Enter The Donlad

The U.S. Can Get Tougher on China in a Way That Would Benefit U.S. Workers Without Triggering a Trade War. But It Requires a Stiletto, Not a Blunderbuss

- Bill Powell

Early one evening in January 2009, Xiao Hongzhi walked down a nearly deserted street in the eastern Chinese city of Dongguan, to the door of the factory at which he had until very recently worked. It was shuttered now, and a note on the gate told former workers they should go to the local party office, where they would receive some compensation. Xiao shrugged, and headed off, relieved that he’d at least get something.

Dongguan, in the coastal province of Guangdong, was arguably the epicenter of what Western economists now call the China Shock: the massive impact, for good and for ill, of Beijing’s emergence as the world’s factory floor. It became, in the years since China’s economic opening to the world, home to factories that made almost everything imaginable— and, for the most part, exported those goods to the rest of the developed world.

That is why, when I visited in 2009, Dongguan was in turmoil and why Xiao no longer had a job. A financial crisis in the United States half a world away, had laid waste to the world’s largest economy, and that meant export-dependent China—Dongguan in particular—was in serious trouble. In fact, Xiao was one of the lucky ones—he and his small family got some compensation, with which they financed their trip back to their home province in central China, where he now runs a small business. Earlier that same day, when he and I visited that closed factory, hundreds of riot police had been summoned to break up a demonstration by workers at another factory—one whose owner had shuttered the place and got out of town, leaving nothing behind.