Calling out China

I was extremely pleased to hear President Obama address China’s unfair trade practices in last night’s State of the Union, though I have to admit, I was taken aback by the incendiary nature of his language and by the mere fact that he even addressed the issue on such a grand stage.  Given the already strained nature of our trade relations with China, coupled with our significant dependence on Chinese exports, labor, and manufacturing expertise, I was very surprised Obama was so direct in calling out China’s unfair practices.

For those of you who didn’t watch, this is what Obama had to say:

I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration – and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China. There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you – America will always win.

In written form the language does not seem to carry the same weight as it did when Obama spoke it last night, but honestly, when I heard this I nearly stood up and started chanting, “U.S.A! U.S.A.! U.S.A.!”

Anyways, if Obama is serious about resuscitating the deflated American manufacturing industry, the China issue has to be addressed earnestly and properly, which I believe includes in good part, bringing claims against China for not living up to its obligations under international trade conventions. Let us hope the Trade Enforcement Unit will do more of just that.

Again, I am happy that Obama seems to recognize the urgency of the China issue. Hopefully, the current rhetoric is not just mere puffing, but instead leads to true action in terms of fixing the China problem. In Evan Osnos’s piece in the New Yorker this morning, Arthur Kroeber, an American who is managing director of GK Dragonomics, a Beijing-based economic research firm, aptly notes that “China is a big issue in U.S. politics in odd-numbered years, because there is no election. In 2005, 2007, 2009, 2011, we had the peak of the currency debates. But in every case, the closer you got to an actual election, China evaporated as an issue.”  For the sake of American manufacturing and the economy in general, let us hope President Obama and the Trade Enforcement Unit take the proper steps so that come November, this is no longer the trend.

One comment

  1. Essentially, the US has taken a strong stance against China not just for unfair trade practices. The international community also has several issues with China’s unfair practices. What about China’s use of torture to guarantee defendants’ confessions (despite reform of China’s criminal procedure law?) Unfair trade is just one of the issues that arises when the US analyzes the Chinese government polices and practices. The US should continue to encourage China to confirm to the international standards for fair trade practices and against the use of torture.

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