Here’s a much needed and different perspective on the U.S.-China trade fight. Bill Mundell, below, relates a story of how a Chinese company with Chinese capital opened a new factory in a “forgotten backwater” in Alabama.
He cites a similar success story in South Carolina, where a Chinese textile manufacturer opened an industrial yarn factory. He asks: If the trade disputes between us and Beijing are resolved, couldn’t this kind of Chinese investing help “revitalize places that were dependent on manufacturing and blue-collar jobs”? Now, that would be a win-win for everyone.
William Mundell is a Los Angeles-based entrepreneur and the producer of Better Angels, a documentary about the U.S.-China relationship. The film won the Grand Jury prize at the 2019 Beijing International Film Festival and was released in China on July 2nd.
Laura Lewis is an unlikely protagonist in the unfolding drama between the U.S. and China. The 32-year-old mother of two, who grew up and still lives deep in the heart of Alabama’s Black Belt, always dreamed of being a nurse. But she dropped out of nursing school because she couldn’t find work. Deeply religious, Laura represented her church in a jail ministry, and during her weekly prayer group she always asked for help to find a job.
For six years, Laura and her husband struggled to survive. She worked as a waitress off and on until the restaurant shut down, and then there was no work. As she told us, “It isn’t uncommon to be unemployed for a very long time in this part of Alabama [Wilcox County, which lost 30% of its jobs in the 2000s].”
Then something unexpected came along.
In this forgotten backwater of the U.S. economy, a Chinese company called GD Copper opened a new factory in May 2014. The company makes precision copper products that are sold in the U.S. market. In the 15th-poorest county in all of the U.S.—and still the poorest in Alabama—there are now hundreds of new manufacturing jobs.
Today In: Industry
Laura Lewis landed one of those jobs. Her story is a powerful lesson about the America we are and the one we want to be.
Laura Lewis, a factory worker at GD Copper factory in Wilcox County, Alabama.
Laura Lewis, a factory worker at the GD Copper factory in Wilcox County, Alabama.BETTER ANGELS
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But Laura’s story isn’t unique. For over 100 years the economy of South Carolina’s Lancaster County was built on textile manufacturing. Springs Mills in Lancaster once employed 20,000. Then it all vanished. The last mill closed in 2007, and by 2009 unemployment hit 19%. Then, a few years later, in a move the county’s economic development director called “stunning,” some of the textile jobs lost to China were brought back—by China. In 2015 the Chinese textile manufacturer Keer opened an industrial yarn factory in Lancaster County.
A big part of the reason for this was shifting cost dynamics. While the cost of labor in the U.S. is still higher than in China, the gap has closed dramatically. And almost every other cost component has become cheaper here. Cotton was over 30% cheaper here than in China; electricity in South Carolina cost almost 40% less. But money isn’t the whole story.
Ever since Congressman Jack Kemp offered his vision of enterprise zones in the 1980s—a vision never truly implemented—the U.S. has tried two things to reverse the erosion of the “old economy” and revitalize places that were dependent on manufacturing and blue-collar jobs. The most talked-about panacea has been the wholesale retraining of the workforce, so that experienced workers whose jobs have disappeared can get different jobs in new growth industries.
The second (and not mutually exclusive) approach has been wealth transfer programs implemented by the government. These try to maintain incomes at minimally acceptable levels until the first option, retraining, makes people employable again.
Or so the theory goes. Yet both of these approaches have failed to solve the dilemma of the “old economy” workers.
The U.S. has plenty of risk capital to create the next Google or Facebook, but we currently lack the risk capital and mind-set to revitalize the small towns that exist all across America, where workforces have been devastated by deindustrialization and globalization. Eighty percent of venture capital in our country goes to 50 counties.
There’s a different pool of entrepreneurial talent and capital out there, one with a greater appetite for the kind of risk that’s tailor-made to bring industry back to life. The key is a mind-set committed to using existing local resources—both human and material—to restore prosperity to a neglected community. This kind of talent is hardly limited to any one nation, but currently it is the Chinese who have spent 30 years becoming the best in the world at this type of project.
This style of Chinese entrepreneurship is reminiscent of the way Americans thought 150 years ago, when we were still a frontier society. China is willing to invest heavily and build risky enterprises all over Africa, despite physical dangers and economic uncertainties. And it will invest in the poorest parts of the U.S., where conventional wisdom says there’s no hope of success. China sees some of our most intractable problems as opportunities. It’s prepared to do more with less, to operate under harsh conditions and, most important, to meet labor halfway instead of expecting labor to bear the full burden of adjustment by retraining itself.
One might have expected that the cultural chasm separating working-class Americans from Chinese managers would prove insurmountable. As Ms. Lewis from Wilcox County told us: “There wasn’t much I knew about China before they came here. I think a lot of things I thought were maybe things I’d heard about China that were probably not true.” Asked what she had heard about the Chinese, she said, “They were mean. Not family-oriented.” She said she’d heard that Chinese and Americans didn’t get along and that the Chinese “didn’t like us very much, that we were greedy.”
Chinese and American co-workers on break at the GD Copper factory in Wilcox County, Alabama.
Chinese and American co-workers taking a break at the GD Copper factory in Wilcox County, Alabama.BETTER ANGELS
How did people so different build a harmonious workforce? I believe it’s not merely because of shared goals. I think it’s that our Chinese “visitors” remind Americans of all ethnicities of a part of our national character that we too often forget. Taking risks on a frontier far from any place we have known is inherent in the American DNA.
“The biggest thing I’ve learned about the Chinese,” says Ms. Lewis, “is that they are just like Americans—they want to strive harder to do better at their jobs, just like we do.”
President Trump campaigned on the idea of bringing back manufacturing jobs to working-class America. His proposed solution was to fight against unfair trade deals, streamline regulations and reverse environmental policies that had made energy production difficult. That resonated with voters because they knew nothing else had worked.
A trade tussle with China, while bringing necessary scrutiny to longstanding and serious issues in the bilateral economic relationship, risks throwing the baby out with the bathwater. The real cost of conflict is not the price increases or even the uncertainty that inevitably results; it’s the lost opportunities to transform the relationship into something much more mutually beneficial.
We must do a better job of replicating the success of Chinese entrepreneurial capital. Right now most Chinese have no idea that a mature country, such as the U.S., has such significant pockets of underdevelopment, and they may feel their capital is unwelcome here. We can change that perception.
It would be wonderfully ironic if the country long vilified for hollowing out the American middle class by exporting its jobs overseas could help turbocharge the American heartland’s economic recovery.