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KOPPEL: This is a program about China,
so why are we beginning in Rolla, Missouri,
showing you a bunch of middle-age blue-collar workers
wandering around a job fair?
Do you have any office positions open?
-Currently, no. -No?
KOPPEL: Because China is where their jobs went.
China -- which relates how, exactly,
to Mexican migrant workers
picking cotton in North Carolina?
Well, that's where the cotton is going -- China.
WOMAN: Sit down, please.
Boys and girls, l feel a little cold.
l think l need some clothes.
KOPPEL: Don't worry.
That North Carolina cotton will be back
as soon as Chinese workers have milled it
and cut it and turned it into...
CHlLDREN: ...a hat...
a T-shirt...
a dress.
KOPPEL: lt won't occur to these children for some years to come,
but they are being trained
to compete in the global marketplace.
l used to work at Briggs & Stratton
and l'm unemployed and l'm looking for a job.
KOPPEL: American unemployed, Chinese children,
Mexican migrant workers.
They don't know one another.
They may not even care about one another.
But as you'll see,
they're all having an impact on one another's lives.
WOMAN: A 7.9-magnitude earthquake hit
in midafternoon...
MAN: ...report that schools and dormitories have all collapsed.
WOMAN #2: ...puts the death toll at more than 55,000.
The spectacle of a profound national tragedy
has a way of erasing differences.
We can all relate to people who never had much
and who've lost what little they had.
"There but for the grace of God," we say.
The earthquake struck a region of China's heartland
that the government has targeted for growth.
All we've been seeing these last couple of months, though --
what has engaged our attention and compassion --
is the massive destruction --
the loss of so many homes, so many schools,
the death of so many tens of thousands,
so many children.
We look at these scenes,
and even those among us who feel no connection
or even kinship with the Chinese
can empathize.
"There but for the grace of God."
We are all vulnerable,
and these days, we are all interdependent.
We'd been working for months in southwestern China
near where the earthquake struck.
Our base was the biggest city
that most Americans have never heard of --
That's where it is on the map, along the Yangtze River
about 1 ,500 miles southwest of Shanghai.
[ Horn honks ]
lt's a city with an attitude,
a place that has something to prove.
And once we've shown you
a few of the things that are happening in Chongqing,
you'll begin to understand why China and the United States
might have a very difficult time
getting along without each other anymore.
The signs of interdependence are everywhere.
The city is blossoming
with the icons of American brands
like Ford, Ethan Allen, and Wal-Mart,
and that's merely scratching the surface.
Love it or hate it,
our economic futures seem irrevocably linked.
lt's a reality. Get used to it.
Let me set the scene for you.
A downtown square in Chongqing ringed with upscale shops,
most of them selling products
that would be completely out of reach,
unthinkably expensive for most Chinese.
And yet there is a new and rapidly growing class
of Chinese who can and do shop here,
people for whom price is no object --
hundreds of thousands,
perhaps even millions of such people --
a huge, new, and expanding market
for high-end Western goods.
But China's new wealths and its growing middle class
are still dwarfed by its hundreds of millions
who live just at the edge of survival.
The brutal truth
is that China can barely take care of its people.
There are simply too many,
which is why you see murals all over the countryside
proclaiming the government's one-child policy.
That's been the law for decades now.
To this day, the government will impose a hefty fine,
sometimes amounting for the poor to half a year's salary or more,
on a couple that has a second child.
lf anything, that has made children
especially precious to the Chinese.
Perhaps the worst unintended consequence
of that one-child policy
is that the earthquake left so many families childless.
lf they're still young enough to have children
and if they can prove their loss,
those families will now be granted the right to try again.
[ Shouting in Chinese ]
They love children. They really do.
But their government is trying to cope
with the largest population in the world,
competing for very limited resources.
You need to be able to look past the images
of regimented youngsters wearing the symbolic red kerchiefs.
There are tens of millions of these children
and hundreds of millions
of their desperately poor adult relatives.
They all need to be employed and housed and fed,
and Communism didn't do it.
What's beginning to do the job is capitalism.
As for that massive population base of poor people,
they are China's weakness and its strength.
Call it the Chinese paradox.
KOPPEL: They are little engines of ambition...
Okay. Very good.
KOPPEL: ...all but vibrating
with the earnest desire to succeed.
And all over China, from earliest childhood on,
English and computer literacy
are being drummed into their little heads.
China has big plans for this generation.
Their skills will far exceed those of their parents,
but that's down the road.
For the time being,
China's most significant contribution
to the global economy
remains cheap, reliable labor.
Line 'em up, snap it on,
plug it in, check it out, send it off.
Snap it on, plug it in, check it out, send it off.
Snap it on, plug it in, check it out, send it off.
Snap it on, plug it in, check it out, send it off.
lt's an endless, mindless, bottomless pit of a job.
Anyone who's ever worked an assembly line
can tell you about the pressure and the boredom and the fatigue.
But if they don't like it -- and many of them don't --
there is a vast labor force of Chinese countrypeople --
peasants and farmers --
more of them than the combined populations
of the United States and all of Europe,
desperate to take their places.
And that is where it all begins.
CROWD: 5...
KOPPEL: ln November of 2007,
a demolition company in Las Vegas, Nevada,
fulfilled its contract
to bring down the old Frontier Casino and Hotel.
lt was done in quintessentially American style...
[ Alarm blaring ]
...quickly, efficiently, totally,
the debris loaded onto trucks and headed for landfill.
[ Shouting in Chinese ]
What this is not...
...is a simple demolition project.
This is a Chinese-style recovery operation.
Buried within each of these concrete beams
is a long, valuable piece of steel rebar...
...that can be melted down, recast, and reused.
When labor is plentiful and cheap enough,
it makes good economic sense
to chip the mortar off each individual brick
so that it can be reused in the building of a new structure.
These women make the equivalent of $1 to $2 a day.
Chip off the mortar, gather up the bricks,
hoist them on your shoulder, dump them in the truck.
Chip off the mortar, gather up the bricks,
hoist them on your shoulder, dump them in the truck.
The men here make more than the women.
Still only $3 to $4 a day, but they consider that good pay
compared to what they can earn at home,
which is essentially nothing.
Most of these people were subsistence farmers
who just barely fed themselves and their families.
ln a good year, they might have enough food left over
to raise a pig or two
that they could slaughter or sell at market.
[ Speaking Chinese ]
lNTERPRETER: lf l stay home working in farmland,
l won't make money.
KOPPEL: lf you're looking for a job in construction,
this is the place to be.
lt's estimated that 1 1/2 million people here
are working on construction-related jobs.
lt's already a big city -- about 13.5 million --
but it's part of an enormous municipality,
a region the size of Austria
with an overall population of more than 30 million people.
The goal over the next 10 to 15 years
is to expand the city out...
[ Horn honks ]
...and draw the people in
until Chongqing is a megacity of 20 million,
with only 10 million or so people
left in the remaining countryside.
But the larger goal is to turn Chongqing
into an industrial hub,
an international center of industry and trade.
The city has already attracted significant American investment,
like this Briggs & Stratton plant,
where Chinese workers are now on the assembly line
building American engines.
WOMAN: This turned my life upside down.
l've got to look for a new career.
KOPPEL: Those engines used to be built here
at this shuttered Briggs & Stratton plant
in Rolla, Missouri.
l hate the fact that it cost me my job,
but, you know, businesses are out to make money.
We have a couple of openings...
KOPPEL: And while the move was good
for the corporate bottom line,
it badly hurt some of the workers,
especially the older ones who thought they'd retire at Briggs.
Now, like awkward teenagers at a prom,
they find themselves shuffling through a job fair.
lt's gonna be hard for me to get a job 'cause l'm 61 years old.
So far, every place l've applied for
has said l'm overqualified.
You know, the polite way of saying, "You're too old."
l'm Pam Leaser.
l'm a dislocated worker from Briggs & Stratton.
KOPPEL: Pam Leaser had been working at Briggs & Stratton
for almost 1 1 years.
She's clearly uncomfortable shopping for a new job.
She never thought she'd have to,
until the day a delegation from Chongqing, China, came calling.
They had a translator with them.
And my boss come up and he asks me
if l would care to explain to them
what my job was and how l did my job.
And l looked at him, and l told him, "No, l will not."
l just knew that down the road l was gonna be losing my job.
KOPPEL: Which is exactly what did happen
to about 480 Briggs & Stratton workers
on September 28, 2007.
Jim, l don't know
if you were kidding me before or exaggerating,
but you were talking at one point
about being the most hated guy at the home plant in Missouri.
l think that "most hated" was a bit of an exaggeration.
KOPPEL: Jim Marceau runs Briggs & Stratton's operation
in Chongqing, China.
There are a lot of people who were concerned
with us building a factory in China,
that it would take jobs from the United States.
This plant was built so we could try to make engines
inexpensively enough where we could sell in the Asian market.
lt wasn't made to take jobs from the States.
KOPPEL: Which is true. That was the plan.
But the engines remain too expensive for China
and for the rest of the Asian market.
So now you've got Chinese workers
assembling the engines in Chongqing.
And even with the additional cost
of shipping them halfway around the world,
they're still a bargain in Europe and the U.S.,
where they're powering lawn mowers,
snowblowers, and generators.
What's involved is just a fraction
of the overall Briggs & Stratton operation,
but Chongqing's gain was Rolla, Missouri's, loss.
LEASER: Well, after our last engine was built,
everybody was gone.
l mean, people wanted to get out of there.
But l was one of them stayed till 3:00.
l thought, "They're paying me for my whole eight hours."
KOPPEL: $11.17 an hour is what Pam earned.
Not a ton of money in Rolla, Missouri,
or in the three other towns with Briggs factories,
but it's a living wage.
The fact is that Briggs & Stratton
has kept 90% of its manufacturing
in the United States,
and that profitable plant in Chongqing
is helping to keep the company competitive.
The labor is, you know, 5% of what it costs in the States
or 10% or 20%.
That's where you save your money.
Well, l thought l was really stable at Briggs & Stratton.
l thought l'd stay there the rest of my life
and retire there.
Well, now l'm 50,
and l have to start all over again looking for another job.
-Well, it's nice to meet you. -You too.
KOPPEL: What do you say to someone
caught in the backwash of the global marketplace?
You may want to try hiking. Have you done that?
KOPPEL: Or, for that matter,
to someone on the other side of world
trying to catch the next wave?
The basic equipment you need for hiking is a simple...
KOPPEL: Li Dun is 17 years old,
and her parents are peasant farmers.
Their combined annual income is less than $600,
roughly half of which goes toward the payment
of Li Dun's tuition, food, and housing
at this boarding school in Chongqing.
She is living the American dream
of a better life than the one her parents have known.
[ Speaking Chinese ]
KOPPEL: This is the fabric room of one of America's
biggest and best-known furniture manufacturers.
But if you look closely,
you'll see that even Ethan Allen in Maiden, North Carolina,
has integrated Chinese-made components
into its supply chain --
thousands of rolls of fabric awaiting the day
when they will be turned into custom-made upholstery
made in China.
Made in China.
Made in China.
Very possibly, though,
spun out of cotton from here in North Carolina.
VlCK: All of our textile mills have moved overseas
either to South America or China.
KOPPEL: Linwood Vick is the foreman on his father's farm.
There are very few mills left in North Carolina,
so all of our cotton is now being exported.
KOPPEL: The cotton and the tobacco grown on this farm
are being exported,
and the labor force is being imported --
legal migrant workers from Mexico.
VlCK: We use migrant workers from Mexico
because they are a reliable workforce.
They do an excellent job.
Our local labor in North Carolina
does not want to work the hours or do the hard work.
lt's extremely hard work.
KOPPEL: That's your basic engine of today's global economy --
cheap labor.
Either it migrates to where the work is,
or the work migrates to where there is
an abundant supply of cheap labor.
What they are assembling at this Ethan Allen furniture plant
is what the company calls the Pratt Sofa.
lt's a pretty expensive piece of furniture --
costs a couple of thousand dollars.
And the base -- this part with the hand-turned legs --
is also made in China.
Anna Rockett, who's 23, does quality control.
ROCKETT: l'm an inspector here at Ethan Allen.
Basically, what l do is l clip strings,
make sure the piece of furniture looks perfect, you know --
doesn't have any holes in it, doesn't have any mishaps --
before we send it out the door.
KOPPEL: Anna earns about $20 an hour,
which is roughly what 17-year-old Moo Wan Ching
earns in a week,
doing essentially the same job -- quality control --
on these boom boxes which are bound for the United States --
Wal-Mart, to be precise.
What confuses Moo Wan Ching is that Americans
get to buy cheap imports
while she can't afford anything made outside of China.
[ Speaking Chinese ]
lNTERPRETER: That's what she feels is the most unfair thing.
lt's very expensive here, but why is in America so cheap?
Because here in China, people work for very low pay.
Do you guys get high pay?
Yeah. We get high pay, yeah.
How much?
Too much.
Maybe you should be a television reporter.
What do you think?
-She thinks yes. -Yeah.
Yeah. Because, you know, she says staying in this factory
is a waste of her talent, actually.
A waste of her talent. l like that.
KOPPEL: Which is pretty much the way Anna Rockett
back at the Ethan Allen plant in North Carolina
sees things, too.
lt's a bunch of different things that you have to look for.
lt's kind of almost a very tedious job at times.
KOPPEL: But here's the kicker --
the Pratt Sofa that Randy Smith is working on here --
that's headed to China -- Chongqing, to be precise.
China's growing middle class has got plenty of money,
and they appreciate good American workmanship.
SMlTH: l think it's wonderful.
As long as we manufacture the furniture here,
we can sell it to anybody we want to.
That's fine. l have no problem with it.
KOPPEL: The balance of trade, though,
between China and the United States
remains totally out of whack.
Americans buy vastly more from China than the other way around.
Moo Wan Ching's boss, the man who manages this plant
assembling tens of thousands of DVD players and boom boxes,
was born in Taiwan
and worked for 15 years in Orange County, California.
Matt Shaw's biggest outlet is Wal-Mart.
Why would Wal-Mart come all the way to China
to buy these things here?
Because what l can tell you right now is,
today, this type of DVD player we provide to Wal-Mart --
we have the lowest cost in the world.
-The lowest cost? -Yes.
l think that's the whole purpose.
So, the lowest cost
means you're paying the lowest salaries in the world.
lt means we have the lowest salaries.
lt means we have higher efficiencies.
KOPPEL: And few American firms understand those efficiencies
quite as well as Apple.
The company boosts its bottom line with the huge savings
that come with the label "assembled in China."
But it's the company's design prowess and marketing savvy
that motivates their consumers.
That's why, for example, every iPod box carries the words
"Designed by Apple in California."
When you buy an iPod for $299,
Apple makes a profit of $80.
The Taiwanese company that assembles the parts
in mainland China earns about $4.
The same dynamic that works for Apple
also works for Wal-Mart,
but on a much larger scale and at much lower prices.
ln fact, it's the Wal-Mart credo --
buy cheap, sell cheap.
And it's precisely what attracts these Mexican migrants
who work on the Vick family farm in North Carolina.
Every Saturday afternoon and Sunday,
they go to Wal-Mart and spend it,
whether they're buying their groceries,
their clothes, or the toys for their kids.
KOPPEL: Wal-Mart's slogan, "Everyday low prices,"
could almost serve as an anthem for the global economy.
These Mexican migrant workers are one strand
of a complex fabric that makes Wal-Mart possible.
On this trip, they're stocking up
in preparation for their return home to Mexico.
And if they take one of these boom boxes home as a gift,
it's a good deal -- only $19.98.
Remember that sassy 17-year-old
with a baseball cap and an attitude?
But she's certainly not making a whole lot of money.
And neither, for that matter, is her boss.
He understands that Wal-Mart has some major expenses to absorb.
They have to pay the shipping from Shanghai to L.A.
They have to pay their stores.
They have to pay their employees,
all their overhead, of course.
But if l said to you, "At the end of the day,
who makes more money on each of these DVDs --
you or Wal-Mart?"
Of course Wal-Mart.
KOPPEL: Moving manufacturing to China
also benefits Briggs & Stratton.
The company's doing just fine with its plant in Chongqing.
Of course that's no comfort to Pam Leaser,
whose job was outsourced to China.
We're gonna wind up having no jobs.
There's not gonna be nothing here in the United States.
lt's all gonna be overseas.
Okay. Thanks. Nice to meet you.
LEASER: l'm just hoping that the government wakes up
and starts seeing
what it's doing to United States citizens.
KOPPEL: Of course, even Pam Leaser shops at Wal-Mart.
LEASER: We shopped at Wal-Mart today in Rolla --
my husband and l did.
We can save money by shopping at Wal-Mart
instead of getting the items here in this little town.
WOMAN: So, in other words, the Wal-Mart's cheaper.
KOPPEL: The reason that everything's so cheap
at Wal-Mart
is because things are made in China.
WOMAN: So, in a way, you benefit from it.
So, how do you feel about that?
KOPPEL: lf Pam Leaser doesn't have an answer
for globalization's adverse effect on American workers,
well, no one else does, either.
At age 50, she is out of work and looking for a job.
You can hardly expect her
to be happy about the bargains at Wal-Mart
when those are largely the products
of cheap, foreign labor, especially from China.
After all,
that's how she came to lose her job in the first place.
Although it's still morning
and he has a field of lotus roots to harvest,
Li Ching Fu is slightly drunk.
[ Speaking Chinese ]
lNTERPRETER: l'm so tired of him.
He's such a pain. He loves drinking.
KOPPEL: That's Mr. Li's wife, Ching Gong Lu.
lNTERPRETER: We don't have a good relationship.
We're staying together because of our daughter.
[ Speaking Chinese ]
KOPPEL: lf the daughter looks slightly familiar to you,
you're right.
You saw Li Dun at school in English class.
Every weekend, she comes home to her parents' village.
At the beginning of every week,
she boards a commuter bus to another village
where she takes a tiny, three-wheeled taxi,
which bumps its way through farmland to another bus stop.
There she catches a Chongqing municipal bus,
which drops her at a stop near her boarding school --
a school which her father and his family think
is a waste of money.
lNTERPRETER: According to their view,
she should have stopped receiving an education
a long time ago.
They think it is useless for a girl to be schooled.
The son should be educated.
l feel it is really unfair.
KOPPEL: Everything that attracts foreign investment to China
rests on the foundation of cheap labor,
and Ching Gong Lu,
staggering under the weight of these lotus roots,
may be a perfect transitional figure.
Six and sometimes seven mornings a week during harvest season,
she carries 120 pounds of produce,
which is roughly what she weighs, to market.
She's happy if the day's work yields $3.
After all expenses are paid --
renting the land, buying the seed,
the daily bus fare to town -- the family nets $570 a year.
Half of that
goes toward Li Dun's expenses at boarding school.
15-year-old Kellen Jang
lives a far more privileged life in Potomac, Maryland,
but she, too, has to cope with family separation.
Her father is often gone for long stretches.
Dr. Her Jang has moved back to China
after living in Canada
and then in the United States for 20 years.
For eight years, he worked as an AlDS researcher
at the National lnstitutes of Health.
Four years ago, Dr. Jang decided to establish his own lab.
He's still trying to find a more effective treatment for AlDS,
but now he's set up shop in Chongqing.
Early every morning,
he's on a conference call with his family.
[ Telephone rings ]
Hi, honey.
ln Maryland, it's late afternoon.
So, how are you guys doing?
KOPPEL: And his son and daughter are just back from high school.
Dr. Jang's AlDS treatment
has now entered the human-trial stage in China.
Between supervising those
and spending time with his family in Potomac,
he spends a lot of his life in airports
and making that long commute.
ln Chongqing, he pays 1/5 what he did in Maryland
for 10 times as much space.
lt's cheap labor, cheap facilities,
cooperation from the government,
and a huge base of people
who have every disease known to man.
ln fact, the major pharmaceutical companies
are now in China building up their R&D center.
ls this good for America or bad for America?
l think, overall, in the long run,
it's good for everybody,
because the lower cost
eventually is gonna lower the medical care.
The drug price is gonna go down.
KOPPEL: And even with the pressure
to keep prices on exports down,
salaries for Chinese workers are going up.
And management?
Well, management is doing very nicely by anyone's standards.
Seen here driving a luxury car
through their gated community in Chongqing
and into the driveway of their elegant new home,
homemaker Zhang Show Jing,
her husband, Ding Ming,
and their 2-year-old daughter, Ding Sehan.
Mr. Ding is an executive at a thriving company
that makes electrical components
for motorcycle firms like Kawasaki and Suzuki.
But Mrs. Zhang is rightly proud of her role
in designing and decorating their new house.
From a pretty-in-pink room for her daughter
to the spacious family bathroom --
note the toddler's mini-toilet --
to the high-quality kitchen fixtures
and top-of-the-line American appliances,
it's a house fit
for one of China's new captains of industry.
Today is delivery day
for some long-awaited new furniture,
featuring both a red carpet
and white-glove delivery service, literally.
As for the couch being so meticulously unwrapped,
so gently -- dare we say lovingly --
moved and placed,
that's the very couch that was assembled
and upholstered in North Carolina,
where it was placed on the legs and base shipped from China.
And now here it is -- Ethan Allen's Pratt Sofa,
complete and in place at its final home in Chongqing
with Mrs. Zhang and Mr. Ding,
who know a nice piece of American craftsmanship
when they see it.
[ Speaking Chinese ]
lNTERPRETER: American products always look good,
and the quality is always good, too.
And my first car was a Buick, which drove very well.
And our new American refrigerator
has big double doors, and it's really well built.
We're told you can even kick it.
[ Speaking Chinese ]
lNTERPRETER: Yes, my father told me we can
pass this refrigerator down to our grandchildren.
Both the fridge and the couch
could be passed down through several generations.
And they match the style of our house.
That's why we chose them.
KOPPEL: Socialism's dream of a classless society
got lost somewhere between Mrs. Zhang's McMansion
and Ching Gong Lu's tiny farmhouse.
But China is becoming a place
where even gaps like that can be bridged.
lNTERPRETER: Life is hard. What can we do?
l'm planning to go out and look for a job
in January or February.
Does your husband know that yet?
[ Man speaks Chinese ]
No, he doesn't know.
What do you think will be better about life in the city?
All l know is that l want to work for myself.
l don't know how bright the future will be.
As long as l can make enough to support myself,
l'll be fine.
l really don't get on with him.
l'm so annoyed by him.
lf it hadn't been for my daughter,
l would have left him a long time ago.
KOPPEL: Ching Gong Lu's chances of getting rich
in her village of Dragon Spring or in the city
were always slim and none.
WOMAN: Go swimming.
KOPPEL: But China's experiment with capitalism
offers a genuine window of hope to Li Dun, her daughter --
the one with the education.
Chun Ji Ming is what is known in Chongqing
as a bang bang man.
ln another time and place,
he and his crew might have been called coolies.
When the riverboats churn their way up and down the Yangtze
carrying foreign tourists to and from the scenic Three Gorges,
Mr. Chun and the others carry their baggage
up and down the embankment here in Chongqing.
They don't know much about Americans,
but what they know, they like.
[ Speaking Chinese ]
lNTERPRETER: Americans are great.
Because their economy is more developed,
they're more generous than the Germans and the French.
Do the Americans have lots of money?
[ Speaking Chinese ]
Americans give good tips.
They are very generous.
Tell me what you know about America.
As far as l know, America is the most advanced
and also the richest country in the world.
KOPPEL: lt may have occurred to Mr. Chun
that Americans and Chinese, who have been enemies,
may one day be bitter rivals again.
And what about China?
Do you think the day will come
when China and America have to fight?
That is impossible.
The relationship between America and China
is pretty good right now.
That won't happen.
KOPPEL: Whether out of courtesy or intuition,
Mr. Chun understands mutual interests when he sees them,
as does American investment banker Simon Erblich.
America has to figure out what it wants to do here.
China is growing fast, and they're opening up their doors.
So, either China, in the long run,
is gonna be a competitor of America's or a partner.
-Both? -Or both.
'Cause being a partner with China,
at the end of the day, is gonna be good for everybody,
both financially speaking, politically speaking,
from a humanitarian standpoint.
That is a win-win situation for everybody,
and you're not gonna be able to avoid
the efficiencies of market,
the cheaper labor that's gonna be available all over the world,
and you can't keep running away from that.
KOPPEL: Take silk-making for example,
an ancient Chinese industry.
These silkworm cocoons,
nurtured on thousands of acres of Chinese mulberry bushes,
are about to be relieved of their silken thread.
They enjoy, thanks to Simon Erblich,
a small, humble place on Wall Street --
another thread, if you'll pardon the pun,
in the fabric of Sino-American relations.
So, what do you know about silk factories?
To be honest, not much.
KOPPEL: But, then, it's not their expertise
on silk production
that makes Simon Erblich and his partner Dan Hirsch
interesting to the Chinese.
Simon and Dan find companies
that can be listed on American stock exchanges --
let's say an antiquated silk factory
that needs money to buy new technology.
Chinese entrepreneur takes American investment,
updates factory.
Chinese government provides incentives,
silk factory blossoms.
ln theory, everybody gets rich.
ERBLlCH: They were valued very low --
$1 million, $2 million -- here in China.
So, that's what you see as...
-An opportunity. -...shooting fish in a barrel.
-Win-win? -Win-win.
-For whom? -Everybody.
KOPPEL: Just as one day,
when millions of Chinese peasants
have been drawn into the cities,
the remaining farmers will start using engines,
perhaps even Briggs & Stratton engines,
to work larger plots of land.
MARCEAU: When you have less farmers
trying to do the same amount of work
without the actual people,
they're gonna have to start buying automated products
to help them.
lf l said to you, Jim, is there any way
of untangling the Chinese-American relationship --
Are we and the Chinese, for good or ill...
Oh, yeah.
l think it's meshed. lt's got to be meshed forever.
l mean, if you look at the amount of companies
in the United States
that rely on Chinese-made products
or Chinese-made materials,
if you try to pull that apart,
you would have so many companies
with a complete loss in supply of what they do.
So l think it's something that will only get --
We'll only get more involved with China as times goes on.
KOPPEL: The family-owned Bernhardt Furniture Company
in Lenoir, North Carolina,
moved some of its operations to China more than 25 years ago.
That, too, says CEO Alex Bernhardt,
has been a win-win proposition.
Work ethic comes to mind immediately.
The people are diligent and work eagerly.
They're eager to learn.
We've been able to instill in them
some of the quality aspirations and standards
that Bernhardt has.
So, clearly, today, it's the country of choice for us.
KOPPEL: Bernhardt explains to his American workers
that outsourcing to China
allowed him to keep plants open in the United States
while keeping his overall prices competitive.
lt's what he calls "That Wal-Mart thing."
BERNHARDT: l shop at Wal-Mart. l expect they do.
l expect we're all using televisions and shoes and belts
and cameras and clothing
that is made somewhere else in the world,
and they understand that the consumers today
want great design, great quality, and a great price.
And whether it's sad or just reality,
the country of origin is not of great importance
to consumers in America.
KOPPEL: Bargains for the American consumer,
quality exports for the growing Chinese middle class.
Remember Mrs. Zhang,
the woman who bought the Ethan Allen couch?
She drives a BMW from Germany,
wears a Burberry shawl from England,
and carries a Louis Vuitton handbag from France.
She's paying her weekly visit to Wal-Mart,
which, in Chongqing at least,
is one of the upscale places to shop.
There are delicacies to be found here --
chicken feet, far superior to the local variety,
imported from North Carolina.
lf you're trying to get a handle
on the Sino-American relationship,
Wal-Mart's not a bad place to start.
ln America,
where consumers are looking for cheap foreign imports,
and now in China, where the Wal-Mart name conveys
a totally different image
of quality and high-priced foreign imports.
lt's more than a toehold.
Capitalism, of all things,
has established a solid foothold in China.
How about that?
When the earthquake hit, China demonstrated
one of the strengths of an authoritarian government --
100,000 troops mobilized and on the scene within hours,
and China's prime minister on hand
to oversee the situation.
Vincent Lo is one of China's billionaire developers.
Democracy. Of course, it sounds good.
But in practice, it doesn't always bring you the results.
[ Camera shutter clicks ]
KOPPEL: lf you listen to a young
Westernized fashion photographer,
the Chinese government's approach is working.
l have to say that l love my country,
but l don't love my government.
l trust my government.
KOPPEL: That, in our next broadcast.
KOPPEL: The superstitious --
and there are many of them in China --
believe that huge natural catastrophes
are always precursors of great change.
What must they be thinking?
A disastrous earthquake,
China, about to host its first Olympic Games,
and the entire world is watching.
Something strikingly similar happened before,
although there were no outsiders in China to record the event,
and very few pictures remain.
ln late July of 1976,
there was an even more catastrophic earthquake
in China.
More than a quarter of a million people died.
The Olympic Games were under way in Montreal,
and China played no part in them whatsoever.
ln those waning days of the Cultural Revolution,
China refused almost all contact with the outside world.
Mao Tse-Tung lay on his death bed,
and great changes were about to take place.
[ Anthem playing ]
Memories fade.
Even in China,
people under the age of 40 have no personal recollection
of the Cultural Revolution --
years when the thoughts of Chairman Mao
were memorized and treasured
as though they were biblical revelations.
Gems like this...
[ Speaking Chinese ]
KOPPEL: "lt is necessary for young intellectuals
to live and work in the countryside
and to be re-educated by the poor farmers."
[ lndistinct shouting ]
lf some German entrepreneur had opened a beer garden
on the outskirts of Munich,
dressed an actor up in an old S.S. uniform...
[ Man speaking Chinese ]
...and then had him read excerpts
from Hitler's "Mein Kampf" into a microphone
while a couple of hundred nostalgic Germans
chowed down on bratwurst and sauerbraten --
if that had happened --
Well, it wouldn't. lt couldn't.
But this cheerful horde of Chinese diners