Roots of the U.S.-China Trade Dispute

Roots of the U.S.-China Trade Conflict

https://portside.org/2019-09-05/roots-us-china-trade-conflict

Author: David Kotz

Date of source: September 1, 2019

Democratic Left (Democratic Socialists of America)

The most anti-worker president in recent memory slaps big tariffs on products made in China — in the name of protecting the jobs of American workers. Corporate lobbyists criticize the tariffs — but say we must get tough on China’s trade policies. Some Democratic senators warn Trump not to back down in trade negotiations with China.

What can socialists make of all this? To answer this question, let’s examine the background of the trade conflict and the reasons why it broke out recently.

China Rises

Beginning in 1978, the ruling Communist Party in China made a radical turn, called the “reform and opening.” Central planning was gradually replaced by a market economy. The previously closed economy was opened to trade with the capitalist countries. Privately owned companies came to predominate. However, a core of large state-owned enterprises remains, and the government actively regulates the economy. China’s economic system today bears some resemblance to the heavily state-regulated capitalist economies of Western Europe in the post-Second World War decades, although paired with a different political and social system ruled by the Communist Party.

When China started down this road, the U.S. government was enthusiastic and supportive. U.S. big business saw big profit opportunities in a growing China market. The reform and opening led to remarkably rapid economic growth, at about 10% per year for decades. U.S. business lobbied for China’s admission to the World Trade Organization in 2001. Many U.S. companies set up shop in China, which has abundant low-wage (yet relatively healthy and well-educated) labor coming from a huge rural sector. China also has a business-friendly government, docile official trade unions, and a government that makes huge infrastructure investments in transportation and power that underpin the profitability of operating in the China market. 

As “Made in China” labels proliferated in U.S. stores, many U.S. workers lost their jobs. Cheap imports from China, along with those from other low-wage countries, have played a role in driving down the real wages of U.S. workers since 1980. That did not concern the U.S. corporations that were boosting profits by moving production to China, nor did it bother the many sectors of U.S. business that purchased cheap inputs from China. 

About Face

Read the entire piece here. 

https://www.dsausa.org/democratic-left/roots-of-the-u-s-china-trade-conflict/