Clear thought has no part in China-bashing process
Peter Z. Grossman
indystar.com
November 11, 2003
Republicans and Democrats seem to agree. Our economic problems have one major cause: China. China-bashing is bipartisan. The only conflict among politicians is how hard to bash.
This effort has produced the remarkable spectacle of a bill before Congress to slap significant tariffs on Chinese-made goods. That is, we may have Republicans, the party of lower taxes, joining hands with Democrats, the champions of the poor, to increase taxes that will fall heaviest on the poor. Wonderful.
But consistency, evidence and clear thought are not part of the China-bashing process. There are actual reasons to criticize China and to worry about the accelerating rush by U.S. companies to locate production there, but these reasons are seldom part of the debate. And for the most part, what you hear is either misrepresented or just plain wrong.
Politicians claim that China is stealing jobs from America through currency manipulation and unfair trade practices. This has, we are told, caused our recession, our jobless recovery and whatever other woe the politicians want to apply. In fact, the recession was not caused by China, and unemployment rose largely because of the recession. But no matter; China's a convenient scapegoat.
This picture is actually a familiar one. Go back to the 1980s and put in "Japan" for "China," and you'll find the same story, replete with fears of deindustrialization where we'll buy everything from Japan and make nothing ourselves. Of course, by the 1990s, Japan's economy was a basket case.
But, you may be asking, isn't there at least some truth to current charges? Aren't our jobs fleeing overseas? Isn't the Chinese currency grossly undervalued?
It is true that the Chinese have sought to peg their currency to the dollar, and it is at least somewhat undervalued. But the consequences of this are not the loss of American manufacturing jobs. In the event that China undertook a huge revaluation, the likelihood is that some companies might leave China -- but not for the U.S. They'd go to other low-wage countries in Central America or Southeast Asia. Production is now a global process. If there is a location that provides cost benefits, firms will find it.
As for losing manufacturing jobs, yes, we're losing them -- 11 percent between 1995 and 2002. But here's a little secret politicians won't tell you: so is everyone else. Japan lost a larger percentage of manufacturing jobs (16 percent) than we did. So, for that matter, did Brazil (20 percent). In fact, so did China (15 percent)!
The point is that manufacturing processes are becoming more efficient, needing increasingly less labor. China, home of some of the world's least efficient factories, is losing manufacturing jobs as more modern operations replace old ones. Our manufacturing job losses (and theirs) represent structural changes in the nature of production, not a Chinese conspiracy.
...
Second, China is an autocratic country whose leadership is attempting the delicate task of matching economic freedom with political repression. Ultimately, this match is impossible; in the event of political and social upheaval, the outcome is again uncertain. China's leadership could well give up on economic freedom before it relinquishes autocratic control. In that case, a U.S. firm dependent on Chinese production could be out of business. |
