: Sharing the Wealth and

Living Large in a Tiny Chinese Village

By MICHAEL WINES

SolidarityEconomy.net via New York times

Published: July 11, 2011

HUAXI, China — Ask not why the citizens of this village of 2,000, a few hours by car northwest of Shanghai, have built a 74-story skyscraper next to their prim town square. Everybody in China knows the answer: it is another step in their plan to create the communist utopia envisioned by Mao. The skyscraper will include a five-star hotel, upscale shopping mall, revolving restaurant and five life-size statues of a water buffalo, Huaxi’s symbol.

The utopia part certainly seems plausible. Whether Mao would have approved is a bit more in doubt.

Huaxi’s so-called New Village in the Sky — at 1,076 feet, a bit taller than the Chrysler Building in Manhattan — is getting finishing touches this summer in preparation for an October opening. Among other attractions, it will have a five-star hotel, a gold-leaf-embellished concert hall, an upscale shopping mall and what is billed as Asia’s largest revolving restaurant. Also, it will have five life-size statues of a water buffalo, Huaxi’s symbol, on every 12th floor or so.

That this half-billion-dollar edifice is a good 40-minute drive from a city of any size is part of the plan. For though not many foreigners have heard of Huaxi, Chinese far and wide know it as the socialist collective that works — the village where public ownership of the means of production has not just made everyone equal, but rich, too.

Two million tourists come annually to view the Huaxi marvel, no small number of them officials from other villages who yearn to know how Huaxi did it. The enormous skyscraper, topped with a gigantic gold sphere, will never win architectural awards. But it will add to Huaxi’s allure, the village fathers confidently predict — and soak up tourist money as well.

“We call it the three-increase building,” said Wu Renbao, 84, the town’s revered patriarch, meaning that it will increase Huaxi’s acreage (by half), increase its work force (by 3,000) and, hardly least of all, increase its wealth.

If he is right, all 2,000 villagers will get a little richer. They all own a piece of the building — just as they own the town’s steel mill, textile factory, greenhouse complex, ocean shipping company and other ventures. That is Huaxi’s carefully curated narrative: by rigidly adhering to socialism with Chinese characteristics, the citizens of this little village have created an oasis of prosperity and comfort that is the envy of the world.

When China effectively embraced capitalism in the 1980s, Huaxi was an agrarian hovel, reachable by dirt roads. Mr. Wu, then the local Communist Party secretary, seized on the new market freedoms to shift the Huaxi economy from farming to manufacturing and trade, but with a twist: the residents would throw their money into a collective pot and share in the take from whatever new businesses they bought.

“In the 30 years after the opening up, the system changed in many places,” Mr. Wu’s son, Wu Xie’en, said in a recent interview. “Some chose private ownership, but we Huaxi people chose public ownership. The biggest benefit is that the people share the common prosperity.”

That Huaxi is prosperous seems undeniable. Here, the villagers get lavish annual stipends, live in spacious single-family homes instead of China’s usual cramped apartments, drive imported cars, and get basic medical care, education and even an annual vacation free from the government. Lately they also get free helicopter rides, courtesy of a 100 million renminbi, or $15.5 million, fleet of helicopters and small jets the village is buying to attract still more sightseers.

Ge Xiufang, now 62, was a penniless peasant in a northern area of Jiangsu Province when her newly graduated son began looking for work in the early 1990s. “He saw an ad in the paper calling for workers to come to Huaxi,” she said. “So we came here, and two years later, we became villagers.”

That was in 1993, before Huaxi took off. Ms. Ge was interviewed in her son’s house, a two-story building with marble floors, overstuffed leather sofas, a large aquarium and a liquor cabinet dominated by an enormous bottle of expensive Scotch. Ms. Ge said she and her husband live in a sprawling town house a few blocks away and shuttle between homes in one of the family’s three cars.

“We peasants, we didn’t even have apartment buildings in those days,” she said. “We had no idea it would be this good.”

The elder Mr. Wu extols Huaxi’s splendor — and the Beijing government’s wisdom and foresight — in a lengthy lecture given each morning in an auditorium packed with hundreds of tourists. To hammer the message home, there follows a musical, a sort of Chinese opera with Disney characteristics and toe-tapping lyrics:

Where we live: garden, house, little Western-style mansion

What we eat: a food culture full of nutrition

What we wear: big brand names of fashion

and

Huaxi is rich in substance, politics and spirit

One American guest said, “O.K., O.K,

Socialism is so good, we Americans want it, too!”

Yet what is branded as socialism looks from the outside a great deal like an old-fashioned capitalist corporation, apparently savvily managed, with 2,000 shareholders who live comfortably off their dividends. Indeed, Huaxi’s affairs are run by a company, the Jiangsu Huaxi Group Corporation, reported to shelter 57 subsidiaries, including seven more holding companies. The town has interests in everything from extruded aluminum to traditional medicine to spun polyester cloth to real estate.

“We have too many investments to count,” said the younger Mr. Wu, the chief executive of the enterprise, which is said on several Web sites to be managed by members of the Wu family. He said he spends his days worrying about investment bubbles, and sprinkles his conversation with references to business advice gleaned at the University of California, Berkeley, and from studies of General Electric’s business model.

Mr. Wu’s claims of success are hard to verify, because the conglomerate’s revenue and earnings are not disclosed in an audited form. Published but unverified reports indicate that the corporation employs at least 25,000 people, many of whom live in the urban area of about 30,000 that exists outside Huaxi’s cramped legal boundaries. A 2009 report in a state-run newspaper said annual revenue totaled 50 billion renminbi, about $7.7 billion at current exchange rates.

Village leaders have denied persistent reports that Huaxi benefits from substantial government subsidies like low-interest loans, although the younger Mr. Wu said in an interview that some of the village’s ventures are financed by debt that amounts to as much as 60 percent of their value.

While each villager is required to work at a Huaxi business seven days a week, virtually all the manual labor is performed by what Marx might have called the proletariat: thousands of outside workers, many of them migrants, who receive better salaries and benefits than many workers elsewhere, but do not share in Huaxi’s profits. For that, one needs a hukou, or residence permit — and Huaxi hands those out with great care.

“This is called exploitation,” said Fei-Ling Wang, a Georgia Tech professor who has studied Huaxi as part of research into Jiangsu Province villages. “Because the outside workers, by law, cannot become a local resident. They cannot share the results of their works. And they are paid by wages, and if they lost their job, they are simply sent home.

“If all migrant workers are treated as full members of the community,” Professor Wang said, “then Huaxi wouldn’t work.”

The two Wus allow that the village has yet been unable to shed capitalism, but they insist that Huaxi has moved to a higher level of socialism than China at large, and that utopia is a matter of time. “Huaxi’s development depends on capitalism and business,” the elder Mr. Wu said. But “capitalism is only a temporary stage. Eventually, we will build Chinese socialism with Chinese characteristics.”

To Huaxi’s 2,000 shareholders, it may be a distinction without a difference as long as the profits keep rolling in. Mr. Wu says they will: in three decades, he insists, not one business venture has gone sour. To Huaxi’s cautious villagers, he said, investing is “like stepping on sea ice.”

Will a 74-story building in the middle of nowhere crack the ice? Not likely, the Wus say: why, just in the last year, one of the building’s water buffalos has grown in value by 70 million renminbi, or about $10.7 million.

That would be the buffalo destined for the 74th floor. The one cast in solid gold.

Jonathan Kaiman contributed research.

A version of this article appeared in print on July 12, 2011, on page A9 of the New York edition with the headline: Sharing the Wealth and Living Large in a Tiny Chinese Village.

Egyptian Woman with Cell Phone

China's Cell Phone Pirates Are Bringing Down Middle Eastern Governments

By Greg Lindsay

SolidarityEconomy.net via Fast Company

1. Enter The Shanzhai

In 2004, a Taiwanese electronics firm named MediaTek [1] unveiled its latest product--a cell-phone-in-a-box aimed at manufacturers, equipped with everything they needed to make the guts of a working phone on one chipset. Write some software, add features, and snap a plastic case on the front and you've produced a new model. It was an immediate hit with China’s notorious counterfeiters, the shanzhai [2].

In 2004, MediaTek sold 3 million of its chips [3]; six years later, its sales had soared to 500 million, more than a third of the worldwide market. Nearly half of those went to shanzhai. The sudden ability to design, manufacture, and ship millions of dirt-cheap handsets in total secrecy led to an explosion in Internet-enabled devices in China. “Five years ago, there were no counterfeit phones,” the sales manager at a Chinese component manufacturer told The New York Times in 2009. “You needed a design house. You needed software guys. You needed hardware design. But now, a company with five guys can do it.”

After conquering China, smuggled shanzhai phones made spectrum so valuable that India’s telcos allegedly bribed government ministers to get their hands on it for $40 billion less than it was worth, triggering an ongoing scandal that might bring down the government. Once India cracked down, however, the shanzhai were forced to look for new markets further afield, to the Middle East--where the glut of cheap phones would help enable the Arab Spring.

2. “Nckias” And “Blockberrys”

The key to the cheap phones was the combination of MediaTek’s chipsets and the vast component bazaars of Shenzhen. While MediaTek’s engineers focused on adding software features such as touchscreen recognition and instant messaging to their chips, shanzhai tricked out basic models with speakers, telescopic photo lenses, and flashlight-strength LEDs. Before long, “Nckias” and “Blockberrys” began appearing across Shenzhen and Shanghai.

With their tiny production runs, shanzhai could manufacture a thousand phones, seed the local markets, see if they caught on, and then crank out some more. Established players like Nokia were soon crying foul, even as they scrambled to keep up. Development cycles collapsed [4] from 9 to 12 months to as little as three months. Instead of knockoffs, the counterfeiters were churning out innovation and forcing large companies to play catch up.

The research firm iSuppli expects China’s gray-market mobile phone shipments to rise to 255 million this year, up 12% from 2010. Shanzhai phones are a leading reason why China’s mobile Internet users more than tripled from 50 million to 180 million between 2007 and 2009, according to a report [5] by the Boston Consulting Group. Chinese teenagers fall asleep every night instant messaging friends via QQ [6] on their shanzhai phones.

3. India's Broadband Scandal

What proved to be the fatal flaw in MediaTek’s chipsets is that they don’t support 3G, a much trickier set of technologies. After both the iPhone and Android smartphones arrived in China, the phone bandits began looking for new customers who didn't mind the outdated technology to keep shanzhai phone production churning.

India, with its low PC penetration, high fixed-broadband costs, and proximity to China, was a natural fit. In 2009, shanzhai phones began flooding the market, offering “good functionality at a fraction of the cost of established brands,” according to BCG. The sudden infusion of handsets sparked a brutal price war among carriers like Bharti Airtel and Reliance Communication, which drove the cost of calls down to $.006 per minute even as the companies collectively raced to sign up 20 million new subscribers per month.

That they could afford that race to the bottom may have something to do with the strange way India’s mobile spectrum was auctioned off in 2008. A last-minute rule change in the auction declared that licenses would be granted on a first-come, first-served basis to anyone with completed paperwork and $355 million in cash. Teams sprinted through the building and down stairs to reach the official clerk--a haphazard process that netted only $2.7 billion in licensing fees and may have left $39 billion on the table, according to outside auditors.

An investigation eventually followed, resulting in the April indictments [7] of India’s former telecom minister, two other officials, and six telecom executives charged with criminal conspiracy, forgery, and fraud. The New York Times has described the burgeoning scandal as “India’s equivalent of Teapot Dome [8].”

4. The Arab Spring

Today, the shanzhai market has moved beyond China, and even India. Of the 235 million chipsets MediaTek shipped last year, 140 million were bound for overseas. They’ve captured half the Ghanian market, for example, and last fall, The National--the state-financed newspaper of the United Arab Emirates--warned “some analysts believe China’s bandit phone makers may now be targeting the GCC region,” referring to the Gulf Cooperation Council and its members: the UAE; Qatar; Kuwait, Saudi Arabia, Oman, and Bahrain.

A few months later, half its members were embroiled in the turmoil of the Arab Spring. Although no one has drawn a straight line between the appearance of shanzhai phones in the region and the protests that followed, The National presciently noted at the time that “these cut-price clones are not only saturating markets such as India but are starting to appear on the streets of Los Angeles and are thought to be being targeted at the Middle East region, too, which has large numbers of consumers in cities such as Cairo as well as high-end users in countries such as the UAE.”

And while they’re not equipped to run Facebook or Twitter, the current list of features for MediaTek’s phone includes everything else a budding revolutionary needs to evade or expose government repression, including video cameras, Skype, and Bluetooth--just the thing for sharing government crackdown videos over your State Department-sponsored mesh network [9]--all for as little as $50.

The irony is that the Arab Spring has triggered a paroxysm of repression within China (sparked by the rumblings of a “Jasmine Revolution”) which has made life harder for its cell phone bandits, who were previously hiding in plain sight. But China's crackdown can't put the phones back in the box: China's cheap and easy manufacturing has helped usher in mass cell phone ownership in places where it once was a luxury. And with phones comes the free exchange of information that causes revolutions. If Beijing is looking for a cause of the uprisings that has them so scared, it's in the cheap alternatives that fuel China's economy.

[Homepage image: Getty Images; top image: Flickr user sierragoddess] [10]

Read more from Fast Company's series The Butterfly Effect [11]: How Google's Robot Cars Will Revive Sprawl [12]

Links:
[1] http://www.ft.com/intl/cms/s/0/6fbf3994-440a-11e0-8f20-00144feab49a.html
[2] http://en.wikipedia.org/wiki/Shanzhai
[3] http://www.sramanamitra.com/2010/02/08/mediatek-part-1-beginnings-and-growth/
[4] http://hbr.org/product/shanzai-mediatek-and-the-white-box-handset-market/an/610081-PDF-ENG
[5] http://www.bcg.com/documents/file58645.pdf
[6] http://www.fastcompany.com/magazine/152/behind-the-great-firewall-of-china.html
[7] http://www.boston.com/business/articles/2011/04/02/3_indian_officials_charged_in_telecom_scandal/
[8] http://www.nytimes.com/2010/12/14/world/asia/14india.html
[9] http://www.nytimes.com/2011/06/12/world/12internet.htm
[10] http://www.flickr.com/photos/sierragoddess/
[11] http://www.fastcompany.com/tag/butterfly-effect
[12] http://www.fastcompany.com/1758128/how-googles-robot-cars-will-make-car-sharing-ubiquitous-and-commuting-less-painful-revive-sp

Photo: Bo Xilai

By Peter Martin and David Cohen
SolidarityEconomy.net via The Diplomat

April 25, 2011 - Bo Xilai has a reputation as a rising political rock star. But do his ‘Red Culture’ policies in Chongqing really offer a viable model for China?

As China’s 2012 power transition approaches, politicians and academics are racing to find the theme that will define the country’s direction for the next eight years. The inclinations of Xi Jinping, heir apparent to the presidency, are still unclear, but his recent visit to Chongqing suggests that he’s taking a particular interest in the ‘Red Culture’ policies of municipal Party Secretary Bo Xilai.

Bo is the highest-ranking Party member of the Chongqing Municipal area, an administrative zone four times the size of the US state size of New Jersey. It embraces acity of 10 million, as well as a vast rural hinterland that contains more than 1,200 towns and villages. Over the past few years, Bo has made himself the centre of media attention with eye-catching initiatives such as a ‘red song’ campaign and a ban on advertisements on local TV.

But the significance of Chongqing runs much deeper than socialist gimmicks—Bo has tried to rewrite the social contract of Chongqing with an attack on economic inequality, an expansion of the state role in the economy, and political moves taken straight from Mao Zedong’s playbook.

People often say that politics in China have stood still while the economy has raced ahead. But the placid surface of single-party rule conceals vigorous debate within the Communist Party over China’s future….

…Policy experimentation at the local level provides fodder for arguments that will determine the shape of Chinese socialism during the next administration and beyond. The approach of the 2012 handover has spurred risings stars like Bo, a Politburo member and likely candidate for promotion to the top-rung Politburo Standing Committee, to jockey for top leaders’ attention with striking new policies.

This conversation doesn’t always move in liberal directions. China’s ‘New Left’ has seized upon Bo’s ideas to argue for a radical shift away from the market-oriented policies of the Reform and Opening period, citing Chongqing as proof that China can combine growth with economic equality in a vision of socialism that looks to a more statist past.

New Left proponentsargue that Chongqing’s experience is the beginning of a path for China that will break radically with capitalist reforms begun by former President Deng Xiaoping.Theyhope to restore the state as the centre of China’s economic system with a focus on poverty reduction and to revive Maoist political techniques. In doing so, they claim to have a blueprint for a new era in China’s history.

Socialism 3.0

In a political system where slogans matter, coining a new buzzword is a delicate business, and Bo has been careful to tie himself to the history of the Communist Party. ‘Some people say that “Red Culture” is a move to the left,’ Bo said at a 2009 municipal party meeting. ‘In fact, it’s just about serving the people. That’s why the Communist Party was founded.’

Yet leading members of China’s New Left are beginning to look beyond the theme that has defined Chinese politics for the last 30 years.

Wang Shaoguang, a mainland-born professor of political science at the Chinese University of Hong Kong, has labelled this new period ‘Socialism 3.0’ in an unpublished article focussing on Chongqing, casting it as the successor Mao’s radical egalitarianism and Deng’s reform and opening.

Controversial Peking University political scientist Pan Wei, for his part, describes Chongqing as proof that China is moving into a ‘post-reform and opening era,’ returning to the traditional socialist focus on equality. Arguing that the growth-centred policies of recent decades have created an unacceptable gap between rich and poor, he says the time has come for a radical rethinking of Chinese politics—but he isn’t sure the time has come to say so publicly.

But while Bo’s Chongqing has become a capital for China’s New Left, it’s not the only model competing for the attention of China’s top leaders. Liberals and globally oriented modernizers have also drawn inspiration from local governments, especially reformist policies pursued by the governments of Shenzhen and Guangdong Province.

The city of Shenzhen, which has experimented with Western-style political reforms in a move toward the separation of powers, was the site of Premier Wen Jiabao’s controversial speech last August in which he forcefully argued for political change, while Wang Yang, the provincial leader of Guangdong and Bo’s rival for a seat on the Politburo Standing Committee, has focussed on the catchy theme of ‘Happy Guangdong,‘ calling for measuring growth with a ‘Happiness Index.’

The Post-Reform Economy

So what exactly do New Left thinkers believe the next wave of Chinese socialism is going to look like?

For a start, they say, it’s going to be a lot less like capitalism. They call for a major re-entry of the state into the economy, and point to Chongqing as proof that a large public sector can co-exist with a dynamic market. Over the past few years, as Chongqing has become a popular destination for factories relocating from the more developed coastal provinces, where wages and costs are rising, its GDP has grown by about 14 percent a year—much faster than the national average–providing fodder for left-wing academics to cast it as a model for growth.

The political scientists of the New Left are using Chongqing, which has encouraged the expansion of state-owned enterprises, to respond to the economic argument shared by many market-oriented Chinese economists that state investment ‘crowds out’ private enterprise (guo jin min tui).

However, Cui Zhiyuan, a Qinghua University professor who has spent much of the last year conducting field research in Chongqing, argues that in Chongqing ‘It’s not the state crowding out private enterprise…In fact, the state and the market develop together (guo jin min ye jin).’

Wang agrees, citing the growth of private activity in the city, which has outpaced state investment.  In fact he dismisses the idea of crowding out, writing ‘This kind of idea not only has absolutely no theoretical foundation,but it’s been also been proved absurd by the practical experience of Chongqing…As the state’s absolute role in the Chongqing economy has increased, its proportion of the economy has decreased.’

In the Chongqing model, though, everything links back to the issues of poverty and inequality, and the government of Chongqing has turned the market profits of state-owned enterprises toward traditional socialist projects, using their revenue to fund the construction of affordable housing and transportation infrastructure. It’s perhaps not surprising then that Bo’s biggest policy hit is the affordable housing initiative for the city’s poorest. The massive construction programme aims to provide cheap apartments to a third of the municipality’s 30 million residents, a programme that has received national attention and clearly impressed the central government, which is rolling out a similar plan at a national level as part of the 12th Five-Year Plan.

Bo has tried to cast his programme as a step past the single-minded focus on GDP that has defined Chinese policy since Deng. ‘It’s not about how many tall buildings you have, it’s how happy people are,’ he argued in a 2009 speech to Chongqing Party members.

Such comments have echoes of the Happy Guangdong talk, but the statist raft of policies is a sharp contrast with rival proposals. The export-focussed province’s recent reforms have lookedoutwards, fitting closely with current debates among Western policymakers on improving urban quality of life.

But Bo’s remarks also allow him to set himself apart from the wealth-driven culture of major coastal cities like Shanghai and Guangzhou, flagship cities of the reform and opening era that have accepted significant inequality as the cost of economic growth.

Politics for the Masses

Although the Western media has tended to focus on Wen’s challenge to his colleagues to pursue political reform, proponents of the Chongqing model believe they have an answer that owes nothing to democratic models. Instead, they are drawing on the political thought of Mao.

The wealth of the reform and opening period, they argue, has led cadres to lose touch with the people, and Bo has taken on Party elitism by drawing on the Maoist concept of the ‘mass line’ (Mao’s theory says cadres should live among the people and that they should share the viewpoint of the masses).

With this in mind, Bo has commanded local party members to ‘reconnect’ with poor residents of their districts, including issuing regulations with specific instructions requiring village party secretaries to meet with residents at least once a week for at least half day. At these meetings, party workers are obliged to explain the work of the government, and listen patiently and attentively to their opinions. County leaders, meanwhile, must also visit rural areas at least once a month in order to open up channels for people’s petitions.

But such moral ‘revival’ isn’t only for cadres and bureaucrats. Bo’s Chongqing has also focussed on the ‘spiritual health’ of the people, promoting red culture as an answer to problems ranging from corruption to gambling to social alienation. Chongqing has sought to bring everyone into this campaign with high-profile moves such as hosting a red song competition and sending text messages featuring Mao’s thoughts to each of the city’s 17 million cell phone users.

Indeed, socialist culture has gone hand-in-hand with promotion of Chinese tradition, despite Mao’s animosity toward ‘feudal customs.’ Residents have been encouraged to read Chinese classics and attend traditional storytelling events—but sharply discouraged from the traditional Sichuan pastime of gambling on mah-jong.

The Chongqing model has been hailed by New Left thinkers as a bona-fide example of home-grown political reform—proof that China can improve its government without copying foreign models. Yet Bo, the son of revolutionary elder Bo Yibo, is an unlikely Maoist. He spent much of the Cultural Revolution in prison when his father fell out of favour, and is noted for his own lavish lifestyle, sending his son Bo Guagua to England’s exclusive Harrow school and Oxford University.

With this in mind, Joseph Cheng Yu-Shek, a Chinese leadership specialist based at Hong Kong City University, argues that Bo fears being labelled the privileged son of a major Party leader. ‘Bo is a very typical princeling, and he now adopts rather popular and rather Maoist policies,’ he says.

Red the New Black?

Clearly, it’s impossible to know for sure how the top levels of the Chinese leadership view Bo’s campaign. But he’s clearly got their attention—Xi visited the city in December, praising Bo’s work in a speech as ‘virtuous policy,’ and saying that the red culture initiatives had ‘gone deeply into the hearts of the people.’

Bo has succeeded in igniting a passionate debate about the future of socialism in China. On the question of whether it has won him a seat on the Politburo Standing Committee, though, we’ll have to wait until next October for an answer.

Peter Martin works for a political consulting firm in Beijing. David Cohen is a freelance journalist. They blog at www.sinocentric.net and their writing has appeared in the Christian Science Monitor, the Guardian Online, the Global Times, the China Daily and the Lowy Interpreter among other publications.

One Chart, One Thousand Words

Source: G-20 Report

From IndianExpress.com

Mar 02 2011, Beijing: China's experiment of mixing economic reforms with socialism has achieved more success than democracies and averted a Soviet Union style collapse in post Mao Zedong era, a think tank here said projecting it as a new socialist role model.

China's economic and political achievements since late 1970s owe to a unique socialism-featured development model, The Chinese Academy of Social Sciences' (CASS), an official think tank's study on World Socialism said.

China's development path lies in implementing necessary structural reforms and in learning from others' success, while, at the same time, refusing any form of foreign intervention, it said.

"China's success in the past 60 years, especially after the opening-up, has surpassed the achievements of Britain during the Industrial Revolution and the US' progress in the 19th century," excerpts of the paper published in the state run 'Global Times' said.

The publication of paper coincides with the call for opening up overseas dissident groups who are calling for protests similar to that of those sweeping the Gulf countries.

The Communist Party of China, (CPC) which is celebrating its 90th anniversary this year changed its ideological course after the death of its founder Mao in 1976 deviating from his hardcore Marxian philosophy to that of socialism mixed with economic reforms propounded by his successor, Deng Xiaoping.

Following the "Deng line", called socialism with "Chinese characteristics", CPC opened up China for private ownership and foreign investment while retaining absolute political control on all arms of the state including the military, steadfastly keeping China a one party state.

"As long as we stick to the path of socialism with Chinese characteristics, we can avoid catastrophic financial crises and economic downturns and help the world economy", the CAAS report said pointing to China's ability to survive the 2008 world economic crisis.

The current global financial depression, ignited by a US credit crisis in 2008, provides opportunities for the development of socialism around the world, even though Beijing will not force others to accept the Chinese model, it said.

The Chinese model at the same time is not perfect and needs to be improved, it said citing problems such as resource shortages, environmental pollution, the widening gap between the rich and poor, corruption and abuse of power by officials.

Separately, the academy also published a book highlighting lessons to be learnt from the collapse of communist rule in the former Soviet Union 20 years ago.

The roots of the collapse were due to degeneration and deterioration of the ruling Communist Party of Soviet Union.

"Differing from previous arguments that the failure of socialism or reforms caused the collapse of the Soviet Union, the book gives an explicit and clear explanation after 10 years of study," Wu Enyuan, director of Institute of Russian, Eastern European and Central Asian Studies at the academy told the daily.

"The direction of Mikhail Gorbachev's reform was correct. The crucial point is that he failed to maintain political stability when carrying out the reform, and the chaos soon spread to other sectors," Wu, the co-author of the book said.

"In the process of reform and opening up, China needs to learn lessons from the Soviet Union by striking a balance between stability and development," Wu said.

This time it's for real.

BY GIDEON RACHMAN

ForeignPolicy.com

JANUARY/FEBRUARY 2011

"We've Heard All This About American Decline Before."

This time it's different. It's certainly true that America has been through cycles of declinism in the past. Campaigning for the presidency in 1960, John F. Kennedy complained, "American strength relative to that of the Soviet Union has been slipping, and communism has been advancing steadily in every area of the world." Ezra Vogel's Japan as Number One was published in 1979, heralding a decade of steadily rising paranoia about Japanese manufacturing techniques and trade policies.

In the end, of course, the Soviet and Japanese threats to American supremacy proved chimerical. So Americans can be forgiven if they greet talk of a new challenge from China as just another case of the boy who cried wolf. But a frequently overlooked fact about that fable is that the boy was eventually proved right. The wolf did arrive -- and China is the wolf.

The Chinese challenge to the United States is more serious for both economic and demographic reasons. The Soviet Union collapsed because its economic system was highly inefficient, a fatal flaw that was disguised for a long time because the USSR never attempted to compete on world markets. China, by contrast, has proved its economic prowess on the global stage. Its economy has been growing at 9 to 10 percent a year, on average, for roughly three decades. It is now the world's leading exporter and its biggest manufacturer, and it is sitting on more than $2.5 trillion of foreign reserves. Chinese goods compete all over the world. This is no Soviet-style economic basket case.

Japan, of course, also experienced many years of rapid economic growth and is still an export powerhouse. But it was never a plausible candidate to be No. 1. The Japanese population is less than half that of the United States, which means that the average Japanese person would have to be more than twice as rich as the average American before Japan's economy surpassed America's. That was never going to happen. By contrast, China's population is more than four times that of the United States. The famous projection by Goldman Sachs that China's economy will be bigger than that of the United States by 2027 was made before the 2008 economic crash. At the current pace, China could be No. 1 well before then.

China's economic prowess is already allowing Beijing to challenge American influence all over the world. The Chinese are the preferred partners of many African governments and the biggest trading partner of other emerging powers, such as Brazil and South Africa. China is also stepping in to buy the bonds of financially strapped members of the eurozone, such as Greece and Portugal.

And China is only the largest part of a bigger story about the rise of new economic and political players. America's traditional allies in Europe -- Britain, France, Italy, even Germany -- are slipping down the economic ranks. New powers are on the rise: India, Brazil, Turkey. They each have their own foreign-policy preferences, which collectively constrain America's ability to shape the world. Think of how India and Brazil sided with China at the global climate-change talks. Or the votes by Turkey and Brazil against America at the United Nations on sanctions against Iran. That is just a taste of things to come.

Reuters/Brennan Linsley/Pool

"China Will Implode Sooner or Later."

Don't count on it. It is certainly true that when Americans are worrying about national decline, they tend to overlook the weaknesses of their scariest-looking rival. The flaws in the Soviet and Japanese systems became obvious only in retrospect. Those who are confident that American hegemony will be extended long into the future point to the potential liabilities of the Chinese system. In a recent interview with the Times of London, former U.S. President George W. Bush suggested that China's internal problems mean that its economy will be unlikely to rival America's in the foreseeable future. "Do I still think America will remain the sole superpower?" he asked. "I do."

But predictions of the imminent demise of the Chinese miracle have been a regular feature of Western analysis ever since it got rolling in the late 1970s. In 1989, the Communist Party seemed to be staggering after the Tiananmen Square massacre. In the 1990s, economy watchers regularly pointed to the parlous state of Chinese banks and state-owned enterprises. Yet the Chinese economy has kept growing, doubling in size roughly every seven years.

Of course, it would be absurd to pretend that China does not face major challenges. In the short term, there is plenty of evidence that a property bubble is building in big cities like Shanghai, and inflation is on the rise. Over the long term, China has alarming political and economic transitions to navigate. The Communist Party is unlikely to be able to maintain its monopoly on political power forever. And the country's traditional dependence on exports and an undervalued currency are coming under increasing criticism from the United States and other international actors demanding a "rebalancing" of China's export-driven economy. The country also faces major demographic and environmental challenges: The population is aging rapidly as a result of the one-child policy, and China is threatened by water shortages and pollution.

Yet even if you factor in considerable future economic and political turbulence, it would be a big mistake to assume that the Chinese challenge to U.S. power will simply disappear. Once countries get the hang of economic growth, it takes a great deal to throw them off course. The analogy to the rise of Germany from the mid-19th century onward is instructive. Germany went through two catastrophic military defeats, hyperinflation, the Great Depression, the collapse of democracy, and the destruction of its major cities and infrastructure by Allied bombs. And yet by the end of the 1950s, West Germany was once again one of the world's leading economies, albeit shorn of its imperial ambitions.

In a nuclear age, China is unlikely to get sucked into a world war, so it will not face turbulence and disorder on remotely the scale Germany did in the 20th century. And whatever economic and political difficulties it does experience will not be enough to stop the country's rise to great-power status. Sheer size and economic momentum mean that the Chinese juggernaut will keep rolling forward, no matter what obstacles lie in its path.

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"America Still Leads Across the Board."

For now. As things stand, America has the world's largest economy, the world's leading universities, and many of its biggest companies. The U.S. military is also incomparably more powerful than any rival. The United States spends almost as much on its military as the rest of the world put together. And let's also add in America's intangible assets. The country's combination of entrepreneurial flair and technological prowess has allowed it to lead the technological revolution. Talented immigrants still flock to U.S. shores. And now that Barack Obama is in the White House, the country's soft power has received a big boost. For all his troubles, polls show Obama is still the most charismatic leader in the world; Hu Jintao doesn't even come close. America also boasts the global allure of its creative industries (Hollywood and all that), its values, the increasing universality of the English language, and the attractiveness of the American Dream.

All true -- but all more vulnerable than you might think. American universities remain a formidable asset. But if the U.S. economy is not generating jobs, then those bright Asian graduate students who fill up the engineering and computer-science departments at Stanford University and MIT will return home in larger numbers. Fortune's latest ranking of the world's largest companies has only two American firms in the top 10 -- Walmart at No. 1 and ExxonMobil at No. 3. There are already three Chinese firms in the top 10: Sinopec, State Grid, and China National Petroleum. America's appeal might also diminish if the country is no longer so closely associated with opportunity, prosperity, and success. And though many foreigners are deeply attracted to the American Dream, there is also a deep well of anti-American sentiment in the world that al Qaeda and others have skillfully exploited, Obama or no Obama.

As for the U.S. military, the lesson of the Iraq and Afghan wars is that America's martial prowess is less useful than former Defense Secretary Donald Rumsfeld and others imagined. U.S. troops, planes, and missiles can overthrow a government on the other side of the world in weeks, but pacifying and stabilizing a conquered country is another matter. Years after apparent victory, America is still bogged down by an apparently endless insurgency in Afghanistan.

Not only are Americans losing their appetite for foreign adventures, but the U.S. military budget is clearly going to come under pressure in this new age of austerity. The present paralysis in Washington offers little hope that the United States will deal with its budgetary problems swiftly or efficiently. The U.S. government's continuing reliance on foreign lending makes the country vulnerable, as Secretary of State Hillary Clinton's humbling 2009 request to the Chinese to keep buying U.S. Treasury bills revealed. America is funding its military supremacy through deficit spending, meaning the war in Afghanistan is effectively being paid for with a Chinese credit card. Little wonder that Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, has identified the burgeoning national debt as the single largest threat to U.S. national security.

Meanwhile, China's spending on its military continues to grow rapidly. The country will soon announce the construction of its first aircraft carrier and is aiming to build five or six in total. Perhaps more seriously, China's development of new missile and anti-satellite technology threatens the command of the sea and skies on which the United States bases its Pacific supremacy. In a nuclear age, the U.S. and Chinese militaries are unlikely to clash. A common Chinese view is that the United States will instead eventually find it can no longer afford its military position in the Pacific. U.S. allies in the region -- Japan, South Korea, and increasingly India -- may partner more with Washington to try to counter rising Chinese power. But if the United States has to scale back its presence in the Pacific for budgetary reasons, its allies will start to accommodate themselves to a rising China. Beijing's influence will expand, and the Asia-Pacific region -- the emerging center of the global economy -- will become China's backyard.

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"Globalization Is Bending the World the Way of the West."

Not really. One reason why the United States was relaxed about China's rise in the years after the end of the Cold War was the deeply ingrained belief that globalization was spreading Western values. Some even thought that globalization and Americanization were virtually synonymous.

Pundit Fareed Zakaria was prescient when he wrote that the "rise of the rest" (i.e., non-American powers) would be one of the major features of a "post-American world." But even Zakaria argued that this trend was essentially beneficial to the United States: "The power shift … is good for America, if approached properly. The world is going America's way. Countries are becoming more open, market-friendly, and democratic."

Both George W. Bush and Bill Clinton took a similar view that globalization and free trade would serve as a vehicle for the export of American values. In 1999, two years before China's accession to the World Trade Organization, Bush argued, "Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy.… Trade freely with China, and time is on our side."

There were two important misunderstandings buried in this theorizing. The first was that economic growth would inevitably -- and fairly swiftly -- lead to democratization. The second was that new democracies would inevitably be more friendly and helpful toward the United States. Neither assumption is working out.

In 1989, after the Tiananmen Square massacre, few Western analysts would have believed that 20 years later China would still be a one-party state -- and that its economy would also still be growing at phenomenal rates. The common (and comforting) Western assumption was that China would have to choose between political liberalization and economic failure. Surely a tightly controlled one-party state could not succeed in the era of cell phones and the World Wide Web? As Clinton put it during a visit to China in 1998, "In this global information age, when economic success is built on ideas, personal freedom is … essential to the greatness of any modern nation."

In fact, China managed to combine censorship and one-party rule with continuing economic success over the following decade. The confrontation between the Chinese government and Google in 2010 was instructive. Google, that icon of the digital era, threatened to withdraw from China in protest at censorship, but it eventually backed down in return for token concessions. It is now entirely conceivable that when China becomes the world's largest economy -- let us say in 2027 -- it will still be a one-party state run by the Communist Party.

And even if China does democratize, there is absolutely no guarantee that this will make life easier for the United States, let alone prolong America's global hegemony. The idea that democracies are liable to agree on the big global issues is now being undermined on a regular basis. India does not agree with the United States on climate change or the Doha round of trade talks. Brazil does not agree with the United States on how to handle Venezuela or Iran. A more democratic Turkey is today also a more Islamist Turkey, which is now refusing to take the American line on either Israel or Iran. In a similar vein, a more democratic China might also be a more prickly China, if the popularity of nationalist books and Internet sites in the Middle Kingdom is any guide.

ROBYN BECK/AFP/Getty Images

"Globalization Is Not a Zero-Sum Game."

Don't be too sure. Successive U.S. presidents, from the first Bush to Obama, have explicitly welcomed China's rise. Just before his first visit to China, Obama summarized the traditional approach when he said, "Power does not need to be a zero-sum game, and nations need not fear the success of another.… We welcome China's efforts to play a greater role on the world stage."

But whatever they say in formal speeches, America's leaders are clearly beginning to have their doubts, and rightly so. It is a central tenet of modern economics that trade is mutually beneficial for both partners, a win-win rather than a zero-sum. But that implies the rules of the game aren't rigged. Speaking before the 2010 World Economic Forum, Larry Summers, then Obama's chief economic advisor, remarked pointedly that the normal rules about the mutual benefits of trade do not necessarily apply when one trading partner is practicing mercantilist or protectionist policies. The U.S. government clearly thinks that China's undervaluation of its currency is a form of protectionism that has led to global economic imbalances and job losses in the United States. Leading economists, such as New York Times columnist Paul Krugman and the Peterson Institute's C. Fred Bergsten, have taken a similar line, arguing that tariffs or other retaliatory measures would be a legitimate response. So much for the win-win world.

And when it comes to the broader geopolitical picture, the world of the future looks even more like a zero-sum game, despite the gauzy rhetoric of globalization that comforted the last generation of American politicians. For the United States has been acting as if the mutual interests created by globalization have repealed one of the oldest laws of international politics: the notion that rising players eventually clash with established powers.

In fact, rivalry between a rising China and a weakened America is now apparent across a whole range of issues, from territorial disputes in Asia to human rights. It is mercifully unlikely that the United States and China would ever actually go to war, but that is because both sides have nuclear weapons, not because globalization has magically dissolved their differences.

At the G-20 summit in November, the U.S. drive to deal with "global economic imbalances" was essentially thwarted by China's obdurate refusal to change its currency policy. The 2009 climate-change talks in Copenhagen ended in disarray after another U.S.-China standoff. Growing Chinese economic and military clout clearly poses a long-term threat to American hegemony in the Pacific. The Chinese reluctantly agreed to a new package of U.N. sanctions on Iran, but the cost of securing Chinese agreement was a weak deal that is unlikely to derail the Iranian nuclear program. Both sides have taken part in the talks with North Korea, but a barely submerged rivalry prevents truly effective Sino-American cooperation. China does not like Kim Jong Il's regime, but it is also very wary of a reunified Korea on its borders, particularly if the new Korea still played host to U.S. troops. China is also competing fiercely for access to resources, in particular oil, which is driving up global prices.

American leaders are right to reject zero-sum logic in public. To do anything else would needlessly antagonize the Chinese. But that shouldn't obscure this unavoidable fact: As economic and political power moves from West to East, new international rivalries are inevitably emerging.

The United States still has formidable strengths. Its economy will eventually recover. Its military has a global presence and a technological edge that no other country can yet match. But America will never again experience the global dominance it enjoyed in the 17 years between the Soviet Union's collapse in 1991 and the financial crisis of 2008. Those days are over.

 

2010 Ends with Immense Opportunities

for both China and the World

China's leading and most influential national newspaper, the People's Daily, on Friday carries on its third page a lengthy signed article signed by Guo Jiping on immense development opportunities that have been provided for both China and the world. Its excerpts are read as follows:

With new, qualitative changes accumulated in China's relations with the outside world in the outgoing 2010, the nation's development has become a supportive prop of vital importance in the contemporary era.

Economic recovery in developed countries is slow overall in the outgoing year, and China's domestic growth product (GDP) for 2010 is around 20 percent of world economic growth. Moreover, the nation's active participation in global economic governance and international economic policy coordination has promoted the enhancement of the representation of developing nations in the World Bank and the International Monetary Fund (IMF).

The track of development since the launch of China's reform and opening to the outside world in the late 70's of the last century highlights the significance of the nation's peaceful development in the world. If you feel good by your neighbors, you have to take them as a partner; if you want to seek development, help other people to get development; if you want your own security, let other people feel safe and, if you want your life to become better, let other people live better. So, China and world have extensive common interests.

American futurist Alvin Toffler, an ace advisor to late President Ronald Reagan (Who was in White House from 1981 to 1988), reminded us: The community of geography is being replaced by the communities of interest... Alvin Toffler further noted that the illiterates of the 21st century will not be those... "With the sector now in transition, TRLabs is itself in transition -- a reflection of its core industry focus and changing industry interest..."

Since the entry of the 21st century, the GDP growth of new market developing countries has increased from 24 percent to 33 percent of world economic growth, and they have contributed 46 percent of global GDP, thus boosting the economic recovery and promoting the multilateral polarization pattern, so that the world economic setup inclines to be balanced.

An innovation momentum has continued to soar with a new round of technological revolution. Innovation, dissemination and application of science and technology has been spread on an unprecedented scale and speed in many countries, especially in developing countries which have taken economic stimulus measures with an unprecedented extent on the intensity to beef up the institutional and policy guidance, in order to seize the commanding heights in new global economic development. And this round of technological revolution has also provided opportunities for emerging market developing countries to achieve their "leapfrog" development.

In the meanwhile, no one wants to miss the opportunity to take on China's development "express train" along the front-line of their own design. But there are a small handful of people, who very much want to ride on while worrying about the direction of ambivalence, and this conflicting mindset is particularly apparent and prominent in fierce battles in the year, from the Google event in late February and the Nobel Peace Prize farce on December 10; and the "responsibility theory", "arrogance theory" and "threat theory", have alternately turned on stage throughout the year.

Development is irresistible or unstoppable; this is the world outlook of dialectical materialism, the truth of a nation with a historical record with 3,000 years of brilliant civilization, and also an eminent reasoning truth highlighted by achievements scored in China's reform and opening-up over the past three-plus decades.

China's relationship with the world has turned even closer in the outgoing 2010. Looking ahead to the incoming 2011. China will usher in the 12th "Five-Year Plan" (2011-15) period, a key era for building a moderately affluent society, and also a crucial period for deepening the reform and opening-up, and accelerating the transformation of economic growth. China will continue planning for its future with a new world vision and strategic thinking. During this period full of opportunity, China can develop its capacity to the full and accomplish a lot of feats of global attention.

"China represents an opportunity apparent for us... Germany is to benefit much more from its development than other countries," noted a well-known German entrepreneur.

A major Oriental nation with a population of some 1.3 billion has continued to march along the road of dynamic economic growth, and it will surely produce a greater impact, competitiveness, affinity and inspiration for the world. China today has an all-powerful ability to offer more strategic opportunities, and the future world will feel more in-depth sense of opportunities from China. Hence, 2010 has come to a close with immense opportunities for both China and the world.

By People's Daily Online

While delivered nearly a decade ago, this speech by Zhu Rongji holds up rather well. Zhu was Premier of the State Council of The People's Republic of China, and spoke at the Round Table of World Summit on Sustainable Development, Johannesburg, South Africa, August 26-Sept 4, 2002

 
Mr. Chairman, today I am delighted to be with you here to discuss issues relating to global sustainable development.  The speeches of previous speakers were full of wisdom and most enlightening.  The question of how to implement the plan of action of this summit and to honor our commitments in real earnest bears not only directly on the success of the summit, but even more on the future of human society.

As the world's largest developing country in terms of population and land area, China attaches great importance to sustainable development.  In handling the relations between economic development and population, resources and environment, we have learned the following from experience:

----Emphasis on harmony between economic development and resource and environmental protection.  The primary task of developing countries is to develop the economy and eradicate poverty.  Without economic growth, there would be no material basis for a better life or better environment for the people.  But economic growth must not be achieved at the cost of environment or resources.  In the absence of proper resource and environmental protection, there could be no sustainable economic development.

----Adherence to the road to human-oriented development.  Economic development and environmental protection are both aimed at improving the level and quality of people's life and ensuring an all-round and long-term development of human beings.  We should strive to find a civilized road to development featuring higher productivity, a well-to-do life and sound ecosystem.

----Continued reliance on scientific and technological advancement and stronger management.  Science and technology, hi-tech in particular, gives strong backing to sustainable development.  We should focus on enhancing our capacity for sustainable development, further increase our input in science and technology, intensify our efforts in the development of environmental infrastructure, apply clean manufacturing technology, develop the industry of environmental protection and improve the resource and environment management system.  We should improve the mechanisms and the legal system through institutional reforms so as to facilitate the effective implementation of sustainable development strategies.

----Continued active participation in international environment and development cooperation.  In today's world, a country could not fully ensure its economic development and environmental protection without international exchanges and cooperation.  Through bilateral and multilateral cooperation in environment across the world, it could introduce capital, advanced technology and managerial expertise to enhance its capacity for sustainable development, while assuming responsibilities and honoring commitments.

Mr. Chairman, to realize global sustainable development is a common task for all countries.  Both developed and developing countries should undertake obligations.  However, developed countries should shoulder greater responsibilities.  The implementation of the global sustainable development strategies hinges, to a considerable extent, upon the materialization of the principle of "common but differentiated responsibilities" set forth at the Rio Conference (UNCED).  In the past decade, there have been both progress and setbacks in this regard.  Some commitments have not been honored in earnest.  The Chinese Government maintains that the international community should strive to make greater headway in international cooperation on environment and development under the continued guidance of this principle.  Now we wish to make the following appeal:

1. Efforts should be made to enhance the capacity building of developing countries for sustainable development.  The international community should vigorously support their efforts in taking their own road to development, so that the diversified development of countries will help realize global sustainable development strategies.  Developed countries, while resolving their own domestic environmental problems, should assist developing countries in such areas as technical consultancy, personnel training and mechanism building.  As education plays a vital role in promoting sustainable development, the international community should take effective action to help developing countries improve their level of education so as to enhance the awareness and the quality of the general public with regard to sustainable development.

2. Multiple channels should be utilized to raise funds of all kinds for sustainable development.  Adequate financial resources are a prerequisite for the implementation of Agenda 21 by various countries.  Constrained by their level of economic development, developing countries lack financial resources.  We hope that developed countries will honor their commitments by taking effective action in respect of financing and technology transfer.  At the International Conference on Financing for Development held in Monterrey early this year, gratifying progress was made on the question of giving financial assistance to developing countries.  It is hoped that the UN and other relevant international agencies will step up coordination and ensure the materialization of what was achieved at the conference.

3. Great efforts should be made to boost international cooperation in science and technology as well as trade.  More exports from developing countries will help spur economic development and lead to better protection of the environment.  It is imperative to remove restrictions currently imposed on exports from developing countries under the pretext of environmental protection.  It is essential to fully understand the difficulties facing developing countries in such fields as trade and technology transfer and to remove trade and technical barriers.

Mr. Chairman, to carry out the strategy of sustainable development involves the economy, social development, population, resources, environment and many other fields.  We should cooperate with one another in all sincerity, stress practical results and do a good job in every sector of work.  Above all, we should give priority to resolving such issues as poverty, hunger, shortage of water resources, urban air pollution, soil erosion, energy and health, which are of concern to the vast number of developing countries.  The international community should understand and support the reasonable requests of developing countries on these issues.  Otherwise it would be impossible to ultimately achieve the goal of global sustainable development.

Thank you, Mr. Chairman.