I have to admit that I don't know conditions in China personally, but rather as is usually reported through the US press, which I find to be quite tainted and can't really trust their perspective.
But I had an interesting conversation with my lead programmer a few years ago about exploitation of workers and the sheer relativity of it.
He was telling me about some place in Asia (can't remember which country now, but a very poor country) that he had read where people were working in factories for foreign companies. The companies gave the workers a place to sleep and something like 10 dollars a day as a salary. He called the place they were living in a cage. He showed me the story on the internet - it was in reality a bunch of dorm rooms where there were bunk beds. It was little crowded, but fairly clean and orderly.
He was raving on about how companies exploit people internationally, that it's a grave sin, that everyone should live a decent standard of life, etc. He's not wrong about that per se, however...
I thought a moment and then I asked him - "Do you think I'm exploiting you?"
He looked surprised that I would ask him that. From my viewpoint, I was the owner of a company who specifically came to Buenos Aires because I could hire programmers that were reasonably well educated for 1/3 to 1/4 of the price I could find the same programmers with comparable skills in the US.
I told him - "You know how much programmers get in the US at your level. Of course, it depends on the city, but there is a range in which your salary would probably be considered to be so underpaid that it would be exploiting you - there."
I was paying him $18 USD per hour at the time. Not only was it a higher salary than he was making, but dollars would help combat any inflation he might feel (in those days it really was around 10% I think). In Houston, I'd be very lucky to find someone of his expertise and experience for $50. When I hired him away from the respectable Argentine development company for which he worked before working for me, he was making the equivalent of $12/hour (in pesos) for a 40 hour work week (he was salaried) and he was being asked to work longer hours to meet the demand they were encountering.
He lived in a small one bedroom apartment at the time, with his girlfriend. The building was ancient. The apartment had 38 sm. No air conditioners at all - the only complaint he had working for me was that we didn't have an office, he worked out of his apartment (in the den) and literally sweat over his keyboard in the summer.
He was paying 1200 pesos a month for his place at the time. The exchange rate was around 3.50 to the dollar, which means he was paying about $340 USD a month for his tiny little apartment.
In 1982, in Austin, I was paying $350 a month as a college student for a two bedroom apartment in a complex with a swimming pool. Our apartment was around to 700 sq. ft. It had central air and heating and a decent kitchen with relatively modern appliances.
I told him that to me, he was living in a cage and underpaid. I overpaid him quite a bit for the market here at the time, and I did it because I want everyone to be happy - I'm not greedy, I can share some of what I make. He was still convinced that I was not exploiting him - which is good, because I'm not, at least in the "evil" sense of the word.
Even people who live here and are part of the middle class don't really understand what it means to live in true poverty. At least in Buenos Aires, to me people who live middle class lives, live close to what I consider poverty in the US. I used to live in the 5th ward in Houston, one of the poorest neighborhoods. I know at least a little what I'm talking about.
Going back to those dorm rooms and the $10 USD a day for the workers working in the factory:
What do you think their life would be like if the company who employed them felt bad about their "exploitation" and picked up and left, or never even came to begin with? First, would they even have a job? Second, what kind of job would that be? Subsistence farming if they're lucky? Working for some rich person as a servant and being mistreated all the time? Third, would they make even near $10 USD a day? Fourth, is a bed in a dorm room better or worse than they would have had without the place to stay?
Having seen poverty up close many times in my life, and lived in it for short periods of time with my Paraguayan "married into" family, I think I know the answer to these questions, personally.
I am willing to bet that the very jobs my programmer thought were exploitation, in reality had a long line of people waiting to get in. I can guarantee you that no one was being forced into slavery to work those jobs.
I'm willing to bet that those companies who go to other countries and invest in infrastructure and jobs in countries where the government does everything it can to exploit its own people are giving them opportunities that they aren't even close to having under other less favorable conditions.
I'm betting that sleeping in a bunk bed in a housing building is way better than sleeping under a thatch roof, with dirt floors and probably no solid walls to speak of, crowded with an extended family from infants to ancients, on beds made of straw laid on top of the dirt or uncomfortable wood.
I don't agree with a lot of what my country has done in the Middle East - I'm a Libertarian who has come to see that the only way to free people and give them opportunities is to educate them and try to get them to understand that governments do NOT in reality give a rat's ass about their constituency, but rather people have to take responsibility for themselves and their condition and do something about it. You can't force a culture to change, you have to educate the people and let them decide how they want to change.
You can't do that by refusing to have anything to do with them, withdrawing your money and making it illegal for companies to go take advantage of the vast difference in wealth and what it costs to do business there. In fact, allowing the companies to do exactly that, as long as they are not forcing the people to work, does WAY MORE to liberate people and give them opportunities, over time, than trying to beat sense into them at gunpoint.
Do I feel guilty because I'm wearing clothes or using electronics that were manufactured in China or other places? Hell no.
Do I feel bad that people are so oppressed in some places that living in a dorm room with many others and getting paid $10 USD a day is an opportunity for them? Absolutely.
Do I want to quit buying Chinese (and other countries') products because of this? Do I think that will do anything other than affect the very people who I would save from their horrible life? Hell no.
Look at the world over the last 2000 years. Tell me it hasn't improved for a majority of the people. Even the poor in many (most?) countries have access to things the rich even 200 hundred years ago couldn't have conceived of. They have more acknowledged rights in many places than people ever thought was possible, much less correct, everywhere in the world 500 years ago and most places even as recent as 150 years ago.
You want to raise the people of the world from poverty, do it economically and mentally, not politically. Do it with education, not bitching and withholding your money from them because you object to how they live. Either way you do it, it will never happen overnight and because YOU want it.
That's my opinion, anyway.
In my book, those who are awaiting eagerly the iPhone 5 (and other new items) should do so with clear consciences, unless they are the ones who are physically keeping the people who made them in the Dark Ages.