In the run up to the Republican Convention, we've heard everything and nothing. We've heard Newt, Mitt and Ron go on about issues that have little if any impact on jobs and national security, but not a single word about the real reason we have massive and permanent unemployment. We've heard very little about the greatest national security threat facing our nation. That problem is unfair, unbalanced trade with the People's Republic of China.
In 2010, we imported 364 billion dollars in goods from China while we exported only 91 billion to them. That is nearly a 4 to 1 trade imbalance. This is according to U.S. Census data for 2010. Compare this to the 149 billion we imported from all of the OPEC countries (less the 54 billion we export to them) or the 319 billion we imported from all of the EU countries (less the 239 billion we export to them). Even unbalanced trade with Japan, that received a lot of attention in the 90s, represented 120 billion in imports verses 60 billion in exports to them. That's only a 2 to 1 trade imbalance -- plus Japan is a democracy, a friend and a military ally, unlike China.
The U.S. has a chronic addiction to imports, but nothing comes close to our trade imbalance with China. Compared to what we trade with OPEC, Korea, Japan or the EU, this is unfair trade on steroids. So why is this a problem?
With capital and technology that came from the West, China has become the factory to the world in less than 20 years. The Chinese people have become admirable competitors, but their hybrid Totalitarian-Capitalist government is not our friend. They don't share our philosophies on human rights, labor rights, or geo-political issues, like containment of Iran's nuclear ambitions. In fact, China is a major importer of Iranian oil, in opposition to U.S.-sponsored trade restrictions, and has probably received access to our recently downed drone aircraft as a reward.
While GOP candidates are preoccupied with Terrorism and Obamacare, the People's Liberation Army has been quietly developing a new advanced stealth fighter, Predator-style drones, the first in a planned fleet of blue water aircraft carriers, an advanced rocket and space program, and a growing nuclear arsenal. Those cheap consumer products have turned China into a super power one purchase at a time. Every time an American patriot buys a Made-in-China product at Walmart, he or she is investing in China's military expansion, which forces us to invest more in our military to counter the threat.
Unlike other imported products that carry foreign brand names like Sony, Volkswagen and Samsung, Chinese products are sold under cover of U.S. brand names like Apple, Gap, and Black and Decker. If you didn't read the label on your new toaster, you'd never know that you are helping the PRC send a rocket to the moon.
Supporters of free trade, whose views dominate in right-wing think tanks, will argue that unfettered trade floats all boats, but in our trade with China, their boat is rising much, much faster. Ours, in fact, is sinking.
Take Dayton, Ohio for instance. A friend of mine in the lumber business recently bid to reclaim wood from thousands of that city's closed factories. Those factories used to create tens of thousands of good Middle Class jobs. Most of those manufacturing jobs were lost to China, and they are never coming back. The irony is that the captains of American industry sent production to low-wage China so Americans could buy cheaper products at home. What happened is that Americans lost their jobs and their buying power so they resorted to mortgaging their homes to maintain their addictive and wasteful lifestyles. This drove the real estate bubble, which collapsed and took Middle Class assets down with it. Today's average American can't afford those cheap goods, or to send their kids to college, or to contribute to the taxes our country needs to reinvest in itself. The plan has backfired, but not in China where wealth has been growing despite the worldwide recession.
That giant debt bomb the Tea Party talks about? It was caused by corporate outsourcing of U.S. jobs overseas while letting banks run wild with borrowed Chinese money. Add to this "design obsolescence" which made it acceptable to buy a Chinese-made product that broke two years later.
We can't blame corporate CEOs and Wall Street -- the 1% -- because they are simply making smart money decisions. It's cheaper to make things in China plus you don't have all those pesky OSHA and environmental rules to worry about. Despite the red ties and American flag lapel pins, American CEOs are not paid to be patriots. They are paid to protect investors who are increasingly Chinese. Even though China has this annoying habit of piracy and corporate spying, making things in China is good for the bottom line and good for those corporate stock options, but is it good for America?
When GE begins manufacturing advanced jet engines in China, China will inherit both the technology and the know-how to make them in the future. There is no doubt that the GE workforce in Illinois will shrink as more production moves to the PRC. Keep in mind that much of the technology in these engines was financed by U.S. taxpayers in the form of military R&D. This disturbing pattern is also found at Boeing where an increasing number of aircraft assemblies and parts are made in China. And where did all this sensitive technology transfer start? You can trace it back to the Motorola Iridium satellite project that put China's space program into hyper drive in the late 90s. The harsh reality is that American taxpayers are financing our competitors in China.
Most Americans are aware that China manipulates its currency, that it engages in dumping, that it steals corporate secrets, and that it has a poor reputation for protecting foreign intellectual property rights, but U.S. consumers buy China-made products nonetheless. The low price is irresistible. What most Americans don't realize is that we buy high-tech consumer goods from China while the few exports we ship to China are mostly grains, raw materials and scrap. It appears that we are the Third World country and China is among the First. China refuses to buy high-tech from us, preferring to foster and protect their own high-tech industries. If they can keep their Yuan at home, they'll do it. That includes worker vacations. Instead of leaking currency to places like Hawaii, China has created its own Hawaiian-style paradise on Hainan, in the South China Sea. American brand name products that are made in China are often re-labeled with Chinese brand names for domestic consumption thus avoiding U.S. imports.
OK, so you are now wringing your hands and saying, "What can we do? We like our cheap Chinese stuff, plus it's everywhere."
We can start by confronting presidential aspirants about unfair, unbalanced trade with China. We should demand that they be frank on this issue and stop asking us to believe that all it takes is relaxed business regulations to bring jobs back. We can ask our president to suggest that corporate America get their eggs out of one basket and spread imports around the world. (Are you listening Apple?) Corporate America should also consider the total cost of exporting jobs overseas. If you kill our Middle Class, who is going to buy your products? We can also demand that China buy more from us. If they expect us to be good customers for their products, they must reciprocate -- or we move production to more sympathetic partners, like Korea or India. We must demand that our government more closely audit technology transfers and the deals that make this possible. Chinese have a right to build their economy, but we do not have an obligation to build China's military and worldwide political power.
Lastly, we should make it a New Year's resolution to check labels and buy American. Every purchase of an American-made product contributes to pulling an American off the unemployment rolls.