By Peter Navarro
Reviewed by Jon Ford, CFP®
Peter Navarro's fact-filled, well-written book left me breathless. The amorphous fears I've had about China and its economic effect on the world were given flesh and bones as I moved from one discouraging chapter to another. The book left me cold with only a bit of hope for the future of our continued role in world leadership. The hope came with the last chapter, "How to Fight and Win the Coming China Wars," but the solutions' reliance on unselfish sacrifice and critical actions by the American public and Chinese left me disheartened—I'm not sure we've got the grit.
Everyone knows toys made in China were recalled last Christmas because they poisoned our children. How many pets bit the dust last year because of the poison in pet food made by the Chinese? Lately papers have been filled with medication recalls due to poisonous additives to Chinese produced medications. These chilling results of China's move into the heart of world economics are only the tip of the iceberg.
"Cut your price by 30 percent or lose your customers." This is what Navarro calls "the China price." China has emerged as the world's "factory floor" because of low wages by nonunion workers, minimal health and safety standards, lax environmental regulations with little enforcement, and the role of direct foreign investment. With these and a dozen other economic drivers, China produces more than 70 percent of the world's DVDs and toys, more than half the bikes, more than one third of the air conditioners, TVs, computer monitors, and microwave ovens.
The Chinese economy has staked a great deal on counterfeiters: medicines, medical devices, foods, textbooks, and clothing that are then sold cheaply around the world. The book provides a number of fictional scenarios, based on real incidents: unexplained illness because of bacteria-laden flu shots, your father almost dies because the knock-off meds for high blood pressure and high cholesterol had no active ingredients, or your mother ends up in the hospital because the meds for osteoporosis were nothing more than molded chalk. And this is only the beginning.
China is a major producer and distributor of the chemicals necessary to produce cocaine, heroin, methamphetamine, and ecstasy. Massive silt buildup is occurring as China has "mass produced" 85,000 dams and reservoirs. Rivers are clogged, slow moving and filthy. Wildlife and fish are disappearing. Pollution-related cancers are leading causes of death among the Chinese and, since 1974, an average of 74 dams have collapsed each year.
China has a parasitic relationship with other countries and the author describes in detail how China has moved into African and Central and South American nations and underbid U.S. contractors for projects. Chinese contractors are willing to take a loss because of the bigger picture. The projects are not for the countries' development; on the contrary, projects are roads and railroads that lead straight to ports so that natural resources can be transported to shipping sites and moved to the world's factory floor.
The purpose of this book is to raise the level of economic and political awareness to an intensity that will allow all of us, including the Chinese, to begin to think much more about the problems and to participate in the hard choices that must be made. Read this book and you'll wonder if we have the resolve.
Jon Ford, CFP®, runs CF Financial Planning Solutions Inc. based in Cedar Falls, Iowa. He writes a regular "Financial Fundamentals" column for the Cedar Falls Times.
Financial Times Press (2007)