Failure to Deliver

Multinational companies embraced Chinese factories to lower costs. Their excessive reliance ended up being a central cause of the COVID supply chain meltdown

- PETER S.GOODMAN

The COVID-19 pandemic raised alarms across the world on many fronts. Fears of a new virus running rampant, first and foremost. But as the world locked down in a bid to control the virus' spread, other concerns arose, like securing face masks and ventilators, computer chips and car parts-and even toilet paper. Exposed by the pandemic was the tenuous nature of the worldwide supply chain. NEW YORK TIMES global economics correspondent Peter S. Goodman explores these fault lines and how they came to exist in his new book, HOW THE WORLD RAN OUT OF EVERYTHING (Mariner, June). In this excerpt, Goodman analyzes how, decades earlier, businesses worldwide began to rely on China to improve their bottom line by providing cheap labor for manufacturing and an expansive market of consumers, culminating in widespread offshoring and just-in-time shipping-with no safety net.

EVEN FOR A FIGURE INCLINED toward impromptu displays of showmanship, Bill Clinton outdid himself inside the massive banquet hall in the heart of Beijing.

It was a balmy night in June 1998, and the president was in the midst of alternately wooing and pressuring China's government to assent to American terms on a deal bringing the nation into the World Trade Organization. He and then-First Lady Hillary Rodham Clinton were attending a state dinner at the Great Hall of the People, the colonnaded fortress occupying the western edge of Tiananmen Square.

Only nine years earlier, the square had been the locus of an extraordinary protest movement led by students who demanded greater freedom. The People's Liberation Army put down the uprising with a massacre that killed several hundred people. That act of brutality had defined China in international discourse for years after. But China's pariah status was already fading as Western executives salivated over the lucrative opportunities waiting to be exploited there. The Clintons were in Beijing in the service of that cause.