Trade With China Is Heating Up As a Business and Political Issue

Wall Street Journal ^ | 7/30/2003 | Neil King Jr., Bob Davis, Karby Leggett

[SolutionsOnly]

With consumer confidence shaky and unemployment at a nine-year high, American anxiety about China's export prowess and the exodus of U.S. jobs overseas is emerging as a significant political issue.

Just Tuesday, three of President Bush's cabinet secretaries traveled to the Midwest to tout the administration's tax cuts and got an earful about China instead.

"How can a tax cut help our economy when it will be spent in stores importing ... goods mainly from China?" Michael Repzer, controller of W.G. Strohwig Tool & Die of Richfield, Wis., asked the secretaries of Treasury, commerce and labor as they visited a Harley-Davidson Inc. motorcycle factory outside Milwaukee.

[SolutionsOnly]

It's about time that this issue receives the attention it deserves . It is very difficult to avoid buying Chinese products these days (I try to). I have no problem with free trade with free-trading countries - but not with a protectionist totalitarian state - especially one that is our political adversary, guilty of espionage and other treachery against the west, like the theft of missile technology, overproduction and resale of US product designs, software piracy and the like.

Enough's enough and it's time for the Bush Administration and all Americans to do something about it!

[Wolfie]

"How can a tax cut help our economy when it will be spent in stores importing ... goods mainly from China?"

Oops, cat's outta the bag.

[Barry Goldwater]

How about a chain store that exclusively sells American made products? Is it economically viable?

[doc30]

Can you post the full article? I don't subscribe to the on line WSJ.

[Xthe17th]

As I dream of hitting the lottery, I dream of opening an AmeriMart - 100% Made in USA products. I think as long as it remained true to that claim and didn't go the way of WalMart's hipocracy, it'd be a winner.

[theDentist]

Trade is our "Big Stick". And China is very susceptible (sp?) to our giving them a whack with it, (not to mention Most Favored Nation status). If the government will not hit 'em over the head, then it's up to the people. We've done it with France, and it's working. And we can get China to put that tin-horn North Korean dictator down for a dirt-nap if we hit 'em hard enough.

[SolutionsOnly]

as requested, here's the full article....

Trade With China Is Heating Up
As a Business and Political Issue

With consumer confidence shaky and unemployment at a nine-year high, American anxiety about China's export prowess and the exodus of U.S. jobs overseas is emerging as a significant political issue.




Just Tuesday, three of President Bush's cabinet secretaries traveled to the Midwest to tout the administration's tax cuts and got an earful about China instead.

"How can a tax cut help our economy when it will be spent in stores importing ... goods mainly from China?" Michael Repzer, controller of W.G. Strohwig Tool & Die of Richfield, Wis., asked the secretaries of Treasury, commerce and labor as they visited a Harley-Davidson Inc. motorcycle factory outside Milwaukee.

"You can get a hundred [Chinese workers] for every one Japanese," one worker complained as the officials toured the plant.


Even as Congress moved toward final approval of Bush-backed free-trade agreements with Chile and Singapore, trade with China is becoming a leading villain, both in Washington and across the beleaguered U.S. manufacturing belt.

Although many U.S. corporations are seeking to tap into China to make and sell their products, a lengthening queue of U.S. industries are petitioning the government for relief from Chinese imports; more than one-fifth of the cases in which U.S. companies accuse overseas competitors of selling products below cost now involve China. U.S. manufacturers, among others, are lobbying the Treasury to pressure China to allow its currency, now tied to the dollar, to rise. A stronger yuan would tend to make Chinese products more costly in the U.S. and elsewhere.

And politicians from both parties, sensitive to business and worker anxieties about the economy, are responding. Democrats such as Sen. Joseph Lieberman of Connecticut, a presidential hopeful for 2004, think President Bush is particularly vulnerable on the China trade front. "Bush's laissez-faire means 'I don't care,' " Sen. Lieberman asserted in a recent speech.

In part to protect their flank, Republicans in Congress are backing legislation to intensify monitoring of China's trade practices and to pressure Beijing to revalue its currency. Rep. Don Manzullo, an Illinois Republican, said that unless the president moves to protect domestic manufacturing jobs, "voters next year are going to take their anger out at the polls."

So far the Bush administration has trod softly with China, figuring Beijing's help on North Korea was too important to jeopardize. Early wariness of China as a "strategic competitor" changed significantly after the Sept. 11 terrorist attacks and, more recently, after North Korea began making threats about its nuclear-arms program. But with the 2004 campaign picking up, some Bush aides vow to get more muscular.

"The weather is changing in our relations with China," said Grant Aldonas, the Commerce Department's top trade official. The administration, he said, now has "serious concerns" about Chinese trade practices ranging from government subsidies to patent infringements. Beijing can fix them, he said, or the U.S. will move toward filing cases in the World Trade Organization.


Treasury Secretary John Snow said Tuesday that he is considering going to Beijing in September after a meeting of Asian finance ministers. "We need to engage the Chinese economy," he said.

As he has for the past several weeks, Mr. Snow suggested that the Chinese government is thinking about loosening the link between the yuan and the dollar, which now moves only within a very tight band. "I'm encouraged by the fact that the Chinese have indicated that they are looking at widening that band," he said.

The Treasury secretary added that some economists believe the yuan could rise between 15% and 40% against the dollar if the exchange rate were unfettered. He also noted, though, that if Beijing lifted controls on cross-border money flows, funds might move out of China; that could put downward pressure on the currency in the short term.

Over the past week, senior Chinese policy makers have made clear in a flurry of state media interviews that the domestic exchange is a matter for China alone to decide. Those policy makers and economists note that while China runs a large trade surplus with the U.S. its overall trade surplus has largely evaporated.

U.S. manufacturers have shed more than 2.4 million jobs since 2001, a rate of more than 2,600 jobs a day. Lawmakers and many manufacturers pin the blame on China, whose exports to the U.S. have more than doubled in the past five years, topping $110 billion in 2002. U.S. exports to China are also rising at a good clip, but they are likely to tally less than a fifth of what China ships to the U.S. this year.

"China is now the economic villain that Japan was in the 1980s," said Nicholas Lardy, a China specialist at the Institute for International Economics in Washington. In the first five months of this year, the U.S. ran a $43 billion trade deficit with China, compared with a $26 billion deficit with Japan. After Canada and Mexico, China is now the third-largest supplier of goods to the U.S., having displaced Japan last year.

Unlike the huge trade frictions with Japan in the 1980s, China isn't pushing to keep foreign investors out. What makes the issue all the more complex politically is that many China backers are themselves U.S. multinationals who have set up in China in force.


Still, many in Congress have zeroed in on the currency issue as a way to combat China's growing export power. A bipartisan group from both the House and Senate is now circulating a letter to Mr. Snow, urging Treasury to push China to float the yuan.

Mr. Snow, Commerce Secretary Don Evans and Labor Secretary Elaine Chao are traveling across Wisconsin and Minnesota in a plush touring bus booked next by the rock group Aerosmith to tout the administration's economic policy and show that Mr. Bush cares about the country's mounting unemployment rate.

It isn't a coincidence that unfair trade would be a big topic at Harley-Davidson. The company nearly went bust in the early 1980s until it won higher tariffs on Japanese motorcycle imports. Harley-Davidson is now the biggest seller of heavy motorcycles in Japan. On Monday, Jeffrey Bleustein, chief executive of Harley-Davidson, gave Mr. Evans a letter outlining the company's complaints about China, which include rules barring large motorcycles from parts of some Chinese cities. Mr. Evans said he asked aides to investigate and pledged to raise the issue with the Chinese.

Meanwhile, goaded by Congress, the administration is set to bulk up its trade offices to keep a closer eye on China. A Republican-sponsored amendment to next year's budget will form an Office of China Compliance at the Commerce Department. The U.S. Trade Representative's Office will get $2 million to bulk up enforcement of intellectual-property rules and assure that China lives up to its WTO commitments.

"None of this is protectionist," said Rep. Frank Wolf, a Virginia Republican who championed the amendment. "We just want to see American manufacturers have a fair shot, especially with China."

[GrandMoM]

BTTT

[lucyblue]

BUMP

[Jeff Head]

As I stated on another thread, what has happened, very similar to the abortion arguement, is that a very craftily wordsmithed message of "Free Trade" has been put forth that people have bought into, thinking "How could anyone be against free trade? Why, isn't that all-American?".

Like with abortion, "How could anyone be against a woman's right to choose? Isn't that all American?".

When in reality, neither message has anything remotely to do with the image they portray.

Today's Free Trade is NOT about the free market. The free market is the system our founders based our commerce on, where the intrinsic, underlying moral values of the people involved in the free market governed the equitable, free exchange of goods and services for other goods and services or currency. Sort of like John Adams said regarding the Constitution...

"We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate for the government of any other."- John Adams, Oct. 11, 1798

Well, as far as I am conerned, the same holds for the Free Market, ie...

The Free Market was made only for a moral and religious people. It is wholly inadequate for the economy of any other.

This is a basic truth. Like our government, it was not supposed to be very regulated or burdened with miriad rules. The people, the companies will govern themselves as to moral issues when this is the case. But, when the moral issues are removed, you do not have what was intended for the Constitution, and you do not have a true free market. When we use our foreign policy and economic policy to set up shop and trade with countries who exploit their people's mercilessly, who keep them down without a hope for true liberty or freedom, who trample the moral values our own system was based upon...and when we do it knowingly, without compuction for those very underlying values, then we do not create a free market...no, that free trade has nothing whatsoever to do with, and is in no way similar to the FREE MARKET.

It's wordsmithing for popularizing and putting forth a policy to drain the Umited States manufacturing, technological, agricultural, energy and other critical industries in order to weaken us...plain and simple...and it is working.

That is what is really happening here IMHO, and until we refocus as a people on that underlying moral foundation and the absolute need for it...we will continue to lose ground.

Just my opinion.

Jeff

[Leo Carpathian]

It's wordsmithing for popularizing and putting forth a policy to drain the Umited States manufacturing, technological, agricultural, energy and other critical industries in order to weaken us...plain and simple...and it is working.

AMEN!

If country has no manufacturing industry/base, it has no value/capital producing mechanism. How long can we survive on "service economy"? You need inventiveness, resources (raw material), labor to produce and sell products. We would be better off to bring hard working people (immigrants) into our factories here, they would become consumers, house buying, country building citizens. That's what America was built on. Stupid enviro regulations, "safety" shackles, trial lawyers, unions are stripping us of our economical power and driving towards the third world "paradise". Communism failed, why are they driving at it here again?

Freep & Roll!

[SolutionsOnly]

Agreed. Everyone needs to play by the same set of rules and values for it to work. There are benefits to free trade. When US auto manufacturers pushed junk on the US consumer, the Japanese came to the consumer's rescue. That's as it should be. But when the Japanese were dumping electronics and steel on on our markets - that was an abuse and wrong.

So Free-Trade is not inherently good - nor is it inherently bad. It must be put into context. As it stands right now, I view trade with China as problematic.

[rootntootn]

I always say the American consumer can go to WalMart and "buy the best that Chinese prison slave labor can produce".

[doc30]

"China is now the economic villain that Japan was in the 1980s," said Nicholas Lardy, a China specialist at the Institute for International Economics in Washington. In the first five months of this year, the U.S. ran a $43 billion trade deficit with China, compared with a $26 billion deficit with Japan. After Canada and Mexico, China is now the third-largest supplier of goods to the U.S., having displaced Japan last year.

At least China hasn't started to build cars and trucks with their cheap labor. If a popular SUV was made in China and imported into the U.S., how cheap would it be? $5000 maybe? If the automakers took a hit, then, maybe Bush would try to stop the sucking sound.

[FITZ]

How about a chain store that exclusively sells American made products? Is it economically viable?

No. The government here makes life extremely difficult for business and manufacturers. For example in China when a tool and die shop or some kind of factory opens that government provides the building, the electricity, and all kinds of support. Try to open one here and you'll see a government working against you, taxing everything every step of the way, sending in OSHA inspections trying to find something for which they can slap heavy fines on you. Any profit you make will be highly taxes, your labor costs are highly taxed. Our government makes it impossible to compete with the state-subsidized manufacturing in China.

[FITZ]

They're gearing up for it.

[RS_Rider]

"Ford Motor Co. President Nick Scheele urges suppliers to explore the possibility of investment in China."

This is how the one of two remaining "Big Three" suggests
that America is to deal with China.

The American car is going the path of the American made TV, and it accounts for a major portion of our economy.

[FITZ]

Or just cover up the "made in China" labels. Like was done here:

'Made in China' labels hidden at Bush event

[y2k_free_radical]

IT'S ABOUT TIME BUSH

[LibertyAndJusticeForAll]

WSJ article on Trade with China.