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Some reflections on Bob Woodruff's China white wash

By Peter Navarro
web posted August 18, 2008

"So near to the truth, yet so far."  That's the feeling I came away with after watching Bob Woodruff's recent China Inside Out documentary for ABC news.  It's regrettable that a journalist of such a high caliber as Woodruff can get so close to a story and not really see it -- while helping to perpetuate a number of dangerous myths about China.

Woodruff's approach seemed very promising at first.  He went to four different continents and countries in order to assess the global impacts of China, the countries being Angola, Brazil, Cambodia, and the United States.

The Angolan segment highlighted China's economic development model in Africa.  The myth perpetrated in this segment is that the development has actually provided a net benefit to the people of Africa. 

In fact, the real truth China is practicing a very sophisticated 21st century version of imperialism in which China loans African countries billions of dollars in exchange for encumbering natural resources.  These resources range from oil and natural gas to copper, cobalt, and titanium.  As part of its debt encumbrance strategy, China gets to reduce its unemployment rate by using a large Chinese construction workforce to actually do the work – rather than relying so much on the native population.

In this segment, Woodruff makes repeated references to corruption.  However, in a glaring omission, he fails to make explicit just how much of the billions in Chinese aid is actually siphoned off into offshore bank accounts held by the African elites.  Nor does Woodruff highlight the intense poverty in the countriesChina is supposed to be "benefiting" -- other than offering a few images of slums.

That said, the absolute worst omission of the African segment is Woodruff's failure to mention the Darfur genocide in the Sudan.  Instead, the only thing we get is a passing reference to Chinese aid to the Sudan in exchange for oil.  In fact,China regularly trades its veto power at the UN for African resources in exchange for shielding African despots from UN interventions.

What made Woodruff's omission all the more galling is that Woodruff did an extensive interview with China's United Nations Ambassador Wang Guangya.  This is the same reprehensible "diplomat" who has repeatedly blocked UN action on Darfur.  (Wang also has blocked action following the sham Zimbabwe election and the attempts of the West to sanction Iran for its nuclear development).    The failure to confront Wang on the Darfur question was tantamount to appeasement -- or, far worse, simple ignorance.

Woodruff's omissions were equally in evidence in his Brazil segment.  The theme Woodruff drew here is that China's increasing consumption for soybeans is leading to deforestation of the Amazon and potential environmental problems.  The biggest problems with this segment were a lack of visual imagery to portray the destruction of the Amazon, and the lack of science and statistics to explain how deforestation in the Amazon is likely to affect the global environment and crop production.

In fact, most of the Amazon's deforestation occurs during the dry season in an orchestrated slash and burn campaign that fouls the skies throughout South America.  Showing that massive environmental carnage -- instead of a few big trees being felled -- would have made for a far stronger presentation.  Missing, too, was any good explanation of why we should care about the Amazon.  In fact, theAmazon River basin and its rainforest are absolutely critical to the global ecology because they are considered to be the "Lungs of our Planet."  By recycling carbon dioxide, the rainforest in particular provides more than 20 percent of the world's oxygen.

Already, more than 20% of the Amazon rainforest has been destroyed while the World Wildlife Fund warns that more than half of the forest will be gone by 2030.   According to many scientists, this destruction of the rainforest has the potential to create severe drought conditions not just in South America but also as far north as the American and Canadian farm belts.  The result may well be a global food crisis -- high irony indeed given that the destruction of the Amazon rain forest is occurring in the name of increased food production. 

Turning to the third segment on Cambodia, Woodruff does a good job tagging the Chinese with at least some responsibility for the Khmer Rouge genocide of millions.  Missing in this segment, however, was any insight into the real reason why China is setting up so many sweat shops in Cambodia.  Too bad Woodruff didn't get his cameras into some of these sweat shops to expose the slave labor conditions!

My other big beef with the Cambodian segment was the failure of Woodruff to mention how China is using its upstream positioning on the Mekong River to dam that river with bullying impunity.  China's dam-happy Mekong River design will eventually include 15 mega-dams.  These mega-dams are likely to create economic and environmental effects that are vast and far-ranging -- and Cambodiais at the front lines of this onslaught.

To understand the problem, consider the impacts of China's dams on one of the world's most fascinating ecological treasures, the legendary Lake Tonle Sap in Cambodia. For much of the year, the lake is only a yard deep with a footprint of only a bit more than 1,000 square miles. During the rainy season, however, flow from the Mekong River helps deepen the lake to roughly 30 feet and increases the area of the lake more than five-fold. This turns Lake Tonle Sap into one of the best breeding grounds for fish in the world.

The obvious problem facing the Tonle Sap is that the China's mega-dams are evening out the flow of water and thereby preventing the world's most fertile natural fishery from realizing its full depth and breadth in the critical fish breeding season. Already, fish catches have declined dramatically.  This is already having a significant negative effect on Cambodia's fishing economy.

Woodruff clearly saved the worst for last in his discussion of the impacts of Chinaon the American economy. He leads off the segment by helping to perpetuate the myth that China's emergence as the world's factory floor is the result of cheap, hard-working labor.  (The mouthpiece here is Evan Osnos, Beijing Bureau Chief for the Chicago Tribune -- an otherwise cogent voice.)

In fact, my research has clearly shown that cheap labor is only a small part of the China puzzle.  Much of China's advantage in world markets comes from five unfair mercantilist trade practices that include a complex web of illegal export subsidies, blatant currency manipulation, counterfeiting and piracy that lowers production costs, and lax environmental and health and safety standards that likewise lower production costs.

That China blatantly manipulates its currency seems to be totally lost on both Woodruff and the seemingly clueless Fareed Zakaria.  Indeed, it is Zakaria who helps perpetuate the myth that the Chinese are more frugal savers than American consumers and that's why China helps the U.S. with its debt by buying U.S.treasury bills.

Note to Woodruff and Zakaria: The purchase of U.S. treasury bills is an integral part of the currency manipulation process.  To maintain China's fixed peg to the dollar and keep the yuan grossly undervalued, China must recycle dollars back into the U.S.   Of course, individual Chinese citizens have no say in this matter; rather they are merely press-ganged into their frugality by China's central bank -- which wants to keep exports to the U.S. cheap and imports into China dear.  (It's no accident the U.S. trade deficit regularly hits record highs.)

The failure of Zakaria to understand this currency manipulation process (and the broader role of unfair trade practices in China's grab of American markets) makes it perfectly understandable why Zakaria ignorantly advises that the U.S. has only two options  with China: "either ride the wave or drown in it."  In fact, what theU.S. government should be doing to prevent the loss of American jobs is cracking down on China's unfair trade practices.  Leveling the playing field would go a long way towards bringing jobs back to the U.S.

On that note, it is useful to point out perhaps the biggest myth of the documentary – one perpetuated by none other than Mayor Michael Bloomberg of New York.  His Honor piously insists that "the jobs that [China] is creating are low-priced jobs" and "that's not the kind of jobs we want for our citizens." 

Note to the Mayor: While you've apparently been sleeping, China has moved steadily up and across the value chain into everything from autos and biopharma to commercial aircraft.  It's not just about cheap toys and sneakers anymore.

My bottom line is that I would love to see an in-depth, fair and balanced critical look at the economic, environmental, military, political, and social impacts of China on rest of the world.  All that we have gotten so far from TV is a bunch of puff pieces that miss many of the major points and keep perpetuate a set of very dangerous myths. ESR

Peter Navarro, author of The Coming China Wars, is a business professor at the University of California-Irvine, is the author of the best- selling investment book If It's Raining in Brazil, Buy Starbucks and the path-breaking management book, The Well-Timed Strategy. Professor Navarro is a widely sought after and gifted public speaker and a regular CNBC contributor. Prior to joining CNBC, he appeared frequently on Bloomberg TV, CNN, and NPR, as well as on all three major network news shows. He has testified before Congress and the U.S.-China Commission and his work has appeared in publications ranging from Business Week, the L.A. Times, and New York Times to the Wall Street Journal, Washington Post, and Harvard Business Review. ©2008 Peter Navarro





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