China Bashing

Presidential candidates Senators John McCain and Barack Obama have both taken political swipes at China in recent answers they gave to questions submitted to them by the American Chamber of Commerce in Beijing and published in the chamber magazine. Surprisingly, the candidates were not asked during their first presidential debate to comment on how they propose to deal with China. Surprising, because China is the scapegoat blamed for everything wrong with America. It is a convenient political football. In the vice presidential debate that followed, China was blamed for causing global warming and pollution. The fact that America is the biggest emitter of carbons was conveniently overlooked. Both presidential candidates did however take a swipe at China during their second debate. That is not surprising.

China is the villain that keeps the value of the yuan artificially low to maintain a trade advantage over U.S.-based manufacturers, and it caused the higher prices for raw materials, including oil, increased exports of cheap manufactured goods that have condemned America’s work force to redundancy because of outsourcing, and global warming.

Congress also wants to impose sanctions on China for its successive inclusion since 1999 on a U.S. blacklist of “severe” religious freedom violators.

U.S. politicians habitually make sure that whatever blame is directed their way for their “voodoo economics” is deflected and redirected at China ─ especially during the current financial meltdown and recession. The rise of protectionist sentiment in America over the trade deficit with China could have devastating consequences on the global economy. Quotas on textiles and televisions from China will not save U.S. jobs. The quotas will only increase imports from other low-cost manufacturing centers that have lost market share to China. This will raise the prices paid by U.S. consumers. The fact is affordable Chinese textiles and goods are an integral piece of fabric of the American lifestyle. If the U.S. insists on messing with Chinese currency and quotas, Americans will end up wandering around like the Timorese ─ the poorest people on earth.

America seems to have forgotten a certain 1980s Japan trade history lesson. Japanese low-cost, fuel-efficient cars terrified Detroit so much in the ‘80s that they U.S. automakers persuaded Congress to impose quotas on them. The Japanese then started to make luxury cars that are far more profitable. The result is that Japan’s Infinitis, Lexus and other luxury makes ─ along with their low-cost, fuel-efficient cars ─ have almost bankrupted the Detroit automakers and their part suppliers who once dominated the luxury market.

China bashing, sanctions and quotas will not help America’s fast melting economy recover. On the contrary, it will only expedite the current economic and financial meltdown should China decide to retaliate by dumping its dollars and treasuries ─ especially now that America is insisting on going ahead with the sale of military weapons to Taiwan.