Congress hits anti-China
drum By Benjamin A Shobert
Blue-collar workers in the American
Midwest are hurting. Their experience post the
2008 financial crisis has in many ways been more
acute than in other parts of the country, largely
because of the role traditional manufacturing has
played in their regions. The anxieties they feel
are widely expressed as frustrations over
globalization generally, and China especially.
Political leaders who represent these distressed
workers can be counted on to be some of the
harshest critics towards China's trade policies,
human rights abuses and military build-up.
In the forthcoming documentary Death by
China: One Lost Job at a Time, Congressman Tim
Ryan (Democrat - Ohio), offers up
experiences from his
district: "Some of our workers, literally their
last act at the factory was to unbolt the machines
and load them up to be shipped off to China." For
those personally impacted by stories like this,
and there are millions across the United States
who have been, nuanced arguments about trade ring
hollow.
As America's pain has continued,
America's political system has reached new levels
of acrimony and dysfunction. Government has
offered little in the way of a compelling new
vision about where America might go, how these
displaced workers might find new opportunities,
and how the national economy can right itself.
Consequently, those who loudly proclaim the ill
done by trading with China are those voices that
offer the clearest vision for the future. These
voices are rising in number and influence. It
would be a profound mistake for advocates of
globalization to overlook what anger and
frustrations like that embodied in the documentary
Death by China represent.
Valiant efforts
are being made to push back against the loud
voices that protest that doing business with China
is counter-productive to America's interests.
Groups like the US-China Business Council (USCBC)
have elevated their lobbying and public relations'
efforts across the country arguing that too many
Americans overlook the great good done by trade
with China. Whether these necessary reminders, and
the more nuanced arguments they propose about how
the country should view globalization are being
heard, remain to be seen.
This week, the
USCBC released a report showing the value of
exports to China from all 435 congressional
districts. A politically and practically savvy
organization, the USCBC did not point towards any
specific congressional leaders in an attempt to
point out hypocritical but politically convenient
stances towards China; rather, they made the
general observation that 420 of the districts grew
exports to China faster last year than in any
other export market. As one example, Congressman
Ryan's district exported US$131 million to China.
As Paul Bedard with The Washington Examiner
pointed out, this was "a 494% jump since 2002."
Ryan, the author of the 2010 Currency
Reform for Fair Trade Act would have assigned
tariffs on China for their currency manipulation.
He has long been a vocal critic of China's trade
practices and believes that much of the economic
pain his district faces has been largely caused by
China. This pain is not trivial: according to the
US Department of Labor's June data, the largest
city in Ryan's Ohio 17th District, Akron, had
25,900 unemployed people, or an unemployment rate
of 7.0% (Akron will become part of the 13th
District as part of the 2013 113th Congress).
Heavy manufacturing including steel and tire
producers, both of which have faced challenges
dealing with China as a competitor, populate his
district.
As bad as this unemployment rate
is, the USCBC's analysis forces an important
question: what would have replaced the $131
million in exports from this district had China
not been a trading partner? Some would respond
that first, if China "played by the rules" the
district would have kept many of the jobs it lost
and second, if Ohio businesses could compete on a
"level playing field" with their Chinese
competitors, this number could be even greater.
While advocates of globalization take
issue with these sort of counter-factual
arguments, the larger point is these are taking on
increasing weight in the American consciousness.
As it becomes more popularly accepted, as
expressed in movies, television and media outlets,
that China is somehow to blame for America's
economic problems, politicians will come to see
the value to adding onto these anxieties. As we
have seen already in the 2012 election cycle, the
most recent incarnation of a pro-business GOP
presidential candidate has come to believe that
being harshly anti-China makes sense both in the
primary and the general election.
This
sort of re-direction by American politicians is
not only politically expedient, it serves their
interests by re-focusing people's frustrations
away from the policies they have - and have not -
advocated for. A more thorough evaluation of what
America's political class was doing in the run-up
to 2008's financial crisis would show too little
was done to better prepare for the onslaught as
globalization brought several billion low priced
workers from emerging economies into the world's
labor force. Dislocations were inevitable, but
America's response to this once in a generation
moment of economic truth was flaccid. Rather than
address what this says about America's political
failings, the nation's ire towards China as the
culprit is slowly and dangerously building.
In the heady 90s, when the American
economy was on solid ground, it was widely
received wisdom that a manufacturing economy could
- and should - be gradually replaced by a new
economy built around high technology, healthcare
and services. Conservatives were quick to argue
that the invisible hand of the market would prompt
dislocated workers to retrain. Liberals were less
comfortable with this assertion, but in the face
of the beckoning lucrative markets in China and
the extraordinary success of the dot-com era, the
swap of market access for short-term dislocation
seemed to make sense.
A deeper analysis of
how severe these dislocations might have been
should not necessarily have slowed down America's
globalization practices. Rather, they would have
directed America's political leaders to sit down
and be absolutely sure displaced workers were
given ample opportunities to retrain, relocate,
and reinvest so as to ensure the remained
economically viable in this newly globalized
world. Instead, America's political leaders turned
their attention towards petty provincial squabbles
that paid window dressing to this critical issue,
only now to be caught unawares over how
globalization has impacted American workers.
None of this was necessary. After all,
globalization does work. The numbers provided by
the USCBC are unmistakable. Trade with China has
grown enormously. It has and continues to remain a
vibrant part of the American economy, Congressman
Ryan's distressed Ohio district included. Beyond
these economic benefits, critics of globalization
have yet to put forward an alternative reality
that draws an isolated and impoverished nation the
size of China out of its backwards past into a
more productive future. Yes, the process by which
America's policy of engagement with China is in
need of refining. But it should not be rejected.
What should be rejected are attempts by
popular culture and political leaders to take
American's attention away from the paucity of
vision their leaders offered at a critical moment
when the global economy was preparing to change.
This was a moment when real leadership was needed.
If we are to take today's political climate as any
gauge, it appears America stands ready to blame
China for problems of our own making.
China cannot destroy globalization. Were
it to somehow extricate itself from being reliant
on exports to drive its economy, its trading
partners can find other places to do business. The
country that can destroy globalization is America.
The longer American politics focuses on punishing
China rather than changing what it is about how
our economy is structured, or what we expect of
government, the more likely America will find
itself ready to do just this.
Benjamin A Shobert is the
Managing Director of Rubicon Strategy Group, a
consulting firm specialized in strategy analysis
for companies looking to enter emerging economies.
He is the author of the upcoming book Blame
China and can be followed at www.CrossTheRubiconBlog.com.
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