Atlanta Maritime Association panel discussion participants. Left to Right: Rick Wen, Russ Held, Seth Becker. Photo by Mike Rast Jr.

The global water crisis and other environmental issues are the biggest challenges facing China’s continued economic growth, according to a panel of three American businesspeople speaking at the Atlanta Maritime Association’s third annual ports and flags night Oct. 11 at the Georgia International Convention Center in College Park. 

The panel discussed relations between the United States and China and their impact on trade due to Georgia’s increasing involvement in ocean commerce with the Asian power through the Panama and Suez canals.

“Water is the No. 1 issue they’re dealing with right now,” said Seth Becker, vice president of global sourcing at Southland Metals based in Maumelle, Ark.  “Forty percent of water is too polluted for human, animal, or agricultural use,” in China. 

He added that one reason for Atlanta-based Coca-Cola Co.’s success in getting distribution contracts in China is the company’s ability to purify water.

China’s rapid economic growth is prompting an industrial revolution in the country that will be difficult to sustain at the current rate from an environmental standpoint, according to the panelists. 

“It took them 12 years to build the Three Gorges Dam; they need a project like this every month to fix China’s energy issues,” said Rick Wen, vice president of business development at Orient Overseas Container Line Ltd.’s U.S. headquarters in San Ramon, Calif. 

He was referring to the world’s largest hydroelectric dam, which spans the Yangtze River in central China.  Construction of the Three Gorges Dam has cost $25 billion to date, displaced over one million Chinese people and will produce 18,200 megawatts of energy annually when it is fully operational in 2009, according to news reports.

The panelists agreed that the United States and China, the largest consuming and polluting countries in the world, have an opportunity to work together on environmental issues.

“The U.S. has a responsibility to move from a neutral strategic role with China,” said Mr. Wen.  “If we share these areas of concern we will have a good relationship and a strong ally.”

Though China’s economic growth is remarkable, the country is still far behind the United States in the global economy.  According to Mr. Wen, whose information comes from Port Import Export Reporting Service, the U.S. accounts for 27.5 percent of the world’s production while China’s contribution is 5 percent.  Further growth may be slowed if environmental concerns continue at the current level.

Another issue in the economic relationship between the United States and China is concerns over the quality of products entering U.S. ports.  Panelists noted recent reports of tainted pet food and seafood as well as defective toys and tires entering U.S. markets from China.

Russ Held, the third panelist and managing director of marketing at the Virginia Ports Authority, links quality control issues to the commercial revolution taking place in China. 

“There’s a school of thought that this problem is arising because they’re facing rapidly rising wages and energy costs, and Chinese manufacturers are looking for ways to cut costs,” he said, leading to rushed manufacturing and poor inspection of products.

Mr. Wen added that average wages for Chinese workers are on the rise, up from 95 cents to $1.75 an hour over the past year.  Rising wages is a positive situation for the Chinese people but one that presents a challenge to manufacturers trying to maintain a low cost operation.

“As we face increased costs in China it will be interesting to see if they can remain competitive,” said Mr. Held.

Mr. Becker recommended that companies operating in China employ their own on-site inspectors in order to ensure product quality.

He said that quality control and intellectual property issues are exacerbated by the Chinese system of government and predicted that change at the local level would encourage more foreign companies to invest in the country.

“Every single problem China has comes down to implementation because local officials aren’t elected, they’re appointed,” said Mr. Becker.  “The only solution is getting some elected officials to represent the people.”

Foreign investment is increasingly regional as Chinese companies gain the financial stability to reach out to local economies around the world.

Regions of the United States that have not enjoyed direct access to Asia are now shipping goods to the region through Chinese carriers.

Mr. Wen said that companies on the East Coast of the United States are becoming more involved in trade across the Pacific Ocean due to the low cost of shipping by ocean liner.

In the past, products from China have entered the U.S. through West Coast ports such as Los Angeles and Tacoma, Wash. before being shipped overland to markets in the rest of the country.  Over the past decade, Chinese shippers have increased use of the Panama and Suez canals to bring goods directly to the East Coast market.

The ships owned by Mr. Wen’s company Orient Overseas, one of the largest shipping companies operating in Asia, can bring goods from the port city of Laem Chabang, Thailand through west the Suez Canal to Savannah in 30 days.  The journey east from Hong Kong through the Panama Canal to the Georgia port takes 32 days, according to information provided by the company.

The Atlanta Maritime Association has 127 member companies including port authorities, ocean shipping lines, freight forwarders and customs brokers, many of whom do business in Asia.  Members range in size from self-employed import, export agents to shipping and logistics companies with thousands of employees worldwide.