Why would the president of the United States fly halfway around the world to watch four days of sports at the Beijing Olympics? George W. Bush is the first sitting American president to attend the Olympic Games on foreign soil. This, despite the fact that China has been recognized by the U.S. State Department as an authoritarian regime with a dismal human rights record. But Bush is savvy enough to understand America's economic dependence on China.
Virtually everything in America is now imported from China. This includes crucifixes and talking Jesus dolls. American Girl dolls, all the rage among the younger set, are made in China. The plastic for American Express cards is reportedly made in China. From toothpaste to computer accessories to food and vitamins, there is little that is not made in China. Even our Old Glory-brand American flags are manufactured in China. Indeed, it's almost impossible to avoid buying Chinese-made products.
One Louisiana family learned this the hard way when they attempted to live without products made in China for an entire year. They ended up buying expensive sneakers from Italy, forgoing candles on birthday cakes, living without a blender when theirs broke, nursing their television back to health when it crashed, killing mice the "old-fashioned way" and giving up holiday decorations.
Another family in South Dakota tried a similar experiment, but only for a week. They found that they were unable to purchase their usual Adidas, Nike or Sketchers sneakers and instead had to opt for American-made New Balance. Food was difficult since China produces 80% of the world's wheat gluten, found in most breads, and 80% of ascorbic acid (Vitamin C), a nutritional supplement and preservative used in almost everything. When the family tried to purchase entertainment, they found even the classic American board game Monopoly contained dice made in China.
Who's to blame for this "made in China" stranglehold in our marketplace? Much of it can be attributed to American corporations that buy from China and outsource their jobs to the emerging economic giant.
China has become the number one exporter of goods to the U.S., with its food exports to the U.S. increasing from $45 billion in 2003 to $64 billion in 2006. But food is not one of China's leading exports -- computers, household goods, toys, clothes, video equipment and footwear rank above it, all of which can be found at your local Wal-Mart. If Wal-Mart, one of America's largest retailers, were an individual state, it would be China's eighth largest trading partner.
Sam Walton founded Wal-Mart with the intention of creating a company known for quality products sold at discount prices. In 1985, as trade deficits grew and Americans feared their manufacturing jobs would move overseas, Walton created a "Buy American" campaign that promised he would buy nationally made products, as long as they were sold within 5% of the foreign competitors' prices.
However, as competition grew among Kmart, Target, Sears and other discount stores, Wal-Mart began increasing trade with foreign nations, while still promoting "Buy American." After his death in 1992, Dateline NBC researched Wal-Mart's success and discovered that Walton actually imported from China quite frequently, exposing the "Buy American" campaign as a facade. Following the Dateline report, Wal-Mart no longer tried to keep its relationship with China secret. Wal-Mart is now responsible for $27 billion, or 9%, of total United States imports from China.
Thus, if China has anyone to thank for its economic ascendancy, it's American corporations like Wal-Mart and American consumers like you and me.
China is emerging as the world's preeminent economy, developing military weapons that threaten the U.S., rising as a prime trading partner with U.S. allies, rivaling U.S. technological inventions and generally growing in size and influence. Incredibly, after three decades of averaging a 10% yearly growth rate, China will likely surpass Germany and even Japan to become the second largest economy in the world. China has already exceeded Japan as the second leading consumer of petroleum and the second largest producer of automobiles.
By keeping its currency undervalued, China decreases the price of exports to the U.S. At the same time, China has increased the price of imports, creating a large trade deficit and thus undermining the American economy. The U.S. currently has a $235 billion trade deficit to China -- a trade deficit, according to the Economic Policy Institute, that cost 2.3 million American jobs between 2001 and 2007.
Can anything be done?
Some lobbyists and special interest groups are advocating legislation to stop unfair trade practices with China. In turn, some in Congress have proposed legislation to curb China's growing trade imbalance and speed up currency reforms. But don't expect much from an inept, bungling Congress.
However, the ramifications of doing business with China go beyond mere economic considerations. There is a moral dimension, as well. The reality is that you're not going to be able to get around buying things that are made in China. However, that doesn't mean that we should give up and turn a blind eye to its abuses. China remains one of the most notorious rights-abusing regimes in the world.
The Constitution opens with those three beautiful words, "we the people." Unfortunately, we the people have lost control of our government, which has become little more than a tool for big business interests. We have allowed greed and the profit motive of mega-corporations to dictate government policies. Unless we drastically curtail such practices and take back the controls at all levels of our government -- city councils, state legislatures, Congress -- the Chinese trap will be the least of our worries.