Zachary Karabell’s June 9 article, “How Can Americans Get China to Do What They Want? For Starters, Shut Up,” promotes a dangerous approach that allows China to freely continue its mercantilist economic policies without even the threat of repercussions. It amounts to nothing less than appeasement and the continued loss of American jobs.
Mr. Karabell will have to forgive me for not shutting up. When a single country accounts for over 70 percent of our annual trade deficit in non-oil goods and they do it by illegally subsidizing industry, dumping at below market prices, and devaluing their currency to artificially make their exports cheaper and ours more expensive, I fail to see the logic in sitting idly by while our economy is decimated and China reaps the benefits.
(MORE: The End of Cheap Labor in China)
History tells us that China only reacts with meaningful reforms when we demonstrate our willingness to correct market distortions. Faced with a similar situation in 2005, the U.S. Senate overwhelmingly voted 67-33 to penalize China for its currency manipulation. Within weeks, China began what turned out to be a 21 percent appreciation of the yuan until it resumed its peg to the dollar in 2008.
Strong use of our trade laws works. We have recently seen that tariffs placed on Chinese tires have resulted in expanded domestic production, plant investment, and more jobs. A devastating and targeted assault on U.S. producers of oil-country tubular goods (OCTG) was halted after our trade laws were used to level the playing field for workers in places like Lorraine, Ohio, and Lone Star, Texas, who are once again producing pipes used in natural gas exploration.
Only after the Obama administration initiated a Section 301 investigation into China’s clean tech energy sector did China put an end to subsidies granted to wind energy producers who favored local content. And only when the administration and U.S. companies spoke candidly and directly did China agree to put more effort into protecting our intellectual property.
Clearly, Mr. Karabell and I agree that more progress needs to be made, but remaining silent will not move the ball forward. China’s deliberate intervention in the currency market is harming U.S. interests. Some 2.4 million U.S. jobs were lost or displaced between 2001 and 2008 as a result of our trade deficit with China, which has continued to grow to a record $273 billion in 2010.
While China’s system of government seeks to quiet discontent, I never imagined that it would have such far-reaching influence. Americans rightly speak up when they see wrong. Eighty-three percent of 2010 midterm election voters said they support imposing tariffs on Chinese imports because of their unwillingness to comply with international trade obligations.
Clearly, Mr. Karabell is in the minority, where in China silence has become a tragic norm.
Scott Paul is the Executive Director of the Alliance for American Manufacturing (AAM).