By the time you read this blog posting, you probably already have cast your vote for America's next president. But before the results come out, let's look at what Sen. Barack Obama has pledged to do if elected. In a letter to the National Council of Textile Organizations, he vowed to use all diplomatic means to stop China from gaining an unfair trade advantage in global markets by manipulating its currency.

An interesting article from the Los Angeles Times quoted a few Chinese foreign-relations experts, who are not overly concerned with Obama's tough line.

But they may well be stretching their optimism.

Richard Baum, director of China studies at UCLA told the LA Times that: "Unfortunately, the search for villains abroad intensifies as the economy worsens at home. So notwithstanding Obama's relatively benign intentions, the first year of his presidency could see a sharp increase in protectionist pressures."

That's exactly what is going to happen, no matter who wins this election, as far as I am concerned.

The report rightly pointed out that "China has traditionally favored a Republican in the White House. Richard Nixon's surprise overture in the 1970s helped break decades of Chinese isolation. And the GOP's more laissez-faire economic policies have generally meant fewer human rights headaches, from Beijing's perspective, and less focus on lost U.S. manufacturing jobs or China's huge trade surplus."

Democrats, on the other hand, tend to be less keen on selling arms to Taiwan, which China considers part of its territory. But at the same time, former President Clinton has a huge fan base in China with his trade approaches.

That's why I often get asked by my friends in China: "Why are the Democrats currently in power [Nancy Pelosi is usually named] so different than Bill Clinton [in terms of their attitude and policies on China]?" I reply: "It has more to do with the individual than the associated political party."

An obvious trend I notice is also mentioned in the LA Times report: The Chinese are reminding Washington that it needs China, especially now. During my coverage of the Rotoplas show last month, the handful of Chinese exhibitors in attendance bombarded me with frequent mentions of the nearly $1 trillion U.S. government debt held by China. They, and all Chinese people, are proud, I know.

But they should be very concerned at the same time: the U.S. and China are in the same boat, and, as I see it, the U.S. still holds the upper hand in the game.

As the Christmas shopping season unfolds, we are hearing toy safety warnings. Although the latest reports are not pointing fingers at China in particular, I'm sure consumers still remember last year's recall scandals surrounding Chinese-made toys. Plus, after all, China makes 90 percent of the toys in the world.

I'm not making any less of the toy safety issues, but there's a bigger crisis going on in the toy industry China. Factories are laying off masses of workers or closing down completely, not because they fail to make high-quality products, but because the businesses have been squeezed out of profitability, viability and hope.

In the past two days, more than 500 workers protested against Kai Da factory in Dongguan, Guangdong province -- a supplier of Pawtucket, Rhode Island-based Hasbro Inc. -- over a severance pay dispute. The demonstration turned violent, with police cars and computers damaged and workers injured.

Unfortunately, such riots are neither new nor rare in China nowadays. They are not exclusive to but they are especially prominent among toy factories, which usually hire thousands of labor workers.

That's why I decided to start a series of reports on Chinese toy makers. Hopefully, through profiles of individuals, discussion of market trends, and analysis of government policies, we can get a better sense of where the world's toy-making industry is headed.

Stay tuned.

China's largest plastics compounder, Kingfa Sci & Tech Co. Ltd. of Guangzhou, Guangdong province, has disclosed more details about its acquisition of speciality engineering resin maker Dongfang Special Engineering Plastics Co. of Mianyang, Sichuan province.

The deal was first announced to the public last month, as mentioned in my blog on Oct. 7.

This week, the price tag has been revealed: 180 million yuan, about 27 percent more than Dongfang's net asset estimate.

Kingfa said it will better align its existing manufacturing bases in Guangzhou, Shanghai and Mianyang after the acquisition is complete, increase efficiency, and reduce Dongfang's reliance on its current partners' toll compounding services.

Kingfa also mentioned a plan to establish a joint venture to manufacture inorganic non-metal materials, including rare earth, and related equipment. Kingfa will invest 7 million yuan for 70 percent of the JV's share.

How many American and European families are buying new Christmas trees and decorations this year? Not as many as before. That's bad news for Chinese vendors in the world's biggest "small commodity" -- basically all kinds of consumer products -- wholesale market in Yiwu, Zhejiang province.

"The Christmas goods section is festively decorated, but only from time to time, a couple foreign buyers show up in the hall, driving hard bargains. The Christmas songs, played repeatedly, make the empty market even more cheerless," a story from the Qianjiang Evening News describes.

Vendors, most of whom make their own products, are trying everything to move their inventory and survive the winter. Some are subletting part of their booth space, others have let go of some employees. Disappointed with overseas orders, vendors are marketing the goods to domestic customers more aggressively than ever. "I text-messaged everyone I know, offering good prices and free shipping," a young businessman said. "Many restaurants, hotels and airports [in China] are buying."

The export situation in Yiwu really isn't as bad as it could have been. Thanks to the massive closure of factories in Guangdong province, more buyers are looking into Zhejiang province, where factories produce even cheaper products than those in Guangdong.

"They prefer cheap plastic Christmas trees now, no bells and whistles," a vendor said.

Low price is all that matters. Price-cutting pressure squeezed Hong Kong-listed Boto Co., formerly the world's largest maker of artificial Christmas trees, out of business in late 2007. Boto's high-tech, innovative trees attracted Wall Street Journal reporters and American private equity, but didn't beat the cost hikes and consumers' tighter pockets.

At a time when China celebrates the earth-braking development it has achieved in the past three decades, Beijing finally is recognizing the enormous contribution of a special group: the millions of Chinese people who left their villages and townships to work in manufacturing, construction and services in the booming urban areas.

There's no question, in my opinion, that China's economic miracle couldn't have happened without these hard-working citizens. The Chinese central government, for the first time in history, awarded 1,000-plus "outstanding peasant workers" -- I personally prefer to call them "migrant workers" out of respect -- at a recent, high-profile ceremony in Beijing's Great Hall of the People.

A quick search of the honorary list from the Department of Labor yielded about a dozen plastics workers, including Mr. Su Bing, a team leader at Kautex Maschinenbau GmbH's operation in Shunde, Guangdong province.

Thank you, migrant workers!

A bigger question is how effectively Wal-Mart manages and audits its suppliers in China. In a nation where authorities fail to police the factories, has Wal-Mart kept its supply network clean?

Not according Bo Lin, again, quoted in an investigative story from the Chinese newspaper 21 Century Economic Report.

Compared to the visible cost hikes, he said, the real burden is the hidden rules. He claimed that he was forced to pay kickbacks to buyers and quality control specialists of up to 15 percent, which can take all profits away.

Wal-Mart China insisted that it prohibits kickbacks. But Bo Lin explained: Wal-Mart can't control its partners, including brokers and third-party agencies.

In my humble opinion, in order for Wal-Mart to implement the sustainability strategy successfully in China, it must streamline its supply system and minimize the tiers/layers of suppliers. But the reason suppliers choose to contract Wal-Mart orders out is oftentimes the low profitability of the business. If the prices Wal-Mart offers can only be achieved by factories breaking environmental, labor and taxation laws, is there any room for sustainability to grow?

So when cost control stifles sustainability, which one will Wal-Mart choose? Or will it be able to find something in between?

I couldn't make much sense of how Wal-Mart defines sustainability other than the "20 percent energy increase" and compliance with local environmental and business laws.

"A company that cheats on age of labor, dumps chemicals in rivers, or does not pay taxes will ultimately cheat on the quality of products ... that's the same as cheating on customers and we will not tolerate that at Wal-Mart," as Andrew Winston quoted Lee Scott.

If these statements can be enforced, China and its people will be the biggest beneficiary. But the most fundamental question is how factories can get the money for an operational overhaul, if Wal-Mart's focus remains on the price.

As Winston wrote:

Wal-Mart has to change the internal culture - as one of the suppliers told me, "They sound serious, but with buyers it's still price, price, price." Lee Scott did address the associates directly during his talk and reinforced the message, but until buyers are paid or promoted differently, it's just talk.

Ask Chinese toy maker Bo Lin, who was featured in an investigative story from the Chinese newspaper 21 Century Economic Report.

"Back then, we took such pride in being a Wal-Mart supplier," he said. But being a bottom tier supplier, he struggled for years. "From 2005 through the end of 2007, [the] U.S. dollar depreciated 17 percent, raw material prices soared 80-200 percent, but Wal-Mart didn't pay me a penny more." Bo Lin wisely cut Wal-Mart orders from 30 percent of his business to 3 percent. "Otherwise, I'd have gone out of business for sure, like my friends who relied too much on Wal-Mart orders."

[Till tomorrow.]

It appears that Wal-Mart is giving its Chinese suppliers no option: They must not only deliver the lowest prices on earth, but also make sure these cheap products (American consumers certainly see Wal-Mart items as cheap, but many have no idea how small a fraction of the price tag Wal-Mart pays its suppliers) are Green.

The news came from the latest Wal-Mart Sustainability Summit in Beijing, as reported by Andrew Winston (who just spoke at the Plastics News Sustain ’08 Conference in Chicago) in the Leading Green blog of Harvard Business Online.

Specifically, Wal-Mart mandates that:

All suppliers will sign new agreements indicating compliance with environmental laws, starting with Chinese suppliers to the U.S., U.K., and Canada in just 3 months. Over the next 3 years, all suppliers globally will sign.

The top 200 suppliers will achieve 20% energy efficiency improvement, and most importantly, "By 2012, all suppliers that we buy from directly should source 95% of product from companies that have the highest ratings in audits."

Wal-Mart also asks suppliers for higher-quality products. "Zero defective merchandise returns by 2012" is the goal.

Don't get me wrong, I'm all for green and high quality. But someone's got to foot the bill. If that additional cost for sustainability and high quality is expected to be covered by Chinese factories that already struggle on razor-thin profits, good luck with that. Let's see if Wal-Mart can defy the "you get what you pay for" of common sense.

[Please bear with me. I'll continue to post tomorrow.]

A Nov. 4 story from the Washington Post threw a heavyweight headline at readers: As China's Losses Mount, Confidence Turns to Fear: Officials Use Bailouts to Forestall Unrest. It struck me that writer Ariana Eunjung Cha and/or her editors appear to use "bailout" in an ambiguous way that misleads readers into believing the Chinese government's intervention is more or less the same as the bailouts we've seen in the United States of America.

I urge you to read through this lengthy story through the hotlink, because the facts in the very story illustrate how China's "bailout," if you will, is totally different than the American version. And, perhaps, set aside the sensational political bluff just for a second.

To make a long story short, what really is happening in China right now, is that tens of thousands of factories are closing down. Most of them were operated in the typical Chinese model of "foreign investment + cheap migrant workers = low value-added manufactured goods for export." Now the factories are down -- their owners oftentimes having actually fled -- and the migrant workers are demanding their over-due pay, which the owner had intentionally slipped up paying them for months. So the local governments, in fear of riots in their jurisdiction, have stepped in to pay off the workers, a lot of whom count on that money to return to their home villages.

So the differences between China's and the U.S.'s situation are that, first, the intervention so far has been limited to local and provincial governments, as opposed to the federal level injection of money in the U.S.; second, the rescue fund has filled the pockets of Chinese workers, instead of jumping into the black hole of unsustainable export businesses; and, last but not the least, the money is not touched by management and has no chance to be spent on a pricy, executive spa vacation in California.