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tinue unless there is some replacement of our
current utilisation of natural resources.’
Fellow guest speaker Russell Hsiao, Associate

Editor of the Washington DC-based China

Brief, maintained that China’s political system

‘has become increasingly inept for dealing with

the complex needs of the Chinese economy

and its societal changes, which is driving it in

multiple directions, while the central authority

tries desperately to maintain its control’.

China’s central government had been largely

unsuccessful, he claimed, in curbing local

offi cials’ expenditure on industrial enterprises

– including aluminium and steel projects. He

also contended that, as in the past, rising

infl ation within China could eventually lead

to increased social unrest.

According to Mr Hsiao, China’s growth was

heavily dependent on foreign resources ‘and

that dependence should, as many analysts would

argue, make China more susceptible to higher

levels of foreign infl uence in the establishment

and enforcement of its economic rules’.

El Dorado or Armageddon
Delegates also heard from Professor Peter

Navarro of the University of California’s Paul

Merage School of Business who presented two

opposite scenarios for the future which he

dubbed ‘El Dorado’ and, somewhat ominously

and perhaps melodramatically, ‘Armageddon’.

In the former scenario, China’s GDP growth

would continue to top 10% per annum. The

Asian giant would carry on climbing up and

across the value chain and would become less

dependent on export-driven growth. At the

same time, there would be diminishing politi-

cal tension between China and both the USA

and Europe. The ‘Armageddon’ scenario, by

contrast, involved growing confl ict in politi-

cal, environmental and trade spheres, possi-

bly including what Prof. Navarro termed

China’s ‘wars from within’.

According to the speaker, the US trade defi cit

with China amounted to around US$ 250 bil-

lion per year while that of the Euro-zone was

even larger. Having argued that most US com-

panies ‘put too many eggs in the China basket’,

he later called on fi rms looking to operate in

China to conduct ‘an adequate risk assessment’

and to ‘mitigate your business risk accordingly’.

Also on the top table was Joe Zhou, President of

China-based Global Metals Co. Ltd, who took

up the theme of the environment by refuting

suggestions that China had polluted the world.

His own view was that ‘the world has polluted

China’ – an opinion which drew support from

Prof Navarro. ‘The West is as much to blame for

the pollution in China,’ he said.

Positives and negatives
The meeting was then thrown

open to delegates’ questions and

contributions, with several taking

the opportunity to speak positive-

ly about their own experiences of

conducting business in China. For

example, Randy Goodman, Direc-

tor of International Nonferrous

Marketing and Logistics at the

Carolinas Recycling Group, said

that he had witnessed in China an

‘amazing’ shift in environmental

performance over the last seven years.

However, his and similar opinions were

rejected by others. One delegate spoke of the

country’s insuffi cient use of technology to

control pollution within its mining and

smelting sectors. And Mr Chiao argued that,

in coastal regions, strict environmental con-

trols were ‘not well observed’.

On more immediate trading issues, the audi-

ence was asked to vote using keypads on

whether the current dearth of 40-foot contain-

ers in the USA was the start of a prolonged

shortage of boxes for exports to China. More

than two thirds of delegates (68%) believed the

problem would be long term. And in response

to a suggestion that the AQSIQ licence scheme

was ‘unfair’ on exporters to China, session

moderator Steve Gilbert, President of North

Carolina-based Global Recycling Inc., com-

mented: ‘If you want to participate in their

economy, you have to play by their rules.’

One of the most-used business clichés of the late 20th century insisted: ‘When the
USA sneezes, the rest of the world catches a

cold.’ But while the health of the US economy is

of enduring concern to business folk around

the world, the well-being of China has taken on

immeasurable signifi cance over recent years. ‘If
the Chinese economic bubble burst, then world
fi nancial crisis is unavoidable,’ declared David
Chiao, Vice President of Uni-All Group Ltd, at
an ISRI meeting in Las Vegas designed to
assess China’s impact on global affairs.
The speaker had begun by outlining some
examples of the massive progress that has
occurred within China over recent times: the
country now boasted seven of the world’s top
20 publicly-held companies and had enjoyed
double-digit GDP growth for each of the last
fi ve years, he pointed out. China’s vehicle
output had jumped from 2 mil-
lion in the year 2000 to 5 million
in 2005, but was expected to top
10 million as early as 2010.
Mr Chiao also emphasised, how-
ever, that this spectacular growth
has not been problem-free, with
concerns including: rising infl a-
tion; higher labour costs (up 40%
in fi ve years); a new labour con-
tract law that was ‘very unfavour-
able to private employers’; energy
shortages; and growing competi-
tion from Vietnam. Mr Chiao later
added that, while the Chinese interior was
‘under development’, access to ocean-going
ports via road and rail remained ‘limited’.
China’s exports were expected to slow in
2008 thanks in part to a 14% appreciation of
its currency in relation to the US dollar over
the course of the last 18 months, he contin-
ued. Meanwhile, the Beijing government was
predicting GDP growth of 8% this year com-
pared to 11.4% in 2007, and had readjusted
this year’s infl ation target from 3% to 4.8%.

Switching production
Looking to the future, Mr Chiao predicted

that China would increasingly graduate to
medium labour-intensive products like cars
and appliances as manufacturers of highly
labour-intensive goods were switching pro-
duction from the coastal provinces of China
to either inland regions or other countries.
And he added: ‘The energy shortage will con-

David Chiao of the Uni-All Group:
‘If the Chinese economic bubble
burst, then world fi nancial crisis is
unavoidable.’

Russell Hsiao of the Washington
DC-based China Brief: ‘As in the
past, rising infl ation within China
could eventually lead to increased
social unrest.’

Professor Peter Navarro of the
University of California’s
Paul Merage School of Business:
‘China will become less dependent
on export-driven growth.’

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