by Mike Genung

In May of 1989, hundreds of thousands of young students flooded Tiananmen Square in Beijing to call for democracy and protest the communist regime’s oppressive policies. Their demonstrations went on for three weeks; I remember pictures of a Chinese version of the Statue of Liberty being hoisted. There was a sense that the breakthroughs that were taking place in the Soviet Union could play out in China.

On June 4, Deng Xiao Ping sent the tanks in. The army started shooting into the crowd; hundreds were killed and thousands were arrested. Messing with the control freak communist government proved to be dangerous.

International outcry of the massacre was great. Mikhail Gorbachev of the USSR suggested that China needed to take steps towards democracy, while the U.S. Congress voted to impose economic sanctions.

In 1989, the average Chinese person was stifled by rigid government control; they had to apply to the government just for a job change. With the exception of farmers, all businesses were government owned; there were no private enterprises. Workers and company leaders alike were just a number in the government system. There was little reason to excel, other than the fear of the Communist Dragoon in Beijing, who was always watching.

Today, it blows my mind how much China has changed.  In a few instances, workers in large companies have banded together to form a union and protest low wages; this would have meant prison time in 1989. Private enterprises are flourishing, as is foreign investment. Company owners now own and drive their own cars (such as the BMW 700 series sedan which one factory president drove me around in during my visit two months ago). Before, in the communist economic system, individuals couldn’t get a license unless they were a “driver” by trade.

Much of this has come about by the trade China has done with the U.S. and other countries. Opening the doors to China has produced freedoms there that were unheard of 24 years ago, and it was all done without firing a single shot.

China’s government still exerts control and limits some freedoms. It’s a one party system that isn’t elected by the people. Some of the large American social media websites can’t be accessed, as well as any other content the Chinese government perceives as a threat. The good news is that the overall trend in China is for more freedom, not less. New Chinese president Xi Jinping has even made attacking corruption one of his stated goals, something that has been a fixture of the old guard until now.

Much of this has come about from the trade China has done with companies owned by people like you and me. The exchange of ideas and inflow of capital has lifted their country from one a gray, dreary society oppressed by a wicked government, to the modern, thriving megapolis that China is today.

Importing from abroad has allowed American companies to be competitive in a global economy.

It also has had the unintended benefit of playing a role in fostering new freedom in China; freedom that those students died for in 1989.  

Laser Cutting in China

During my last visit to China in March, I visited a factory that did laser cutting. It was a large manufacturing company, with rows of computer controlled machines. watching the lasers cut through steel plate was fascinating.

Pictures of this factory’s products, their machinery, and more information is available at the blog here:  https://www.mgtrading.com/2013/05/30/laser-cutting-in-china/

The Exchange Rate

The exchange rate remains the same as it was last month:
Yuan to the dollar, as of today: 6.13 to 1

Rate when the Yuan was depegged from the dollar on June 19, 2010:  6.82 to 1
Change: .69 (10.1%)

Previous Newsletters:
May: Our Most Critical Asset
April: Contrasts Between East and West
March: The Titanic; Made in China
February 2013: They’re Back… Sort Of
January 2013: Business News and Trends for 2013
December 2012: A Trip I’ll Never Forget

All material copyright 2013 Global Trade Specialists, Inc.
This newsletter may be reprinted as long as the copyrights and a link to the Global Trade home page (www.mgtrading.com) are shown at the end of the article.