In recent weeks, Chinese leaders have stepped up the verbal assault on the West by attacking U.S. policy as well as U.S. and European corporations.
Due to the global recession and falling demand, some Chinese factories had to lay off workers and close their doors. While there has been some talk of finding ways to boost domestic consumption, that's a tough sell with China's leaders. After all, consumption still has a bitter taste on a communist tongue. Chinese leaders would prefer instead to see the export ball rolling once again. Furthermore, they blame free market capitalism for the worldwide financial crisis and recession. They don't take kindly to U.S. politicians lecturing them about a weak currency. On the contrary, they say America is the one that is purposely debasing the value of its currency in order to boost its exports and raise the cost of China's goods for American consumers. For good measure, they have even complained about U.S. arms sales to Taiwan and President Obama's temerity for meeting with the Dalai Lama.
The Chinese have also gone on the offensive against Google, putting the company in a rather awkward position. Google executives are asking themselves if they should compromise their values and censor searches (especially searches on political speech) in order to maximize shareholder wealth, or if instead they should live up to the company's code of conduct, 'don't be evil,' even if doing so results in the loss of an estimated $600 million (according to JP Morgan) in revenue this year alone.
It seems that values are winning this debate. Now that Google appears set to pull out of China, its advertising partners are up in arms. They say Google's decision will put them out of business. They want compensation for their losses. Are lawsuits far behind?
Not long ago, Google and a number of other American companies were targeted by computer hackers who were operating from within China. Some experts suspect the Chinese government was actually behind those attacks.
On top of all this, Chinese officials are suddenly claiming that Western luxury goods makers are selling shoddy products in China. This seems like a thinly veiled attempt to urge Chinese consumers to buy only Chinese made goods.
The bottom line is that corporations are finding it much more difficult and costly to make a buck in China. Others may follow Google's lead and leave the country entirely. Or, they may complain to their governments to apply diplomatic pressure. The end result could be an ugly trade war, which would hurt all parties involved. That's an outcome that will make the Great Recession even greater.