Chapter One

The Shanghai Squeeze

Corporations have been moving jobs and capital out of countries like the United States since the late 1960s. But in the public mind it is only recently that China has become the most likely destination. Almost overnight, it seems, the given wisdom is that if China’s breakneck growth continues, its inexhaustible labor pool, its burgeoning high-tech skills, and its investment opportunities could effortlessly absorb the livelihoods of workers and professionals in every corner of the world. Worries are also mounting about how the world’s resources are being drained to service this growth, but they do not yet compare to the widespread anxiety about the flight of industry and capital: in Mexico, whose NAFTA-based manufacturing sector has been hemhorraging jobs to Asia; in Japan, Taiwan, and Korea, where leading technology industries have come to depend on manufacturing on the mainland; in the United States and Western Europe, where offshore job transfer is sprinting up the value chain into the realm of professional services; in the offshore sites of Eastern Europe and North Africa that are increasingly less profitable than Asian locations; and even

in countries like Cambodia, Thailand, Vietnam, Burma, and India, whose low labor costs are now undercut by the comparative advantages of producing in the heartlands of the jumbo China market.

Workers everywhere tend to perceive the mercurial growth of China’s economy as a threat. Most owners of mobile capital, by contrast, see only an investors’ bonanza. This discrepancy is not surprising, but it is rare to come across a star