Last Wednesday, by a wide bipartisan margin of 348-79, the House passed a bill giving the executive branch authority to impose retaliatory tariffs on a wide range of Chinese exports. The bill was intended to give the Obama Administration leverage (which the White House seems quite disinclined to use) in continuing talks with Beijing about China's manipulation of its currency.
The usual suspects made alarmed clucking noises about jingoism and impending trade war. Writing in the New York Times op-ed page, Steven Roach, a senior executive with Morgan Stanley, contended that the real problem is the low US savings rate, which supposedly leads America to over-consume and pull in imports. This has been used as an alibi for decades, but the fact is that our savings rate bounces around while our trade deficit with China moves only in one direction. Global mega-banks like Morgan Stanley profit from the US China trade, even if America gets rolled. Even the Financial Times, usually pretty sensible, warned against a more assertive stance.
In truth, a trade war already exists, and it is being unilaterally waged by China. The entire Chinese industrial system uses a wide range of subsidies that violate both the letter and the spirit of the World Trade Organization. As the US-China Economic and Security Review Commission has long documented, China subsidizes exports, provides bank loans to industry at zero or negative interest rates, and either bribes or coerces US industry to locate production in China for export but not for China's internal market. All development land in China is owned by the government, which means that China can subsidize favored projects at will.
Supposedly, state socialism failed, but the Chinese have created an improbable combination of a one-party socialist state and predatory capitalism. American industry is so far into the tank with the Chinese and the U.S. government is so heavily dependent on the Chinese to buy our bonds that the administration can't imagine taking a hard line against Beijing. Our diplomats behave more like a client power genuflecting before the might of the imperial master than the dominant nation that the U.S. is supposed to be.
The Chinese system has succeeded in giving China a growth rate in excess of ten percent a year. It has created a new capitalist class, a burgeoning middle class, and an urban proletariat that lives relatively better in sweatshop conditions than in rural destitution.
The system works, sort of, for China. But it doesn't work for China's leading trading "partner" -- the United States.
It would be far better if China focused more in its own internal market, and paid its people wages commensurate with their rising productivity, so that they could import more from the rest of the world. Wages count for only about 32 percent of total GDP in China -- in most of the West, the figure is double that. So the Chinese governments keeps its own people poor and uses the fruits of their labor to invest in expansion, including many billions of dollars in illegal subsidies to industry, and then lends America the money to buy subsidized products.
An artificially cheap currency, which has gotten most of the attention, is only one part of Chinese mercantilism. It gets the focus, because even the free-market crowd find it hard to defend. But China could let its currency values be set by market forces tomorrow morning and the rest of its mercantilist system would remain intact, as a real menace to what's left of US manufacturing.
Interestingly, some improbable commentators, like the Washington Post's Robert Samuelson, usually a defender of the free-trade orthodoxy, are recognizing that we have a real problem. Much of the fault lies with our own leaders, and the fault is bipartisan. Both parties have refused to commit the US to an industrial policy of its own. The Democrats under Clinton (Bob Rubin, to be precise) let China into the WTO without asking for any serious reforms in return. The indulgence of Beijing continued under Bush, and continues to this day under Obama. The Chinese make vague noises about currency revaluation, and the administration immediately backs off.
These people are cleaning our clock. The one card we have to play is that they desperately need the big US consumer market. For the moment, there is a two-way codependency. It's not in China's interest for America to go broke. But in another few years, we will have squandered whatever leverage we still have left.
For once, Congress did the right thing. The administration should follow. If China wants the benefits of an open trading system, it should start playing by the rules. And our own executive branch should pay more heed to jobs for our people, and less to profits for corporations that move work offshore and banks that profit from alliance with China's mercantilism.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.
If it is, why the need to post here?
Wouldn't the issues speak for themselves?
Influencing another nations political dialogue is an act of cowardice and aggression.
"Chinese Internet users first coined the term "Fifty Cent Party" for undercover Internet commentators that the Chinese government paid to influence public opinion. Fifty cents refers to the alleged pay the Internet commentators received per post. Currently, the term describes anyone who actively and publicly posts opinions online that defend or support Chinese government policy".
Unfortunately the Huffington Post is flooded with these folks ... they better get it under control or else the value of these postings are all suspect. Not paranoia ... simply a fact.
I've nothing against the Chinese students who post here.
But, you're right. I don't post here to debate with 50 centers. I'd like to converse with fellow Americans.
It surely can't be too hard to ban these foreign agents?
http://www.informationweek.com/news/global-cio/trends/showArticle.jhtml?articleID=227700255&cid=RSSfeed_IWK_All
Summary:
The Chinese may still be behind the developed countries in innovation, but
China is investing USD $25 billion in Science and Technology R&D
Most of it is in Applied Research (not Basic Research) which leads to products.
There is an eager educated younger generation and overseas returnees creating entrepreneurial startups
The last time it did this everything appears to have worked out splendidly so there’s no need to worry. Right? Right?
Hopefully the Senate which is green with envy at China’s ability to create “...an improbable combination of a one-party socialist state and predatory capitalism...” without the “socialist” bit of course, will not endorse this time. The administration is not wildly excited about cashing this check either.
File under “after the election”.
As if there was not enough piracy, China's enforcement of laws that regulate supply chain pharma ingredients is inadequate. China has yet to enforce any drug counterfeiting. Result -- deleterious impact to legitimate domestic and foreign pharma supply chain manufacturers.
You Don't Know Where Your Drugs Come From And Neither Does The FDA; U.S. Imports 90 Percent Of Its Antibiotics (And Vitamin A) From China
"..In the United States, virtually all companies manufacturing pharmaceuticals are inspected by the Food and Drug Administration. But not imports, which freely enter the country from factories that will never see an American inspector. From 2002 until 2006, "an average of just 15 of the 714 Chinese drug plants that export to the U.S. were actually inspected by FDA," says the study entitled, "Potential Health and Safety Impacts from Pharmaceuticals and Supplements Containing Chinese-Sourced Raw Ingredients." "At this rate, it would take more than 50 years to inspect all of the plants..."
Chinese leaders have also moved loan making to the domestic players rather than just for exporters. Result -- Chinese telecomm companies have been able to put in zero bids for major contracts. This is another way to lock out foreign companies by giving advantages to local Chinese firms -- discourage competition.
China limits foreign direct investment in telecommunications to 49 percent for basic services and 50 percent for Value-Added Services (VAS).
Non-tariff barriers in China damage business opportunities for foreign companies across the spectrum of media interests. The Great Wall built around China to block foreign products and services has manifested itself in a big way.
You are ignoring the fact that China's growth and infrastructure build out has required a lot of imports. Besides the much needed raw materials from Africa, Australia, Brazil, Canada, India and S.E. Asia and agricultural products from Australia, NZ, S.E. Asia & the USA, China also imports other countries manufactures. From Brazil she imports small civilian aircraft; Canada she imports train & rail control technology and small civilian jets; from France she imports train & rail control technology and luxury goods; from Germany she imports cnc tools, robots, also imports train & rail control technology and luxury cars; from Italy she imports luxury goods; from Japan, again, ncn tools, robots, train & rail control technology, heavy machinery and high-end electronics & gadgets; from Europe in general she imports large civilian Airbus airliners as she does Boeing jets from the USA; from S. Korea she imports high end electronics & gadets and cars; electronic components are imported from from Malaysia, Thailand, Taiwan.
It's up to US companies to find out what the Chinese need and want to be able to sell to them. The customer is
http://www.nytimes.com/2010/10/06/business/global/06trade.html?hpw
Currently China is invested in Greece in the Port of Pireaus since the EU didn't want to invest any more money in Greece. China is now offering to buy more Greek assets and to invest in Greek Euro denominated bonds. I'm not sure if those would be good investments as it is Greece but there are rumblings in other European capitals about the Chinese moves.
God Bless You and God Bless China.
The current Chinese regime is a fascist state, and like all fascist states, it is a threat to all other nations. It will never be a responsible member of the family of nations as long as the thugs who currently reign in Beijing remain in power. Those of us who value democracy and human rights need to wake up to the facts. Appeasement has never worked with any fascist state, and never will; the fascist mentality sees compromise not as a gesture of good will, but as an admission of weakness, and becomes more aggressive, not less.
Most Americans disagree with you, as they have eyes, and can see how well China's reforms are serving her people, and how the grateful Chinese citizenry honors Beijing with 70%+ favorable poll ratings. Even Harper had to acknowledge that, and make up with Beijing.
Who gives a rat's fannie whether people like Beijing. Now New York City, thats a great city.
Full of Free citizens who come and go as they please and can protest if they wish.
Ask Li Xiaobo what he thinks of Beijing. Of course you'll have to bring him out of Chinese prison to do so.
I propose to stand up to thuggery and fascism, wherever I find it. What do you propose to do? Continue to serve your masters?
Unfortunately, I am one of those Americans who doesn't have eyes, and therefore can't see that the government of China is the friend of the entire human race (cue music, with videos of pandas and happy Chinese dancers).
The "grateful Chinese citizenry" has only honored Beijing with "70%+ favorable poll ratings?" A decent fascist dictatorship wouldn't settle for that. The Nazis and the European Fascists always got more than 90% in their pleibiscites. Stalin demanded that at least 110% of the Soviet people support him, or heads would roll; Mousie Dung wouldn't accept anything less than the support of 150% of the Chinese people (he killed millions of people to make his point; just continuing an ancient Chinese tradition). I can't believe that the Thugs of Beijing would settle for the support of only 70%+ of the Chinese people. Clearly, the 20 something percent of people who don't have the eyes to support the beneficent Beijing government should be re-educated or, in some other way, neutralized.
Please forgive me, we Westerners have something "Freedom of Speech."
Name the sector and foreigners are shut out or limited in their operations in China. Change, if any, is slow by design in order for domestic Chinese players can play catch up to their foreign competitors.
Again I will ask,
Why does China hate its workers?
http://www.nytimes.com/2009/06/17/world/asia/17china.html
Chinese citizens are demanding more accountability from their Communist leaders, albeit slowly. Some Chinese leaders are paying the price for their arrogance.
That report is shameful. The Communist Party officials have no respect for Chinese workers.
I can see why they shut down GOOGLE. Can't have the chinese citizens asking for justice.
And this is the system we're supporting with our trade dollars.