China has been roundly criticized in recent months for currency policies that have reduced the cost of its exports and generated a $200 billion trade surplus with the U.S. for the first nine months of 2010.
Many candidates running during the recent midterm elections attacked Beijing for threatening American jobs; in its last session, the House of Representatives passed legislation that would allow U.S. companies to petition the Commerce Department to impose higher tariffs on imports from any country that is suspected of manipulating its currency for maximum trade advantage; and President Obama has pushed Chinese officials to change their currency policies.
Meanwhile, a recent Pew Research survey indicated that 41 percent of Americans believe that China is the world's leading economic superpower, slightly more than those who think the United States is on top. And, in the latest CNN poll, 58 percent of those surveyed said that China's "wealth and economic power" is a threat to the U.S.
These numbers are certainly revealing, but before we turn on China, I think it's vitally important to understand the forces behind this emerging nation's economic policies and actions. My view is that we need to be realistic and neutral; and accepting the fact that China and the U.S. are inextricably linked in a mutually dependent 21st century global economy is essential.
A brief digression and disclaimer: I am the CEO of the Port of Seattle, and China is our largest import trade partner and represents 40 percent of our overall trade volume. We've been doing business with the Chinese since 1980. And during these 30 years, we've been able to establish a series of close ties with a handful of their ports.
These trans-Pacific relationships obviously serve us well; but, in addition to generating revenues, they give us a real sense of what's going on in China today, and why the Chinese have chosen their current path.
The first -- and perhaps most important -- point is that Beijing has felt pressure to adopt its present portfolio of economic policies.
China is a huge country -- and the world's second-largest economy -- but it's not a monolith, and there are huge disparities internally when it comes to economic development, salaries and employment. Indeed, in sharp contrast to glittering and modernized cities like Beijing and Shanghai, there are still millions of rural poor, and legions of factory workers making subsistence wages, in undeveloped inland regions.
China's leaders are well aware of this inequity between the haves and have- nots, and they fear its consequences. That's why they are trying -- like the U.S. -- to boost domestic production and employment through cheaper exports.
But Beijing also knows that being the low-cost producer is not a viable or sustainable long-term strategy. Eventually, as Japan learned, the low-cost advantage evaporates. Japan lost this edge to Taiwan and South Korea; and China could lose it to Vietnam and Indonesia.
As a result, the Chinese are working hard to upgrade their products so they offer greater value and more innovative technology. This is smart from Beijing's perspective, but it represents another potential challenge to the U.S. in terms of global competition.
China has also proven that it will use its vast financial resources and controlled economy to create jobs and economic expansion. Unfortunately, this is a fiscal luxury that the deficit-ridden U.S. just doesn't have right now.
One of the best examples of China's ability to deliver employment and GDP growth is the way it developed Shanghai's port at Yangshan. All this work was completed in a matter of years, thanks to government imperative and intervention.
China will almost certainly continue to make its economic presence felt over the next decade; but, even though this concerns many players in the global markets, it's not in anyone's best interest to condemn Beijing. After all, the Chinese are just trying to employ their people and enhance the quality of life in a nation of 1.3 billion.
Tay Yoshitani is CEO of the Port of Seattle.