“It is good for China,” he told CBS’s Charlie Rose. “To a certain extent, Charlie, 11 percent is unsustainable. You end up getting too much stimulus or a misallocation of resources. They are much better off working on a more consumer-based economy, less dependent on exports. The one thing that actually works, state-run communism … may not be your cup of tea, but their government works.”
Well, what does that mean, state-run communism works?
Immelt explains: “They have five-year plans.”
That’s true enough; during one of their five-year plans, the Great Leap Forward of 1958-1963, an estimated 36 million Chinese people starved to death.
The ridiculousness of Immelt’s comments aside, there’s more and more evidence China isn’t “working.” A more thoughtful piece in Forbes magazine explains how China is turning into the “next Rust Belt.”
“Just two years after China overtook the U.S. to become the world’s largest manufacturer, the country faces the prospect of decades of de-industrialization,” writes Gordon G. Chang. “And there is little Beijing can do to arrest the slide.”
That government, which thought nothing of making entire towns into toxic waste dumps to advance its manufacturing goals, suddenly found that no one wanted to live in them. Chang reports that “citizens took to the streets to complain about metals in the soil, pollutants in the water, and soot in the air. Now, no one in China wants to live in a ‘cancer village,’ and people are routinely blocking projects, especially in the prosperous coastal regions of the country.”
And China’s communist regime failed to discourage — when it wasn’t actively encouraging — the theft of intellectual property. People with good ideas are now less likely to choose China for a manufacturing facility.
But China’s biggest strength, also a product of its state-run economy, was a cheap workforce. But Chinese workers don’t like the conditions they’re forced to labor under, and it’s beginning to show. There are well-publicized strikes and suicides, Chang notes.
“Labor issues became so serious that Foxconn Technology Group, which now employs 1.2 million workers in China, decided it had to automate,” he reports. “Last year, this electronics assembler had 10,000 robots in that country.”
Apple has announced it will soon make a Mac in the United States. That’s part of a trend.
“Lenovo, China’s largest maker of PCs, in October said it would move some computer manufacturing to its North Carolina facility, and General Electric has been transferring production back to Appliance Park in Louisville,” Chang adds. “Small- and medium-sized manufacturers are starting to return to the U.S. as well. American manufacturers, in short, are gaining on the Chinese.”
Immelt’s wrong, on more than merely historical grounds. A closer looks shows that China’s state-run communism doesn’t work.