General Motors announced this week that it will start building the Cadillac XTS, CTS and ATX in China in an attempt to keep up with the insatiable demand for luxury consumption by that nation's nominally Marxist elite. It seems that Communist Party princelings and their crony capitalist clients just can't get enough Caddies, not to mention the BMWs, Ferraris and Lamborghinis. While China's ever widening class divide offends human dignity, what is really scary is the way that we have been importing it into America via a trade policy that undermines the value of U.S. labor while increasing the returns to capital invested in China. As American industries flee to China's exploitive manufacturing heaven, real wages for working class Americans steadily decline. Meanwhile the profits of multinational corporations soar and the growing rift between wage earners and the smart, big money investors swallows our dwindling middle class.
The Cadillac announcement nicely underscores the source of this problem. China Car Times notes "Currently the car is imported from the USA which makes it price much higher than it should be due to higher taxes on imported high displacement vehicles." A great way to target American imports and jobs. Chinese bureaucrats and law makers at all levels have internalized a national industrial policy which impedes imports from the U.S. while welcoming the American capital investment that creates jobs in China. Most North American made cars imported into China get hit with about a 25% tariff while the Chinese cars that are beginning to sneak into our market a paltry 2.5% tax. DOH! That's the trade deal presidents Clinton and Bush sold to America when they pushed for permanent "Most Favored Nation" (normalized) trade status and then entry into the WTO for the Boys from Beijing! We've seen the outcome of that policy in industries from textiles to electronic assembly. There is no sane reason to believe it will play out any differently in cars, or aircraft as every firm seeks to obtain Apple-like profits off the backs of China's weary workers.
We should expect to see a lot more GM models made with repressed Chinese labor in a regulatory environment that allows this formerly American firm and its Chinese partners to pollute the environment and injure employees at will. We can also expect to see those cars exported to other countries, killing even more U.S. jobs. In the not too distant future, we will see Chinese made Cadillacs, and other GM cars, imported right back into America, with our timid tariff serving as an ironic welcoming mat to the enemy of truly free markets.
Even after GM drives this latest stake into the heart of America's manufacturing base, our Faustian bargain with Communist China will continue. American consumers will continue to blindly trade their high paying manufacturing jobs for low prices at Wal-Mart. The administration will surely respond with extended unemployment benefits and more fruitless stimulus, while promoting manufacturing via subsidies to speculative industries. Meanwhile both the president and Congress will continue to advocate the misrepresented version of "free trade" that has destroyed our proven industries, because multinationals will continue to pour money into their Super PACs. China will continue to behave in a mercantilist manner and it rulers will continue to spend their accumulated wealth on a repressive internal security apparatus and a rapidly growing military preparing for war in East Asia.
Supporters of the Bush and Obama bailouts are always quick to assert that GM has paid back its debt to the U.S. However, what GM has really done in the decade or so can be summed up as:
1. Taken billions in U.S. government money. (Ironically, much of which we borrowed from China with interest to be paid by our unemployed kids.)
2. Invested billions into joint ventures in China controlled by Chinese state owned enterprises like SIAC.
3. Closed plants in America and laid off workers in the U.S.
4. Built new facilities and hired more workers in China.
5. Dumped subsidiaries, like its GM Components operations (Delphi), throwing thousand of employees under the bus and then stealing their retirement with U.S. government assistance.
6. Recognized huge profits and reinvested a great deal of them in creating more jobs in China.
It's no wonder that Cadillac has sponsored a Chinese film celebrating the 90th anniversary of the founding of the Communist Party, an organization that has probably killed more people than in any other the history of mankind* and which continues to repress hundreds of millions from Tibet to Mongolia.
Greg Autry serves as Senior Economist with the American Jobs Alliance and is co-author (with Peter Navarro) of Death by China
*According to the latest updates from Prof. R.J. Rummel, expert on Genocide and Democide.
Follow Peter Navarro and Greg Autry on Twitter: www.twitter.com/deathbychina
US is now managed by your US is now being managed by the America’s Capitalist Party(ACP)which have become almost indistinguishable from China’s Communist Party(CCP) members,They’ve used their power to give themselves absurdly high pay(Legalised corruption); they have no accountability to shareholders; and they’ve created a new caste, which is now exercising enormous political power. The American Capitalist Party and CCP are both very worrisome.
I guess China should've just done it like the Americans did with the Indians: massacred almost all of them and put the few remaining ones in reservations.
However, in trying to establish moral equivalency to excuse tyranny you miss the great thing about America:
1. You can dig up our crimes and expose them all you want without replacing Chen Guangcheng under house arrest or going to prison camp having your organs sold like the Falun Gong.
2. America will listen and LEARN from our errors because we aren't afraid to face them.
Since the Chinese regime covers up all their mistakes and those who expose them, they can never improve. Saying anyone who has ever done wrong can never try to stop anyone else from committing a crime the whole world into chaos and hell. Perfection is impossible, seeking it nobel.
So, chuckle, away but just remember that while millions of Mexicans take great risks sneaking INTO the United States, China is shooting Tibetan's trying to get the heck OUT of "China." There's a reason for that.
Mr. Autry's "Death By China" blog is excellent comedic material, not unlike Glen Beck and Rush Limbaugh. I sometimes have to wonder if they believe all this fear mongering they are creating is it's just for attention.
Why does China's (even by their own understand figures) military expand at a rate far beyond their robust GDP growth rate? What's that for?
What are all the nukes they've been hiding in tunnels and submarines they build caves for?
Why are we spending $billions on a missile defense system on the West Coast???
Sounds like a cold war to, like it or not. Living in denial won't make the facts go away.
We are getting a taste of global capitalism.... and by 2030... I suspect that civilization as we know it will have ended..... not with a whimper, but a bang.
We aren't getting a taste of capitalism, but rather "state-capitalism". GM is a government subsidized operation doing business in a communist, state planned economy where most of its Caddy customers are politically connected. When GM builds a car in China that says "Buick" its in a factory controlled by their FORCED joint venture partner, Shanghai Automotive - a state owned company GM is FORCED to do business with and to hand over technology to in order to do biz in China. This is far from "global capitalism" as you can get.
If you are serious about looking at China as part of global capitalism please read: http://www.deathbychina.com/archives/934
-Greg
How about the tens of thousands of people directly employed by GM in America? Or the hundreds of thousands employed indirectly (suppliers, dealerships, etc.)? You realize that GM's presence in China was a very important factor in its survival, don't you?
> [Shanghai Auto], a state owned company GM is FORCED to do business with and to hand over technology to in order to do biz in China
Look, those are the rules set by the Chinese government. You want to build cars in China? Get a partner. Nobody FORCED GM to do business in China and agree to those terms.
They made a business decision, not unlike what Europeans, Japanese and Korean carmakers did. A decision that apparently guaranteed GM's continued survival and with it, the survival of many American jobs.
And at least GM is selling millions of cars in China and commanding a decent market share. Where's the outrage against Japan and S. Korea, our trading "partners" who ship millions of cars to our shores yet impose all kinds of restrictions on imports? You do know that American brands combined have less than 1% market share in Japan, don't you?
So what if more Chinese get Cadillacs than Americans loose their jobs?
And yet the RWNM recoils and the thought of a 'socialist' and democratic europe that stil has free market and people and capital aren't fleeing in great numbers from there are they.
I agree Democracy is not required for economic success. Nazi Germany and pre-war Japan did pretty well. While certainly not Democratic China is also far from "free market." What works best int he short run for national wealth is a highly mercantilist trade policy combined with a smartly planned industrial policy focused on infrastructure and capturing industries. The US did that in the 19th century, Japan, Germany, South Korea, and Taiwan all duplicated it with great success in the last half of the 20th. China has copied that. It isn't free market, though (like everything else in China) it is often propagandized that way.
Actually, a lot of capital has been fleeing Europe for China and even the US (every time the Euroscare pops up anew).