Making Sense on China, Trade and Jobs

How to win the argument about the big economic challenges facing the American people
Number 5 | October 24, 2012

Making Sense On China, Trade and Jobs

The Challenge

American companies continue to ship good jobs to China. They seek to profit from underpaid, overworked labor with few rights. They profit from Chinese subsidies and lax environmental policies. They want access to China’s market, even at the price of forced partnerships, stolen technologies and tilted playing fields.

Our $295 billion trade deficit in goods with China in 2011 was the largest-ever such imbalance between two nations. It is a staggering three-fourth of the U.S. non-oil trade deficit. And it is as much a jobs deficit as it is a trade deficit.

International Monetary Fund economists have declared that severe trade imbalances contributed directly to the economic collapse. And now the China deficit weakens our recovery. In the years since China’s entry into the World Trade Organization in 2001 we lost more than 50,000 factories and 5 million manufacturing jobs without filing a single trade complaint. Even worse, we have lost entire industries and vital industrial ecosystems, taking down entire regions of our country. And the threat of companies leaving has put downward pressure on wages here, as workers are frightened that they will lose their jobs if they assert their rights.

The reason for the imbalance is that China pursues mercantilist policies. The Chinese government controls access to its internal markets; steals technology; manipulates its currency to keep the prices of its exports artificially low; holds down the cost of fuel and electricity; provides free land and utilities to companies in key economic sectors; limits competition by regulating distribution of products; subsidizes Chinese-owned companies and industries, and utilizes many other methods of promoting its export industries at the expense of those who play by the rules.

But China isn’t simply taking jobs from us. U.S. corporations are shipping our jobs to them, seeking out low-wage workers, subsidies, and minimal workplace and environmental regulation. And worse, they can write off the expenses of doing so from their taxes as a cost of doing business. And while China’s government has a national trade and industrial strategy, U.S. trade strategy is written by multinationals, serving their interests and not the interests of the American people.

Make the Case

It’s time to see “Made in America” once more. We’re running a trade deficit of well over $1 billion a day. We can’t continue to let countries like China rig their currency, target our industries and drive us into a race to the bottom. We do need more trade, but it must be balanced trade. We have to put companies on notice: If you want to sell in America, you need to produce in America. And we need to put countries like China on notice: We will treat your exports to this country in the same way you treat our exports to your country. It's time to enforce the rules – and to change the rules that rig the game. Let’s stop negotiating more treaties modeled after NAFTA (North American Free Trade Agreement), which opened the U.S. floodgates to cheap imports and encouraged corporations to export jobs to low-wage countries, and start balancing our trade. And let’s create a manufacturing strategy for this country to rebuild manufacturing right here at home.

Case in Point

Don’t buy the myth that more trade treaties create more jobs. NAFTA-style trade treaties aren’t free trade accords. They are complicated agreements negotiated with corporations, designed to protect their investments abroad as much as exports abroad. Our trade policies are dominated by American multinationals that profit from shipping jobs abroad to low-wage markets. The old-style trade accords have cost us jobs and run up our foreign debts.

“Made in America” needs to be more than a slogan or a fading wish. We need a national manufacturing strategy, as every other country has, that targets strategic industries, invests in research and development, builds world-class competitive infrastructure, and enforces balanced trading relations.

"China cheats" resonates with voters because it is true. They sell much more to us than we sell to them. That is not “trade”; that is a one-way relationship that is draining our economy. China is guilty of repeated trade violations and they regularly lose trade cases brought not only by the United States but also by other nations and the European Union.

When we fix the trade problems with China (and other countries) our economy will be better off, we will have more and better-paying jobs, and key industries will again prosper. And if China begins to seek greater growth at home, millions of Chinese will be better off as well! To fix this we need to act against currency manipulation and trade violations like government subsidies and blocking our products from sale over there.

But the problem isn’t just China. The problem is that U.S. trade policy is dominated by multinationals that have a different interest from the American people and American workers. They can profit from moving good jobs abroad, even as Americans pay the price in lost jobs and declining wages. We won’t have a trade policy that makes sense for America until we clean out Washington and curb the influence of big money and entrenched corporate lobbies.

Counterpoint
When they say: Aren’t you risking a trade war if you take on China’s cheating?
You can say: We are already in a trade war and China is winning. We can fix trade with China and both sides will be better off.
When they say: What happens if China retaliates and won't buy our bonds?
You can say: We are China’s largest customer. If China stopped buying our bonds it would bring down their economy. Also, that would force the value of the dollar down, which would help make U.S. exports more competitive.
When they say: We benefit from cheaper goods made in China.
You can say: The cost of those cheaper goods is closed American factories, lost jobs and stagnant wages for most of us who still have jobs. It also means sacrificing our ability to make a living in the future. If we keep going down this path, the U.S. will no longer be the leading source of innovation and new technology.
When they say: Aren’t you just advocating “protectionism?”
You can say: We need a trade policy that works for working people. We can’t let global corporations drive a race to the bottom that undermines working families here and abroad. We need a strategy that defends core labor standards at home and abroad. We need a national strategy to counter the strategies of mercantilist nations and unaccountable multinationals.
When they say: Isn’t a national strategy just picking winners and losers?
You can say: No, this isn’t about picking individual companies to win and lose. It is about creating a strategy to insure that the U.S. captures a lead in the markets of the future – from clean energy to biotechnology.

The Public Pulse

Americans know our trade deficit with China is important. In a September Pew Research Center poll comparing public concerns with those of “experts”:

  • 78 percent of the public considers the amount of debt held by China to be serious vs. 20 percent of government experts, 42 percent of business/trade experts and 53 percent of news media experts.
  • 71 percent of the public sees loss of jobs to China as a serious concern vs. 22 percent of government experts, 15 percent of business/trade experts and 22 percent of news media experts.
  • And 61 percent of the public sees the trade deficit with China as a serious concern vs. 33 percent of government experts, 36 percent of business/trade experts and 31 percent of news media experts.

The public wants policies that stand up for America. A July poll conducted for the Alliance for American Manufacturing found that:

  • Overwhelming majorities of Republican (87 percent), Democratic (91 percent), and independent (87 percent) voters were in favor of strong Buy American provisions for public works projects.
  • More than two-thirds said that China’s trade violations were costing the U.S. jobs, and 62 percent wants Washington to get tougher on China’s cheating.
  • 83 percent had an unfavorable view of companies that outsource jobs to China while voters maintain extremely favorable views of goods manufactured in the U.S. (97 percent favorable).
  • 62 percent of voters favor a “get tough” approach with China, as opposed to only 29 percent who say we should be careful not to “start a trade war.”
  • When asked if China’s cheating on trade agreements had cost American jobs, helped create U.S. jobs, or had no effect: 68 percent said it cost jobs, 10 percent said no effect, 2 percent said had created jobs.
  • When asked about enforcing trade laws to support a level playing field, 91 percent of voters were in favor.

Hot Facts
  • The trade deficit with China cost more than 2.7 million American jobs between 2001 and 2011.
  • Our $295 billion deficit in goods trade with China in 2011 was the largest-ever such imbalance between two nations in the history of the world, and it is on pace to exceed $300 billion this year. It is as much a jobs deficit as it is a trade deficit.
  • From January 2000 to December 2011, the U.S. lost almost 5.5 million manufacturing jobs (from 17,292,000 to 11,808,000), according to the Bureau of Labor Statistics.
  • China has accumulated almost $1.5 trillion from the trade imbalance.
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    How To Say It
  • America has been falling behind, while countries like China have a vision to succeed. We need our own vision for American success. We need a clear strategy to make things in America, make our economy competitive and revive America's middle class.
  • It's time to challenge countries like China that are taking our jobs, end subsidies to corporations that send jobs abroad, stop passing NAFTA-like trade deals until we have a national strategy for making things in America and exporting goods, not jobs.
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    Avoid
  • Being against China just because they are “foreign.” This is not the source of the problem with trade with China.
  • Sounding like you are against trade itself. If set up correctly, a good trading relationship with China will benefit us as much as it benefits them, and we want that.
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    Tweet This

    Tell Congress to vote on Currency Manipulation Bill to bring back jobs. Boehner holding it up. #smarttalk via @OurFuture

    Renegotiate bad NAFTA-style trade agreements that kill jobs and industries! #smarttalk via @OurFuture

    Stop China cheating! Enforcing trade agreements will bring jobs home. #smarttalk via @OurFuture

    Learn More

    On OurFuture.org:

    Alliance for American Manufacturing:

    Public Citizen's Global Trade Watch

    Coalition for a Prosperous America Trade Reform
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