Mercedes built in China?

I recently ran across one interesting article on CNN involving, gasp, China. It seems like every other article in the business sector now involves China. Don't get me wrong, I am genuinely amazed at their ability to grow with speed surpassing that of U.S. three times. Chinese economy recently outgrew that of Italy to become the sixth largest in the world and is, without a doubt, set to overtake U.K. and France in the near future. It's GDP (gross domestic product) grew, on average, 9.6% in the past decade, more than triple the pace of all developed countries. Measured in absolute values, its GDP yielding only that of U.S. Not bad for a country with a centrally planned economy up until less than a quarter century ago.
Now, any rational human being upon hearing all this would probably ask, "Well, what's in it for me?" I believe the word "globalization" rings a bell and if it doesn't, I suggest reading news at least occasionally. And even though I believe in the basic law of supply and demand and realize that in crease in the latter would bring the prices down thus increasing the purchasing power of consumers, I also realize its negative effects. In the wealthier country opening its borders to globalization, lower to middle income class is usually the one suffering the most. We already witnessed this trend in our own country, especially in the central and south-eastern states where thousands of people are currently unemployed or, even worse, underemployed. Underemployed means you are the only one suffering since the government still thinks you are working and supporting yourself and you family and usually ignores your outcries calling them groundless. As for poor countries, everything is not so peachy there as well. Take that same China. Despite its enormous economic growth, the country is still considered lower-middle income in per capita terms and still falls below international poverty lines. Moreover, income distribution within the country is rather surprisingly uneven, with coastal provinces achieving somewhat acceptable economic stability and interior regions still suffering from the harsh reality of poverty and stagnation. Economic development is also causing rapid deterioration in environment, and especially air pollution. Government officials are currently spending billions a year trying to clean up the air poisoned with smog and sulfur dioxide from coal-burning plants.
In addition, rapid growth in real estate have some investors rethink their strategy. If Chinese build more than they can actually utilize, the supply will far exceed demand meaning the owners will find it increasingly hard to rent out their properties and repay their debt. This, in turn, will leave a lot of foreign investors exposed with more real estate loans turning bad. Even though current outlook remains positive mainly due to a rise in real estate prices themselves, investors have to be on guard more so than with their other foreign ventures and be ready to act fast should something happen.
Anyhow, I am so off the point here. Well, I am not off the point per se, but I definitely have to narrow it down. Back to the article. According to CNN, Daimler Chrysler have recently signed a deal with China's Chery Automobiles for the latter to build small cars to be sold worldwide. Even though Chery markets its own brands of cars, these new cars will be sold as a Chrysler Group brand. The size and financial terms of the agreement are still unknown pending the approval of Daimler's supervisory board...
And now back to my seemingly unrelated tirade in the first paragraph. I think it is fairly safe to say that with things progressing as they are now, within the next ten years China can wipe out the lower end of the U.S. markets. By letting them into WTO, U.S. essentially gave them free access to its market. On their side, though, they maintain high tariffs on automobiles, they require U.S. automakers to make their parts their and to transfer technology. Naturally, they teach their local companies how to make cars. In addition, we are being high strung by undervalued Chinese currency. Doesn't it all seem a bit excessive? At what point do we have to ask ourselves if benefits outweigh the costs? And whether it is worth continuing it or, to be more exact, continuing it at the same pace as the last decade and a half?
While free markets certainly seems like an attractive perspective in economic theory, the reality has already bitten both sides in the ass once they experienced its negative effects.