Trading blows over China leaves real questions unanswered

By Zhang Lijuan
0 Comment(s)Print E-mail China.org.cn, October 3, 2012
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Recently, U.S. President Barack Obama made a two-pronged attack against China, in the form of a trade complaint that asserted that up to 60 percent of Chinese auto part exporters benefit from subsidies, and an accusation against Republican candidate Mitt Romney which alleged that Mr. Romney profited from outsourcing to China. There is no question that China has been dynamite political leverage for both presidential candidates and the China question is growing ever more explosive as the election campaign heats up.

China is very much the scapegoat in all of this. If we analyze American Presidential campaigns over the past few decades, we can see that China has always been cast in this role in U.S. election years. Bill Clinton did the same thing before running for the White House, and he was extremely popular with Chinese people.

This phenomenon raises a number of questions: "Why do politicians place China in the crosshairs whenever they need votes, irrespective of whether the election is presidential or congressional? Is it because the American people dislike China? Do American consumers object to cheap "made in China" products? Do American businesses recoil from the 1.3 billion consumers in the Chinese market? Do Chinese people like America? Do Chinese consumers appreciate products which are "made in the USA?" Do Chinese businesses relish the prospect of the consumer-driven American economy? The answer to all of the above Chinese questions is a resounding "yes"; but I am not so certain about the answer to the American questions. However, as we have all seen, what happens and what is said in politics is simply for the sake of politics alone and has little to do with truth in the context of the wider world.

Since it is impossible to reverse the culture of U.S. elections, the Chinese government should focus on improving the trade regime, both domestically and internationally; and my advice to American politicians is to formulate an improved proposal for restructuring the US economy. The truth is that even if manufacturing jobs return to the U.S., they will not prove to be the salvation of the American economy.

It is time for China to reevaluate its trade policy of the past thirty years. There are certain policy initiatives related to the promotion of trade which easily draw accusations of unfairness. Consequently, such initiatives are associated with dumping and subsidiaries, which leads to the implementation of antidumping and countervailing duties according to U.S. trade laws and regulations. Trade protection is required by every nation, but protectionism is against the rules and regulations set by multilateral trade agreements. It is no secret that U.S. trade law is above World Trade Organization rules and regulations in many respects. Indeed, the U.S. trade principle – "free but fair trade" – has guaranteed many trading advantages for American businesses. In addition, "fair trade" has forced all of America's trading partners to follow the standards set by U.S. laws and regulations. There is no doubt that the U.S. has the most developed legal system in the world, while China continues to lag far behind in terms of trade laws and regulations. The result is that Chinese traders and businesses have to pay a high price in order to learn how to build a stronger domestic trade regime. Now is the time to undertake the evaluations and projections necessary for achieving this aim.

It is also time for the U.S. to reevaluate its economic structure. Financialization has been the key phenomenon in the American economy in recent decades. The number of manufacturing jobs has been reduced, not by blue-collar workers, but by the economic transition from manufacturing to financialization. A resurgence in manufacturing jobs will do little to improve overall job creation in an economy which is dominated by the service industry. Farm workers are in short supply in California this harvest season, but Americans are unlikely to rush to work on farms. The truth is that the international division of labor is changing. If there must be a target for creating jobs, it is the market, the government and the new American economic structure.

China is by far one of the largest trading nations in the world, but China is not among the most powerful trading nations. Because China is still living with the image of low-end, "made in China" export goods, it is really exporting welfare to the world at the unacceptable cost of cheap labor, poor healthcare, and a polluted environment.

In the recent months of the U.S. presidential election campaign, the growing anxiety of both candidates regarding the American economy has become clear to the American public. It appears that the candidate who is toughest on China will win the election. As a result, both candidates are erroneously campaigning on their China policy rather than on a viable restructuring plan for the American economy.

There is no doubt whatsoever that China is important to the American economy. But this reliance must not be based on trade restrictions against China. In today's world, economic interdependence among emerging economies and developed economies is extremely important to economic growth. However, China cannot change or play a leading role in American economic restructuring. Although some scholars argue that targeting China is an election-year phenomenon, the outcome of the election will only modestly affect U.S.-China trade relations. But still it is worth mentioning that such a political action will cost the American people and American businesses dear. We need a peaceful world. Trade was created to benefit the needs of consumers. If politicians shape trade, global trade will return to an era of protectionism. It is crucial that both Mr. Obama and Mr. Romney realize that we require trade worth, not trade wars.

The author is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/zhanglijuan.htm

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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