So why is it so easy to manufacture cheaply in China?

Well, there's the billons of dollars in government subsidies?  And there's the massive benefit provided by Beijing deliberately undervaluing its currency.

If you're a manufacturer in China, you also don't have to make much of an effort to clean up your industrial emissions.  Rather then spend money on environmental protection, you can simply spew out vast clouds of smog.

As the Wall Street Journal reports, smog in and around Beijing has reached the "worst air pollution in recent memory," forcing residents to stay indoors in recent days.

In 2009, the Alliance for American Manufacturing (AAM) examined China's environmental regulation of its rapidly growing steel industry.  AAM found that ineffective enforcement of weak pollution-control standards and a failure to use adequate pollution-prevention measures has resulted in continuing, high levels of pollution.

Propelled by its rapid industrial expansion and low environmental standards, China has become one of the world’s biggest polluters. It now produces more sulfur dioxide than any other country, and has taken the lead in generating carbon dioxide as well.

As the heavy smog levels in Beijing reveal, this pollution is taking a heavy toll within China. It causes as many as 750,000 premature deaths in China each year, according to the World Bank, and 99 percent of the 540 million Chinese who live in urban areas breathe unsafe air. But it also raises global threats. According to the Environmental Protection Agency (EPA), on some days, one-fourth of the particulate matter (dust and soot) in Los Angeles comes from China.

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