World Economic News
Wal-Mart Drives Down Jobs and Wages in China
Wal-Mart's "brutal" low-price demands are even forcing China's factory managers to slash jobs and wages, as well as devastating communities in the United States, the Wall Street Journal wrote Nov. 13. Wal-Mart and other retailers, says the Journal in a front-page article, are "demanding rock-bottom prices and forcing factory bosses to cut costs any way they can in order to remain in contention for export orders." "It's the survival of the cheapest."
This forces wages, which are already low in China, even lower. For example, Ching Hai Electric Works in Shanjing has cut its workforce by a whopping 50%, to 1,500 employees, even while maintaining the same level of orders for small appliances. In addition, its starting salary is $32 per month40% less than the local minimum wage. Workers face up to 18-hr days.
Pressure from Wal-Mart has already forced U.S. manufacturers to close U.S. plants, and move production to China. In Shanjing alone, a southeastern city of 600,000, there are 1,200 factories.
Wal-Mart denies driving the cost-cutting, saying it only capitalizes on it. "As things get more competitive, the pressure that comes along with thatyeah, we try to take advantage of it," says Gary Meyers, a vice-president in global procurement at Wal-Mart.
Wal-Mart expects to purchase $15 billion of goods from China this year, up from $12 billion last year.
In 1996, buyers representing Wal-Mart wanted to place a massive order of electric fans with China Hai. Plant manager David Liu, distressed by the low price being demanded by Wal-mart, turned down the order. Wal-Mart claims there is no record of purchases in its database. Meyers insists, China Hai "doesn't ring a bell."
German Exports Eastward Growing Steadily
The German office of statistics reported Nov. 11 that exports to Russia, Eastern Europe, and China are increasing steadily, while exports to West Europe and the U.S. are stagnating. August official statistics show that German while exports to eastern countries showed some considerable increases, exports to western countries decreased generally, with the United States and non-eurozone European countries showed the worst declines. The following, cited figures are comparisons with August 2002.
Exports to Russia: up 12.6%; China: up 7.7%; Hungary: up 7.4%; Czechia: up 6.4%; Poland: up 5.0%.
Exports to the 12 Eurozone countries: down 3.1%; non-Eurozone countries: down 6.8; USA: down 19.1%.
Chavez's Venezuela Now Most Depressed Economy in South America
Venezuelan purchasing power has fallen as much as 7.3% below what it was 50 years ago, according to a study just issued by the UN Development Program (UNDP) and reported in the daily El Nacional Nov. 10. According to a report by the Venezuelan Teachers Federation, the average family income only covers 39.7% of the requirements for indispensable food, and other goods and services.
On-the-scene reports also contradict claims by the Chavez government that the health of the population has improved as the result of his "import" of Cuban doctors (the majority are paramedics, in fact). Medical services, in particular, are collapsing, residents say, to the point that patients at public hospitals are forced to bring everything with them, from cotton pads to blood to syringes.
A recent study prepared by the Venezuela Council of Industries reported that 60% of the industries in the country have disappeared over the last four years. That is, 4,611 out of the total 11,198 which existed in 1999, have shut down. Those that remain active, are using only 44% of their machinery and equipment. This is due to two causes, primarily: the deep collapse of internal demand, and the government's utilization of exchange controls to shut down industry. Venezuelan industries are highly dependent on imports, given that nearly 60% of the raw materials they use is imported from abroad. Yet, over the nine months the exchange controls have been in effect, the government had released only $2 billion to industry, whereas previously, businesses spent more than $500 million a month on imports.
Thus, it is not surprising that, according to a report by the UN's Economic Commission on Latin America, Venezuela's economy contracted 27.6% in the first quarter of this year, helped along by the effects of the nationwide strike, in early 2003, which attempted, but failed to oust dictator Hugo Chavez from office. The economy fell an additional 9.4% in the second quarter, putting Venezuela ahead of Argentina as the Ibero-American economy with the severest recession on the continent.
Free-Traders Meet in Miami; Counter-Assault Threatened
Ministers from the 34 countries of the Western Hemisphere are meeting in Miami Nov. 17-21, to try to set the rules for the final negotiations of a Free Trade Area of the Americas (FTAA). A pre-meeting was held this past weekend of Nov. 8-9 at a conference center in Leesburg, Virginia, attended by U.S. Trade Representative Robert Zoellick, and by ministers of 16 of the 34 countries, including Brazil's Foreign Minister Celso Amorim, described as one of the spokesmen for the developing-sector "bloc," which has, up till now, resisted U.S. pressures to capitulate.
According to web sites run by the various Jacobin operations regularly launched against IMF and WTO meetings as provocateur side-shows, the Miami meeting on the FTAA will be a definite target of these networks. One such outfit, comparing itself to the coca-growers in Bolivia, put out the following alert: "For those of us who can attend, now is the time.... In Cancun, we derailed the WTO; now we have a crucial opportunity to carry the momentum forward and derail the FTAA... We are calling for massive non-violent direct action in Miami.... Our direct actionfollowing in the footsteps of resistance movements in Bolivia, El Salvador, and elsewhere in the Global Southcan take many forms...."
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