Last week, President Obama forcefully declared that the United States would not withdraw from the Asia-Pacific, telling the Australian Parliament that he was dispatching 2,500 Marines as well as ships and aircraft to serve at a base in the Australian port of Darwin. The message, in case anybody missed it, was unmistakably directed at China.
But while Obama was making symbolic military gestures, his administration was doing nothing serious to contest China's growing threat to America's economic base. That threat is spelled out in an official government document that should be mandatory reading for all of us -- the annual report of the U.S.-China Economic and Security Review Commission, released last Thursday.
What's noteworthy is that this is a bipartisan commission created by Congress, and that all of its 12 commissioners, six Republicans and six Democrats, signed off on the report.
The basic findings: China is a mercantilist and authoritarian state that is determined to appropriate not only U.S. jobs but also U.S. advanced technology through illegal subsidies, suppression of worker rights, and deals with U.S. industry that are one part lucrative carrot (cheap wages, state capital) and one part illegal stick (if you want to do business in China, take a Chinese partner and share your trade secrets). Even then, you must produce mainly for export back to the U.S., not for sale in China.
Worse still, U.S. industry has been happy to take these deals, which makes them a domestic ally of the China lobby. While our government periodically makes half-hearted complaints that the Chinese currency, the Renminbi, is seriously undervalued, American corporations like that just fine -- because it makes their exports to the U.S. from Chinese factories even cheaper. The U.S. Chamber of Commerce, which fights industrial policy at home, lobbies fiercely against any pressure from Washington against Beijing's mercantilism.
So while the Obama administration flails around with small-bore military gestures and bipartisan free trade deals with smaller countries, it does not dare to challenge the grand bargain America's corporations have made with China, or China's own illicit policies.
Among the Commission's more important findings:
The U.S.-China trade gap continues to widen, especially in advanced technology. China sold the US $81 billion in advanced technology products in the 12 months ending last August, and imported just $13.4 billion worth. The total trade deficit with China was a record $273 billion, more than half of America's total trade deficit with the world. By mid-2011, China's overall trade surplus of $3.2 trillion was up $800 billion in just a single year.
Although China agreed in 2001 to stop explicitly requiring foreign companies to surrender their technology to China in return for market access and investment opportunities, the government in Beijing still employs several tactics to coerce foreign firms to share trade secrets with Chinese competitors. China's industrial policy in general and its indigenous innovation policy in particular seek to circumvent accepted intellectual property protections and to extort technology from U.S. companies.
These requirements and extortions explicitly violate prohibitions of the World Trade Organization.
China is becoming a national security threat, both because it is an increasingly important player in the supply chain for advanced components no longer made in the U.S., and because of its sophistication in cyber-warfare:
The U.S. government, foreign governments, defense contractors, commercial entities, and various nongovernmental organizations experienced a substantial volume of actual and attempted network intrusions that appear to originate in China. Of concern to U.S. military operations, China has identified the U.S. military's reliance on information systems as a significant vulnerability and seeks to use Chinese cyber capabilities to achieve strategic objectives and significantly degrade U.S. forces' ability to operate.
Despite the threatening and unpredictable conduct of North Korea, the Chinese Communist Party appears to have calculated that its interests are better served by the support of the [North Korean] regime than by its removal. Likewise, China's relationship with Iran undermines international efforts to curtail Iran's pursuit of weapons of mass destruction and support of international terrorism.
China continues to be an autocratic, one-party state that brutally represses dissent, even as it becomes a more effective state-led, pseudo-capitalist world power. Despite China's increasing productivity, the Chinese government suppresses domestic consumption so that it can have ultra-low wages and cheap capital to build its economic machine and bribe American industry to collaborate with its mercantilism. Its state-owned industry sector is still immense, as its favoritism for domestic companies in its public procurement.
Because of the American reliance on Chinese capital to finance the U.S. public debt and American capital markets and because so many of our largest corporations have made their separate peace with the Chinese regime, we may have already reached a tipping point where Washington is unwilling to make more than token complaints that Beijing knows not to take seriously. Though China's suppression of the value of its currency has been thoroughly documented, Treasury Secretary Geithner has repeatedly refused to formally cite China as a currency manipulator, which would compel the U.S. government to pursue sanctions.
While the West teeters on the brink of a second recession and perhaps a collapse of the Euro, China's autocratic state capitalism is largely unchallenged by either the U.S. or Europe. After the most recent European summit meeting desperately sought to cobble together a new bailout fund, European leaders went hat in hand to Beijing, where they were told in no uncertain terms that if they wanted China's help, they needed to stop pressing trade complaints and change China's status from "non-market" to "market" economy. This is how China exercises its immense leverage to tilt the playing field even more extremely in Beijing's favor.
As the Commission reports, this is the 10th year of China's provisional membership in the World Trade Organization. Though the U.S. government and others still have some leverage to change China's behavior, if they choose to use it, the Commission reports that China hopes gradually to "strong-arm its way into market economy status, and shake free of restrictive terms and obligations in its [WTO] accession agreement."
Many Americans naively emphasize China's great progress in improving its educational system. While we can only applaud the social strides China has made, the source of America's growing economic disadvantage vis-à-vis Beijing lies elsewhere.
While Republicans and Democrats elsewhere agree on nothing, all commission members after extensive testimony and study agreed on the mounting threat of Chinese mercantilism. The problem is that other Republicans and Democrats -- such as those in Congress and in the White House, have a much more benign view of the Chinese government and continue to naively promote a "free trade" that China doesn't practice.
And while U.S. industry occasionally complains about the outright theft of intellectual property, for the most part the largest corporations like the deal they have with its outsourcing, its cheap and docile labor and its capital subsidies by the Chinese government. The Commission reports that this costs the U.S. between 600,000 and 2.4 million jobs.
It is ironic that both the Republican jingoism, support for expanded democracy overseas, and saber rattling against other perceived threats, and the Obama administration's desire to look credibly tough in the Pacific, both stop well short of defending America's real national interests against Beijing.
As for those 2,400 Marines soon shipping out to Australia, they just might have the sweetest posting of any U.S. servicemen and women anywhere. Reenlistments should be no problem. Our newly truculent policy toward China might as well be called "Throw another shrimp on the barbie."
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.
Ann Lee: A World Without China
Richard Seireeni: Why Won't GOP Candidates Talk About China?
Meanwhile, most Western journalists are ignoring these heinous acts and are writing silly stories such as this one.
The Western World should not be dealing with the CCP but is doing so because of corporate greed. America and Canada have forgotten the human rights issues that they used to cherish. This is just my understanding, thank you.
The U.S.-China Economic and Security Review Commission’s most recent annual report highlights the multiple of violated expectations by China since its joining the WTO. What is even more troubling is China no longs feels a need to set expectations that it intends to violate. The following text illustrates its confidence that it can now set expectations to continue as it has since 2001, even risking a chronic global recession for many of its trading partners:
Chinese Vice-Premier Wang Qishan warned on Monday the global economy is in a grim state and the visiting U.S. commerce secretary said China would spend $1.7 trillion on strategic sectors as Beijing seeks to bolster waning growth.
Wang said an "unbalanced recovery" may be the best option to deal with what he had described on Saturday as a certain chronic global recession, suggesting Beijing would bolster its own economy before it worries about global imbalances at the heart of trade tensions with Washington.
"An unbalanced recovery would be better than a balanced recession," he said at the annual U.S.-China Joint Commission on Commerce and Trade, or JCCT, in the southwest Chinese city of Chengdu.
http://www.reuters.com/search?blob=Global+economic+outlook+grim%2C+China+tells+U.S.+trade+talks
Now the holidays are upon us and how many of us will check the labels to see what products are "Made in the USA"? Catalogs - called to see about one item - was told it was made in Cina. What about another item - made in China. Tossed the catalog. Checked on small decorations and lights - made in China. Clothing - same thing. Kitchenware, throw rugs, small appliances, TVs, cameras - don't we make anything?
But we should all be rooting for China! That remark made me so darned angry and then made me question just what our government really believes is a priority - our country or China.
I think our politicians are jealous of the chinese ones. Despite all their corruption, they still don't have quite as firm a grip on the nation as do the greedy chinese leadership. Must be why they like despots too!
Keep corporate taxes at 35%, but eliminate all subsidies and exemptions except this one... every dollar in wages paid to an American employee (someone with a Social Security number), up to $75,000 per employee excepts $1 dollar of profit from tax.
So a corporation that made $5 billion in profit could avoid paying taxes completely if employed at least a 100K people at an average wage of $50k a year.
This would give the "job creators" that actually create jobs a nice tax break while industries that don’t create many jobs (or ship jobs overseas) would have to pay significantly more.
They setup a Chinese joint-venture to make a product at 10 cents apiece. They then setup a company in the tax-free Cayman Islands to buy the product at 12 cents apiece. They thereby give the Chinese Communist dictators a 20% profit.
They now setup a company in Delaware to buy from Cayman at a dollar, but sells it in the US for 99 cents. It then spends 10 cents apiece in campaign contributions in Congress, in exchange for a tax-credit of 20 cents earmarked into some highway bill. The Delaware company pays its CEO and CFO and lobbyist, the same top 1% “they”, 4 cents apiece for their trouble, and then reports to Wall Street a nice 5% net profit margin. The product is a hit at Wal-Mart with 100 million pieces sold. They later shut down all of their companies and pay themselves everything as capital gains.
Now in total the top 1% “they” would pay at most 30% tax on their $4 million salary, 15% tax on the $5 million capital gain from Delaware company, and 0% tax on the $88 million profit from Cayman company. This is a grand total of 2% tax on their $97 million, and Congress got $10 million cash. While we Americans paid $1.19 for a piece of junk that doesn’t last a year in our cupboards.
http://en.wikipedia.org/wiki/Robert_Kuttner
China only dominates as a source of cheap slave labor because only the Chinese are willing to treat their fellow humans so terribly. Only in China can life be had to so cheaply. That is the attraction for manufacturers.
And as for education, the people who started Apple, Microsoft, and Facebook...some of the biggest companies of our time...all started by people who didn't finish college.
Think people. Please think for yourself! Stop repeating the same old media lines.
(2) If the average American had the formal level of education of Gates, Jobs and Facebook's founder we would be in very good shape.
Eh, artists? Dixie Chicks.
Eh, prisons? We have China beat by half, we have TWO MILLIOIN people in jail, more than any countery EVER as numbers and per capita. China has only 1 million yet they have 1.4 billion people and we have 350 million people.
You just keep on talking as though none of this existed, as if it were 1980!
Heck, we even have MIGRANTS just like China, only they are ILLEGAL immigrants from all over the place, having it every bit as rough as the Chinese migrants, maybe more, or do the Chinese migrants have to face deportation,including from thier own infant children? I thnk not.
Republican programs
Alternate Housing program for the poor.
http://ampedstatus.org/exclusive-analysis-of-financial-terrorism-in-america-over-1-million-deaths-annually-62-million-people-with-zero-net-worth-as-the-economic-elite-make-off-with-46-trillion/#rules
(T)here was $17 billion cut from public housing programs, while there was an increase of $19 billion in programs for building prisons, “effectively making the construction of prisons the nation’s main housing program for the poor.”
Before laws began to be rewritten in 1980, with direct input from ALEC, we had a prison population of 500,000 citizens. After laws were rewritten to target poor inner city citizens with much more severe penalties, the US prison population skyrocketed to 2.4 million people.
Republican "Jobs" policy
http://seattletimes.nwsource.com/html/nationworld/2001854367_bushecon10.html
2004 President's Economic Report.
BUSH: SENDING JOBS OVERSEAS HELPS U.S
February 10, 2004
WASHINGTON — The movement of American factory jobs and white-collar work to other countries is part of a positive transformation that will enrich the U.S. economy over time, even if it causes short-term pain and dislocation, the Bush administration said yesterday.
To get you started;
The Export-Import Bank: Corporate Welfare At Its Worst by Rep. Bernie Sanders (I-VT)
"This country has a $6 trillion national debt, a growing deficit and is borrowing money from the Social Security Trust Fund in order to fund government services. We can no longer afford to provide over $125 billion every year in corporate welfare - tax breaks, subsidies and other wasteful spending - that goes to some of the largest, most profitable corporations in America. One of the most egregious forms of corporate welfare can be found at a little known federal agency called the Export-Import Bank, an institution that has a budget of about $1 billion a year and the capability of putting at risk some $15.5 billion in loan guarantees annually. At a time when the government is under-funding veterans' needs, education, health care, housing and many other vital services, over 80% of the subsidies distributed by the Export-Import Bank goes to Fortune 500 corporations. Among the companies that receive taxpayer support from the Ex-Im are Enron, Boeing, Halliburton, Mobil Oil, IBM, General Electric, AT&T, Motorola, Lucent Technologies, FedEx, General Motors, Raytheon, and United Technologies. You name the large multinational corporation, many of which make substantial campaign contributions to both political parties, and they're on the Ex-Im welfare line.
On the international economic stage, the US is trying to game both China AND Europe to the effect that the only winner would be the US. At the bottom line, the situation is this: The crisis proved that believes held in the previous two decades and especially in the US and UK about "service society" and consequently de- industrialization were wrong. Some nations did not follow through with that "program" and upheld, maintained strong industrial sectors and now find themselves in a position of relative strength but threatened by the lack of regulation regarding international financial institutions.
But the US (Congress ? and government) is unwilling to trade off agreeing into tighter regulation of especially banking services (FTT and/or OTC trades and/or regulations on derivatives and/or etc.; there are a lot of ideas on the table to hold that sector accountable and restrain it) for concessions regarding the trade in goods.
If you look at some of the proposals put forward at G20 summits and elsewhere, they are on the facade painted to be directed against China but would also affect Germany. Not only that, the proposals also favor corporations over SMBs/SMEs which the real backbone of German exports.
Only repeal of the "Free Trade" laws, environmental laws and other anti-business laws that ECONOMICALLY REQUIRED that US businesses to move their US factories and those associated jobs for US citizens to overseas locations and lay off all of the US employees in order to take advantage of lower labor, lower energy and lower environmental compliance costs available in foreign countries might bring those jobs back to the USA.
This might be too late, because it will also take years to rebuild our STEM educated human manufacturing technology database that was also destroyed along with our industrial base.