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From China without love: A tsunami of exports


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By John Metzler
SPECIAL TO WORLD TRIBUNE.COM

Friday, January 14, 2005

UNITED NATIONS — In the early years of the American Republic, merchant ships from Massachusetts ports would venture to the Far East in pursuit of commerce. The products they would return with after the long voyages included porcelain “chinaware” and varied exotica, which would make the fortunes of the Clipper ship Captains. Today it’s the American captains of industry often working through joint business ventures in China are producing a plethora of easily accessible products for Americans, not just a wealthy few, but in the process have caused surging trade deficits and a loss of U.S. jobs.

The People’s Republic of China has evolved into a factory to the world. The communists have conceded the reality of markets, and moreover have unleashed the entrepreneurial genius and hard working nature of the Chinese people to create some genuinely impressive economic magic. While this commerce should be applauded after the dark chapters which shrouded the first decades of the People’s Republic, China’s excess has gyrated from hard politics to hard selling.

At its essence is the understandable desire by Beijing to flood many unprotected overseas markets with a Tsunami wave of exports, ranging from the cheap to the desirable avoiding the breakwaters of tariffs and protective quotas. While the U.S. has long allowed these presumably “cheap” Chinese imports, even European countries are now feeling the pressure of PRC products. Given that the global trade system agreed to drop textile quotas as of 1 January, many countries fear a new Chinese commercial offensive.

China in an appeal to rife consumerism have inundated American markets with a wide range of products ranging from textiles and shoes to machinery. More ominously, some Chinese companies pirate products such as car parts and computer software.

Staggering trade deficits — in other words importing more than we export — continues to plague the USA. But beyond the commercial calculus there’s the growing American job losses not only in the traditional manufacturing sector, but including the service and transportation sectors as well.

Since 1989, the years of the communist crackdown on the democracy movement in Tiananmen Square, the trade deficit with the PRC grew from an unhealthy $6 billion to a dangerously unstable $123 billion in 2003. The 2004 numbers already surpass last year’s deficits; the November 2004 monthly U.S. trade shortfall with the PRC stood at $26.6 billion or nearly half the entire deficit!

During the same period according to a survey prepared by the US China Economic Security Review Commission, a Congressionally appointed group, over one and a half million U.S. jobs were lost to the China trade. I would wager that Mexico may have actually cost America even more jobs but then again they don’t have missiles aimed at us.

But gone are the days when the Mainland produced only cheap textiles, tools and toys. Now many PRC products have a decidedly high tech application ranging from the computer to micro chips. The recent IBM deal essentially selling its personal computer division to a Chinese company, underscores this point.

“China is now responsible for our $32 billion deficit in advanced technology products like computers, electronics,” argues international economist Robert E. Scott.

Indeed one overlooked point in the mix is the following – by the end of 2004 the PRC’s foreign currency reserves had surged to a dizzying $610 billion — up by 50 percent over the previous year. Thus the world’s largest dictatorship holds a huge cash reserve sloshing around by buy Boeings, Airbuses and also other items we would rather not think of. With such favorable trade earnings, not only are we losing jobs — and this is true in Europe too — but we are equally financing the strategic dreams of the dragon to purchase high end military hardware and electronics.

Beyond also facilitating weapons R&D one does not need to be too creative to presume that People’s China uses a considerable sum for black budget espionage and active measures intelligence operations targeted not only at the Republic of China on Taiwan, but equally to intimidate and penetrate large overseas Chinese student as well as exile communities in the USA, Canada and Western Europe.

The PRC has abused the free trade playing field offered by the USA and has quite aggressively seized markets. It’s long overdue for the Administration to politely re-explain the rules of fair trade to the PRC before explaining the rules of commercial hardball.

John J. Metzler is a U.N. correspondent covering diplomatic and defense issues. He writes weekly for World Tribune.com.




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