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New China’s catch-22

This Magazine Staff

alexandramossflickr china.jpg
For the past twenty years, the Chinese state has been luring foreign capital to their country with the promise of cheap wages, abundant natural resources, good infrastructure, and a massive internal market. The hope is that the flows of foreign cash will spur development that will vault China into developed-country-status by 2050.
The problem, as the Chinese government is finding out, is that capital has no loyalty. As the Globe and Mail reports in a story today, China is facing an influx of foreign goods made in even lower-cost countries like Indonesia and Vietnam. China is also losing some of its garment factories to places like Bangladesh. It’s an example of how capital works on a global scale – zipping here and there, setting down roots wherever it can get the greatest profit, and then moving on to the next big score.
It presents an interesting catch-22 for the Chinese-inspired development model. The strategy promises to lift countries out of third-world status, but the very character of the development necessitates their continuing poverty.

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