Click here to watch the complete webstream of Book TV’s presentation on The Coming China Wars. Note that to watch this, you must have a Windows Media Player. For a shorter version that will play right off you web browser on You Tube, click here. Now for this week’s China Effect:
#1: Here's a personal question for you: have you been waking up in the morning with a scratchy throat and irritated eyes and maybe even a skin rash? The culprit may well be those pretty pajamas you bought that were made in China. At least that's the warning coming out of New Zealand where the government is cracking down on formaldehyde found in Chinese PJ’s. Formaldehyde in small amounts IS useful to prevent creases in the clothing and mildew, but the levels that are turning up are 900 times above levels deemed safe. What is particularly annoying about this latest incident is that the Chinese government once again is in denial about the dangers and lashing back with accusations of "China bashing." The broader issue here is that the "made in China" label is suffering a huge devaluation -- think of all of this as hundreds of millions of dollars of expenditures on negative advertising. Come Christmas, many American corporations that rely on Chinese products may find both consumer demand and profits down.
#2:Conventional wisdom has it that China is merely a blue-collar manufacturing powerhouse. The larger truth is that China is steadily moving up and across the value chain into white-collar industries like biotechnology and pharmaceuticals.
Yet another data point was offered by this week's announcement of a deal between Eli Lilly and a Shanghai pharma company to develop drugs within China to treat cancer and inflammatory diseases.
The simple fact of this matter is that it is considerably cheaper to test drugs in China. A bit more Orwellian, China also has far fewer restrictions on conducting tests on human and animal subjects.
Hardest hit by this particular China Effect will be Biotech centers like San Diego, San Francisco and Boston.
#3: While the United States hasn't built a new nuclear power plant in decades, China is moving in just the opposite direction. This week a consortium of utilities broke ground on the first nuclear power plant to be built in Northeast China. The plant is very near the port city of Dalian.
Astonishingly, this plant is scheduled to go online in five short years. That's less than half the time it has typically taken to build a nuclear power plant in the United States. The second thing to note here is that yet another foreign corporation -- Westinghouse -- has agreed to turn over its advanced reactor technology so China can use it to build future plants by itself in exchange for Westinghouse participating in the current project -- a Devil's bargain if there ever was one.
#4: And lastly, from the funny file, as reported in the Wall Street Journal, there is a "gallows humor" joke going around China that you can tell what colors are in fashion by looking at the color of the rivers. China's textile manufacturers routinely dump tons upon tons of contaminated water into rivers and streams. In a recent expose, one company was found to be using a pipe buried underneath its factory floor that was dumping over 20,000 tons of contaminated water a day. This is a far too common occurrence in China where modern manufacturing equipment often sits side by side with medieval pollution control measures.