“As China Rises, So Does Vietnam”- New York Times article cheats, foists Vietnam’s rise over China – UPDATED [Sweet & Sour Socialism Special Report]

February 23, 2011  –  UPDATED AND EDITED with additional statistics – Zuo Shou 左手

~ This Special Report is a critique of “As China Rises, So Does Vietnam” [New York Times] by Wayne Arnold, 2010 December 21. NYT article link here ~

by Zuo Shou 左手

January 5, 2011

I don’t dispute the article’s title and initial premise, that China and Vietnam are developing in an economically similar manner.

However, the title proves to be something of a bait and switch as the article eventually transforms into a topic which the title does not portend, of Vietnam gaining at China’s expense — a hypothesis which is over-hyped and at times fundamentally deceptive in its presentation.  Not that there isn’t competition or dynamic changes in flows of capital relative to the two countries, or that the article doesn’t encompass some other ambiguous dynamics of two nations’ inter-related economies. However, in this particular context there are some glaring omissions and mistakes (if not lies) that should be pointed out.

Once it sketches out the relatively recent parallel “socialist market reform” which happened first in China and then in Vietnam, the article moves into a slippier, more propagandistic realm.

The writer expostulates that there is a major shift in industry and investment away from China and towards Vietnam, and a pretext is given that it’s either because “China stumbled” i.e. it’s China’s fault, and Vietnam exploited that based on some inherent advantage; or it’s implied that any changes in the two countries’ relative economic fortunes are simply the working out of impersonal domestic and global market forces.

One support given for the “it’s China’s own fault” rationale is Chinese “nationalist demonstrations”, which are alleged to have spooked Japanese factory-owners in China.  This is interesting in that peaceful demonstrators numbering in the dozens which took place just in September of this year are partially blamed for a factually-unsupported, immediate exodus of Japanese enterprise from China in the following 3-month period. If this author has data to back this up, he should share it… It’s also interesting because critics of China’s government bash it for allegedly suppressing freedom of assembly; yet when Chinese citizens do demonstrate – peacefully — it’s not praised, but branded “nationalist” and marked down as an indication of an unstable investment environment.

The major flaw in this claim’s narrative, intriguing in that it’s originating in the US “newspaper of record”, is the total omission of the ongoing US protectionist policy towards China, in particular in the furniture industry, an industry which the article itself poses as analysing.   It’s telling, or ironic, that this article was published 10 days before the US government renewed bipartisan-supported “anti-dumping” tariffs on Chinese wood furniture for another 5 years, which have been in place since at least 2004. [1][2] It’s also odd because the article recognizes the US tariffs (or lack thereof) on certain Vietnamese textiles.

Furthermore, the article fails to reveal that Vietnam is a direct beneficiary of the very China-curbing US policy it obscures.   Here’s the real story: “…The rapid rise in [Vietnam’s] furniture exports was also helped along by the anti-dumping duties on imports of wooden bedroom furniture from China imposed by the US Department of Commerce in 2002.  Added to this was the US-Bilateral Agreement which reduces the tariff on Vietnam’s furniture exports to the United States from 35% to 3%.  Both developments opened up the US market for Vietnamese furniture leading to its rapid growth….” [3]  This directly repudiates the writers’ claim that if China loses trade to Vietnam, it’s because “China stumbled” and Vietnam was “[w]aiting with its own well-educated, disciplined but much cheaper work force…”

This skewed view of the Chinese-Vietnam furniture export relationship is capped and summarized with a single unbelievable quote: “The whole industry just gradually moved to Vietnam”.   The facts: despite US protectionist policies, China’s global furniture exports in 2009 were over ten times those of Vietnam, $38.9 billion vs. $3.3 billion. And in a further irony, despite the US diverting wooden furniture trade to Vietnam away from China, in 2009 Chinese furniture exports to the US were still 10 times those from Vietnam, paralleling the global trend. [3][4]

The article’s dubious hypothesis of Vietnam outflanking China is further pushed with an anecdote about Intel replacing facilities in some countries like China and moving to Vietnam:

“…This year, Intel opened a new, $1 billion semiconductor factory near Ho Chi Minh City to replace facilities in Malaysia, the Philippines and China…” [emphasis mine]

This too proves to be extremely misleading, and presents an entirely false impression of Intel in Asia, particularly China.  It was reported in 2008 that Intel was developing a major chip-producing facility with $2.5 billion in investment in the northeast Chinese city of Dalian, to be the largest IC-processing base in Asia and Intel’s single largest investment outside of the US. [5]  With the plant fully operational in 2010 and Phase I completed, the total investment is being reported as $6 billion, more than doubling earlier reports.  Further adding to Intel’s total investment in China, the company still has a chip-production plant in Chengdu. [6]  In any case, in terms of real investment this new China plant in Dalian alone obviously surpasses the scale of Intel’s new Vietnam facility and this fact destroys the “Intel helps Vietnam surge past China” point the NYT writer was trying to make.

The article does make the concessional point that lower labor costs in Vietnam aren’t everything, that it is lagging behind China in infrastructure and other developmental indices.

The article concludes with one last major distortion regarding the NYT reporter’s favored theme:

“…Vietnam seems to have won favor as an alternative to China for foreign investors.  Foreign direct investment into Vietnam rose almost fourfold between 2005 and 2008, according to the World Bank, to $9.58 billion, and slipped 20 percent during the crisis in 2009 to $7.6 billion.  In China it almost halved.”

Sounds somewhat convincing, but if read closely, a distorted gauge of comparison should be evident.  Research data reveals the writer is indeed pushing  —  again  —  a demonstrably false claim, that “Vietnam seems to have won favor as an alternative to China for foreign investment”:

from “Top 25 Countries for Overseas Investment” – Business Week

China

Rank: 1 (Change from 2007: Unchanged)…

2008 Foreign Direct Investment (FDI) Inflows: $108.3 billion…

Vietnam

Rank: 12 (Change from 2007: Unchanged)…

2008 FDI Inflows: $8.1 billion…

So the report by consultancy A.T. Kearney and published March 2010 in BusinessWeek shows that whatever the drops that occurred during the financial crisis, China remains the number 1 destination for foreign investment, and what’s more there was no change in the relative rankings of China and Vietnam from 2007 to 2010 as “Top 25 Destinations for Foreign Investment.  So once again the hypothesis of Vietnam “gaining” on China is trashed.

Was this article simply slipshod New York Times hackery, a deliberately distorted propaganda piece, or something in between?  What is clear is an emerging trend of US ruling class strategy is to play Vietnam off against China, a strategic alliance most difficult to swallow, considering the recent genocidal history of the US War on Vietnam; the US elbowing into the South China Sea territorial dispute on the side of Vietnam against China shows this will have both foreign AND trade policy implications.  That there will be deceptive “free trade” propaganda via US government corporate mouthpieces such as the NYT is not so new; what is perhaps new is its hybridization with China-bashing of varying subtlety and the spectacle of a virulently anti-socialist media stalwart promoting a bias of one socialist nation over another, in an attempt to diminish the image of the rising national rival that is China in the eyes of its readership.

Endnotes

1 “ITC explains why it let furniture anti-dumping duties stand” Heath E. Combs, Furniture Today, 2010 December 28 http://www.furnituretoday.com/article/534377-ITC_explains_why_it_let_furniture_antidumping_duties_stand.php

2 “US to slap tariffs on Chinese furniture” (Agencies) ChinaDaily, 2004 June 20 http://www.chinadaily.com.cn/english/doc/2004-06/20/content_340899.htm

3 “Vietnam’s furniture exports continue to grow in 2009” Benjamin Chiu, Philexport Cebu, 2010 September 12 http://www.philexportcebu.org/index.php/Furniture/Vietnams-Furniture-Exports-Continue-to-Grow-in-2009.html

4 “US-China Trade Statistics and China’s World Trade Statistics” The US-China Business Council (USCBC) Reports, Analysis, and Statistics http://www.uschina.org/statistics/tradetable.html

5 “Intel’s CEO should receive a medal as big as a frying pan”, Neill Newton, Liaoning-gateway.com, 2008 December 8 http://www.liaoning-gateway.com/gateway/86/3159586.shtml

6 “Intel Dalian Plant to start production in October” CNET News China, 2010 August 16 http://www.cnetnews.com.cn/2010/0816/1850618.shtml

One Response to ““As China Rises, So Does Vietnam”- New York Times article cheats, foists Vietnam’s rise over China – UPDATED [Sweet & Sour Socialism Special Report]”

  1. GreatChina Says:

    Good post. Its so typical of the US to try to turn Asians against each other, we must be united against the west. Whats really shameful is the way they deride North Korea who has always been a loyal ally of China. A lot of Chinese troops died to keep North Korea free from US oppression and imperialism so I think China and Asia in General should do everything they can to support the DPRK.

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