Harold Meyerson

Doing business in China is beginning to cost real money. Not that Chinese workers are buying second homes or anything like that: Their average wage is still a little short of a dollar an hour. But so many Chinese have now left their villages for the factories that the once bottomless pool of new young workers is beginning to run dry, and the wages of assembly-line employees are rising 10 per cent a year.

Worse yet, new labour laws are making it harder for employers to cheat their workers out of their wages and benefits. Many American businesses that do their manufacturing in China had warned against those laws. But the good old days of Maoist labour discipline, when the government could send tens of millions of skilled workers down to the farms to be toughened up and periodically tortured, are gone. Mao’s heirs, though not above a touch of torture here and there just to keep the system humming along, are concerned, as he was not, with achieving social harmony, even if that means compelling employers to sign, and honour, contracts with their employees.

Multinational companies as Canon and Hanesbrands are expanding or building factories in Hanoi, where they churn out products for Wal-Mart and other American retailers. Foreign direct investment in Vietnam increased 136 per cent between 2006 and 2007, while it increased just 14 per cent in China. The reason for the move south is straightforward: Vietnamese factory workers make about a quarter of what their Chinese counterparts earn. But why Vietnam and not, say, Thailand, where labor is similarly cheap? Vietnam’s edge, it seems, is political. “Communism means more stability,” Laurence Shu, the chief financial officer of Shanghai-based Texhong, one of the world’s leading manufacturers of cotton fabrics, said. This view is common among Asian executives and some American executives, too. After all, Vietnam, like China, outlaws independent unions.

We could argue that our one-time opposition to communism was noble and all that but that, unburdened by the illusions of the past, American business, backed by the American government, has realised that the problem with communism wasn’t that it was undemocratic but that it was anti-capitalist. And that once communism was integrated into a world capitalist

system, its antipathy toward democracy not only wouldn’t be a bad thing but would actually be good.

That is clearly the political logic that underpins our involvement with China. It’s a little dicier to say this about our growing involvement with Vietnam, since all those Americans whose names are on that wall on the Mall probably didn’t realise how compatible with global American enterprise Vietnamese communism would turn out to be or how the cause of democracy would turn out to have been of no real importance at all. I guess a note from the American establishment to those men and women with their names on the wall would be in order. Something like: Say, guys — sorry ‘bout that!