U.S. Shots at China Trade May Backfire

BEIJING, Jan. 31 (Xinhua) — U.S. politicians have aimed a barrage of critiques at China’s trade policies recently but the shots from the crisis-plagued economy of the United States are likely to miss their target, or worse, backfire.

As the Chinese braced for their Lunar New Year, U.S. leaders and congressmen worked on a combination of action plans to deal with China’s “unfair trade practices” and restore domestic jobs.

In the State of the Union address, President Obama said he would set up a new trade enforcement unit to probe unfair trade practices in countries such as China. At the Davos forum, Treasury Secretary Geithner singled out China as a “really unique and formidable challenge to the global trading system” for its systematic state subsidies and undervalued currency.

U.S. Republican lawmakers are mulling new legislation to facilitate levying countervailing duties on subsidized imports from China among other non-market economies.

It’s the beginning of the Year of the Dragon, and the fire being breathed at the country’s trade is more in line with the hostility that the animal represents in the eyes of the Westerners, instead of the fortune and power indicated by the Chinese zodiac.

The sharpening tone on China’s trade for the sake of protecting domestic jobs is understandable and predictable — this, after all, is a year of presidential campaign during which China is doomed to be a target for candidates’ bullets in an effort to win votes.

As old a trick as this is, the U.S. government does face a freshly trickier picture: limping growth accompanied with stubbornly high unemployment, and debt woes which have spread from commercial mortgages to sovereign bills. For those anticipating growth would return in the wake of a massive state bailout and stimulus package, bad news stories have come one after another.

But that hardly suffices to prove that bashing and taxing Chinese goods will put growth and jobs into place. The high-profile tire dispute in 2009 shows how a get-tough policy on Chinese exports has failed to get the wheels of the United States’ economy moving after three years of practice. A U.S. tire association official told The Wall Street Journal recently that the tariffs which are supposed to cut U.S. imports and increase jobs have done little of either, but raised prices for consumers.

Mobilizing a special task force is, on one hand, part of the political show in an election campaign year. On the other hand, it underscores that, to look to trade to boost growth, the U.S. government means business. It may move toward the right ends, but not necessarily with the right means.

Any arbitrary guesses of the new trade unit’s de facto function is undesirable. Still, hopes are high that the U.S. government can rationally handle the sensitive trade issue and explore innovative ways to sort out disputes, rather than complicating and intensifying the conflicts and escalating trade rows into trade wars.

Hope for the best, but prepare for the worst. The U.S. congressmen’s tough talk of new countervailing duty bills signals that regrettable story could take place overnight.

Their intent to seek speedy taxation betrays their jitters about domestic incompetence and their jealousy of emerging economies’ growing strength in a range of areas from traditional manufacturing to clean energy.

Furthermore, China has not run out of ammunition to cope with the chaos, although retaliation or the abuse of trade remedy measures have never been at the forefront of the country’s arsenals.

Accusing China of subsidizing exports is based more on self-reinforcing ideas than on calmly conceived measuring. The land and loans that Chinese companies get owes to their merits in the appraisal system. Even with some state help, those promising industries deserve a due level of government nurture.

In fact, Western economists don’t need to be too sensitive about the words “state” or “government.” The debate between free market and state capitalism became a hot topic at the World Economic Forum in Davos last week. Free-market economies have paid exorbitant prices for lack of essential supervision in key industries. And the battlefield is yet to be cleaned up.

To revive domestic manufacturing, the U.S. government needs to do something pragmatic to restructure its industrial pattern and labor force. It would be an utterly cock-and-bull story if it merely complained about another’s advantages without addressing its own chronic problems in order to get its economic engine purring again.

Being each other’s second-largest trading partner, China and the United States should set sail on the same boat toward the shared boom.

Xinhua News

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