China is not the big bad wolf of international trade

Right before the second presidential debate on Tuesday night, I shared with you why international trade is an important topic. I was glad that international trade, as it relates to jobs and economic growth, was a part of that debate.

Even more interesting was that two key points were made about international trade. These points receive minimal attention in the media and in discussions about the U.S. economy, the global marketplace and China.

1) Some jobs and industries are just not coming back to the United States

2) China’s currency has actually appreciated 

One of the questions posed to the candidates was:

IPad, the Macs, the iPhones, they are all manufactured in China, and one of the major reasons is labor is so much cheaper there. How do you convince a great American company to bring that manufacturing back here?

President Romney said much of what he has argued in previous debates and public speeches:

The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China’s been cheating over the years, one, by holding down the value of their currency, number two, by stealing our intellectual property, our designs, our patents, our technology. There’s even an Apple store in China that’s a counterfeit Apple store selling counterfeit goods. They hack into our computers. We will have to have people play on a fair basis. That’s number one.

Number two, we have to make America the most attractive place for entrepreneurs, for people who want to expand a business. That’s what brings jobs in.

President Obama responded with:

[T]here are some jobs that are not going to come back, because they’re low-wage, low-skill jobs. I want high- wage, high-skill jobs. That’s why we have to emphasize manufacturing. That’s why we have to invest in advanced manufacturing. That’s why we’ve got to make sure that we’ve got the best science and research in the world.

And when we talk about deficits, if we’re adding to our deficit for tax cuts for folks who don’t need them and we’re cutting investments in research and science that will create the next Apple, create the next new innovation that will sell products around the world, we will lose that race. If we’re not training engineers to make sure that they are equipped here in this country, then companies won’t come here. Those investments are what’s going to help to make sure that we continue to lead this world economy not just next year, but 10 years from now, 50 years from now, a hundred years from now.

Furthermore, China’s manipulation of its currency continues to surface as a hot issue. President Obama’s pointed out that China’s currency has actually increased by 11 percent during his term in office. Fact checkers support President Obama’s statement. Nevertheless, the appreciation of China’s currency has received little attention, as noted in a New York Times article earlier this year.

China is not the big bad wolf in the area of international trade. This is not to deny concerns about China’s trade practices or those of any other country. Rather, we are also facing the realities of a different global economy from that of 50-60 years ago. Those realities go back to the two points highlighted above–the United States is no longer competitive in certain industries and China has appreciated the value of its currency.

The next president of the United States needs acknowledge this reality and outline a strategy that will build a strong economy that will last at least for the next 50 years. Blaming China is not the way to go.


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About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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3 Responses to China is not the big bad wolf of international trade

  1. Kristen Rollins says:

    Dr. Jackson I agree with  your input on Obama’s comments to trade with China vs. that of Romney there was a lot of recap of Obama’s comments from Romney. But as China seeks to advance through unfair trade, they hinder their competitors from being able to compete. How does that not make them “the big bad wolf”? Or were you just speaking in terms of China’s currency and the fact that they are more productive in certain markets that are no longer actively concerning the U.S. as far as production goes.

    • Dr. Sarita D. Jackson says:

      Kristen: Thank you for your comment and great question. When I say that China is not the “big bad wolf” in international trade, I am merely saying that our foreign trade policy should not be built off of fear tactics. In other words, China is not the main or only culprit in terms of U.S. challenges in certain industries within the global market. Challenges to U.S. manufacturing, for example, emerged long before China even became an economic powerhouse. Other factors such as the use of machines and higher production costs in the United States determine competitiveness. The use of modern technology, not China’s trade practices, has played a role in declining labor in manufacturing. Higher production costs, not only China’s currency practices, has played a role in making U.S. exports less competitive against lower cost producers. While I agree that we should be concerned about unfair trade practices, that does not relieve the United States of its responsibility of devising a foreign trade policy that will help businesses and workers to adapt to the current international trade environment.

  2. Pingback: You spoke and I listened | International Trade Examiner

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