China’s most serious challenge to us isn’t what you expect
Beijing, China’—Let me tell you what I think will be China’s greatest challenge to our country in the upcoming years.
I am sitting here in the student cafeteria at Tsinghua University in Beijing. I am eating a tasty lunch meal of dishes chosen from hundreds of possibilities in the modern cafeteria line. Meats, rice, soup, cabbage, dumplings, a big bottle of beer and more. I paid for all of this quickly and efficiently with an electronic card that I purchased for about $1.20. I have almost enough credit left on the card to buy a similar meal tomorrow.
Surrounding me are mobs of college students, moving through the line, chatting enthusiastically with their colleagues. Except for the chopsticks everybody is using, there is little difference here from the modern Rams Head Dining Hall that opened this spring on the Carolina campus.
I am spending two weeks in this country as a part of a Working Language program offered by UNC-Chapel Hill’s Kenan-Flagler Business School. In addition to language classes, we are visiting businesses, factories, sales outlets and markets in various parts of the country. And we are staying in the homes of Chinese families, talking with them, and with Kenan-Flagler alumni about China’s aspirations and possibilities.
The older areas of downtowns in major cities like Shanghai and Beijing have been torn apart and replaced by modern skyscrapers that light up the skies at night. Inside those buildings, new businesses are sprouting up. On the streets the pace is fast.
On some street corners in the big towns, and even in the western city of Xi’an, I have inspected circus-tent-sized kiosks that offer high-priced, luxury real estate homes for purchase by those who can afford them. I am staying in one of these newer homes, a part of a housing development that was recently built for Tsinghua University faculty members ‘— to attract and retain them to the university. So, I can testify that, for those who can afford them, the conveniences and comfort of these new homes match up to the highest American standards.
Outside the cities, well-planned industrial parks are eating up former agricultural land. We visited a new printing plant, equipped with fast German machinery and overstocked with low-wage, hard-working employees. The managers talked to us about the competitive environment and how they must be efficient and profitable to survive. I saw a lot of English pages coming off the presses.
In the Suzhou silk region near Shanghai, we visited a ‘silk factory.’ But as the manager explained, traditional silk manufacturing companies are mostly bankrupt. His restructured firm has located in a new industrial park in modern spacious buildings. The firm is equipped with brand new machines from Japan. They weave Celanese, US-made, rayon threads into ‘“lining’” for jackets and suits. Their products are rolling out the door.
In downtown Shanghai, we visited a government-sponsored center designed especially to connect prospective foreign purchasers with the Chinese businesses. The center has a database of Chinese companies anxious to fill the foreign company’s orders or help design a product for manufacture in China. ‘“Just tell us what you want, and we will put you in touch,’” he told us. Then, as we heard over and over, he said, ‘“China is the world’s factory.’”
‘“But,’” he added, ‘“we don’t want any more Wal-Marts. It drives the prices down so low; we can’t make a good profit. We are looking for nice foreigners who will pay a fair price.’”
With all these visits running around in my head and seeing the energy and competitive spirit of Chinese people in every market place, it would be easy enough to come to the conclusion that China’s main challenge to our country is in becoming the ‘“world’s factory.’” And there is no doubt that China is gaining strength from its growing productive capabilities, ones that other countries are losing. Their growing ‘“world factory’s’” needs are driving up the costs of the energy resources and raw materials so high that some Americans will no longer be able to afford them.
But, sitting in this Tsinghua University student cafeteria, I am more worried about the challenge represented by the hundreds of Chinese university students who surround me. China has learned a lesson from us ‘— a lesson that we seem to be forgetting. It is this: Invest in education. Offer the highest level of education as widely as possible. Give access to the talented and energetic. Give them the skills to contribute and earn, using their brains.
On another part of the Tsinghua campus, brand new buildings house schools of business, law, engineering, and science research. Thousands of modern and very attractive housing units are springing up to serve a growing population of scholars, teachers, and students.
If these investments in education and research produce the same dividends that our country is enjoying from its commitment during the last century, then 15 or 20 years from now China will be the new leader in the high-wage brainpower jobs. When it takes brainpower leadership away from us, we will be in real trouble.
But, maybe after their better-educated workers have taken those high-wage jobs from us, we will find a niche again as a low-wage manufacturing economy again. Maybe a few years down the road we can become a ‘“world factory’” for the Chinese, again using low-wage workers to produce low-cost products that the educated, high-wage Chinese will buy from us.