A + B = China
Posted by SCapozzola on March 26th, 2008
An interesting item in yesterday’s Chicago Tribune: Reporter Jim Tankersley noted that some progressives are skeptical about Clinton and Obama promises to correct NAFTA’s shortcomings.
Tankersley cites Senator Bernie Sanders in his article. Sanders observes that if the candidates were genuinely concerned about the failings of current U.S. trade policy, they’d be addressing problems with China as well: “It doesn’t take a PhD in economics to see when you go shopping the only products you can afford are made in China. The American people know it, and I hope our candidates learn it.”
AAM’s Scott Paul was also quoted in the article, noting that increasing voter concern regarding lost manufacturing jobs will lead to “a stark difference” in the general election. Paul also focused particular criticism on John McCain, whom he said “has made it clear that he is philosophically disinclined to do anything on this issue.”
Bottom line: U.S. trade policy needs an overhaul. Convenient fixations on NAFTA overlook a more grievous problem. Our $256 billion annual trade deficit with China outstrips our NAFTA trade deficit by more than $100 billion. China cheats on trade agreements and illegally manipulates its currency, all in an effort to gain an advantage over its competitors—including the U.S.
The coming weeks will provide a revealing indication of whether ANY of the candidates would actually take serious action to address China’s cheating.
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March 27th, 2008 at 6:02 pm
That huge trade deficit with China is basically the same one that we’ve had with Asia as a whole for a long time now. China has simply consolidated the trade surplus of all of Asia into its own with the US.
What do you have to say about the fact that US corporations control more than 2/3 of China’s export production; that our corporations are renting China’s cheap labor and keeping much of the profit?
Is this China’s fault? No. To blame our current demise in the manufacturing sector on “China’s cheating” is entirely naive, and displays a misunderstanding of the issue.
Start talking about the corporate American-influenced disintegration of international supply chains in the manufacturing sector in favor the cheapest labor costs for production, and then you are actually beginning to see the larger, clearer picture.
March 28th, 2008 at 3:42 am
Joe, I agree. The fault lies with our own trade policies. The U.S. must take actions that are within our control to effect the desired results, and stop cajoling our tade “partners” to play nice.
It’s time to take a step back from free trade. It’s time to consider whether the economic theory upon which it’s based - Ricardo’s principle of comparative advantage - may be overly simplistic and flawed. We can’t keep doing the same things we’ve been doing for decades and expect any different results.
Trade is fine. I don’t care if we import everything that we consume, as long as the rest of the world buys an equal amount from us. The key is balance. It’s absolutely critical that the U.S. take action to restore a balance of trade.
Pete Murphy
Author, Five Short Blasts
April 3rd, 2008 at 3:29 pm
Isn’t it clear why America can’t compete with China given that the exchange rate is about 8 yuan per dollar, when those 8 yuan in China will buy as much as $32 in the United States?