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.
PHOTO ALEXANDRA MOSS, FLICKR