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Dr. George Wang Was Interviewed by ABC News Reporter

Dr. George Wang, President of US-China Exchange Association, was interviewed by ABC News reporter Mary-Rose Abraham on 10/16/2007. The featured report containing interview was published on ABCNews.com, money and business section on 10/24/2007. A part of the interview conversation is summarized as follows (ABC for Mary-Rose hereafter):

ABC: How are you, Mr. Wang! The City of Palm Bay, Florida is proposing to ban the purchase of products made in China. If it passes, this central Florida town would be the first in the nation to enforce a ban on goods from one particular country. What do you think about that?
George: I think it is a decision of the majority of the residents of the city. Just like any other products, the consumers have the right to determine what product, what brand, and what country' product they like to buy. Just like food, if you like Chinese, you can go to "Dragon Garden". If you like Italian, you can go to Pizza Hut. And if you like Mexican, you can go to "Casamaya". It is their decision, their choice.

ABC: OK, Do you think they can actually ban the products made in China?
George: That's a good question. What people want to do and what people can actually do are totally different things. I remember I heard from the news about a month ago that a couple in Ohio decided to ban the products made in China. But they only maintained for about one month, then, had to give up. Because Chinese manufactured products are so fundamental for average American's daily life now, it is difficult for an average American consumer to ban the products made in China without negatively impacting their normal life. Just take a quick look at the Wal-Mart, it is probably more than 90% of the products that are sold in Wal-Mart are made in China.

ABC:Your organization has been promoting the trade and the city and business collaboration between the two countries for years. What do you think this proposal from your organization's perspective?
George: As I mentioned earlier, given the quality issues and product recalls, I understand where they come from if taking a consumer's perspective. But as a third party opinion, I'm not sure whether it is the best way to do it.

ABC: Yes, product recalls. The proposal also mentioned other issues related with the products made in China: pollution, child labors, the lost jobs in the US, etc. They are not happy for what happened, and use this way to express their unhappiness.
George: Fully understood. If I lost my job, lost my business, I'll complain as well. But the issue is whether the way they took can actually help resolve the problem. Maybe we can say all these issues came from globalization. But globalization is not an initiative of any single person, single company, single city, single region, or even a single country. It is just a natural process of the global market evolution. While I understand not every single person, single company, single industry, single city or region benefit equally with all other participants, someone could even suffer from that, but overall, we should say the country, as whole, do benefit from the globalization. That's why so many countries are involved, and the globalization could actually become the trend.
For the lost manufacturing jobs, can the US gain them back if the Chinese products are boycotted? We can take a look at what happened for the past decades. Many years ago, there are many manufacturing jobs in the upstate of New York and New England area. Where are they right now? They first moved out to the mid-west and south, because the operating expenses there are cheaper. When the job increased in these areas, the income increased and the operating expenses increased as well. Did these jobs then come back to New York or New England area? No, with NAFTA signed, these jobs further moved to Mexico, because the labor cost there is cheaper. With the increased jobs in Mexico, however, income and operating cost there also increased. Did the jobs then come back to the US? No, with (or without) China's entry into WTO, these jobs further moved to China. They first settled in China's coastal area. With the increased income and the cost of living in these areas (you probably heard that prices of some Shanghai real estate are well comparable to that of the New York City now), some jobs further moved to inland and west of China. You can imagine, when the cost in these areas increase, the jobs will probably (and some already) move out of China to Viet Nam and some other south eastern Asia countries.
So in some sense, the root cause for the lost jobs is not just that the cost is too low in other countries, it is that the cost in the US is relatively high. The minimum wage, even in the coastal area in China, is just about $0.50-$0.60 per hour, while US minimum hourly wage rate is well above $7.00. So as far as the US cost is still relatively high, these lost jobs won't come back to the US. If the wage rate in China is increased, the job will be likely to move to the country with the next lowest cost, keep other things being equal. It is no longer a 2-country game any more. If the job is not in country A, it will be in country B. If not in country B, it will come back to country A. Globalization is a 200-country game. If the job is not in A, it may go to country B. But if not in B, it may not be necessarily to go back to country A. It can go to country C, D, E, or X. If we still believe what David Ricardo said about 200 years ago on competitive theory, then businesses will always go to the place where the cost is lowest, consumers will always buy whatever is cheapest, keep other things being equal. For the similar reasons, appreciation of Chinese currency may not help the jobs in the US, either.
For the pollutions and other corporate social responsibility issues, they are certainly the problems that are associated with China's fast growth, and need to be resolved. But boycott of the Chinese products may not be the best way to do it. (1) China side may retaliate with the US products so to lead to a loss-loss game as happened in many other countries' cases before. (2) There are deeper issues associated with these problems. I talked with many Chinese company executives regarding these issues. Their point is that the large US multinational corporations (MNC) such as Wal-Mart squeeze the purchasing price to the extent that they can't afford to take any anti-pollution measures. A T-shirt with $13-$15 retail price in the US can be only sold at less than $1 to US MNC buyers. They said they understand that the pollution will cause cancer and cancer will make people die. But they think that the choice they have is either to die due to cancer or die due to poverty. Of course, there are other issues for China's pollution and other CSR issues, such as GDP oriented growth models, but the pressure of survival is certainly a significant consideration. So, as mentioned above, the issue is not as simple as it may appear.

ABC: I see. So what would you recommend?
George: As I mentioned earlier, I understand where they come from. But, as a rational consumer, they need to compare and calculate all the benefits and costs associate with what they want to do, and also make sure what they want to do is what they actually can do.

ABC: Thanks for your time to take this interview.
George: Thank you!