W.J. Astore
Is it a good idea to get in a trade war with China when they make all our stuff?
I thought of that again this morning as I looked at the outfit I’m wearing. LL Bean shorts? Made in China. Frye boat shoes? Made in China. Polo shirt made from organic cotton? Made in China. Brooks running shoes that I put on for my stretching routine? Made in China. My underwear? Made in Thailand. Aha! So not everything comes from China. I also note my Citizen Eco-Drive watch has a Japanese movement, but it’s unclear where final assembly took place. Any chance it might also be in China?
I just want to state the obvious here: I’m a thoroughgoing Asian man, representing China, Thailand, and Japan. Even when I don my most American-sounding brands like “True Grit,” they are most often made in China.
So, while it’s nice to hear that President Trump is calling a temporary trade and tariff truce with China, I have to say the Chinese already own us, and in more ways than one, since they also own trillions of our national debt. Meanwhile, Trump’s “tough” tactic of raising tariffs to “punish” the Chinese just passes higher costs to American consumers, so who’s really being punished?
Sadly, as I’ve said before, the only American products I routinely hear about in the news as major money-making exports are weapons of war. Bombs, missiles, guns, warplanes, and the like. America used to be the world’s merchant for all kinds of products; now we’re better known as the world’s leading merchant of death. We’re not the “arsenal of democracy,” as we were in World War II. Now we’re just an arsenal.
Isn’t it time we converted our forever war economy into one that produces products that we can wear and enjoy in everyday life?
Or am I forever fated to be a statement of Asian sartorial excellence?
Bracing Views 
‘Made in China’ in pre-election times reminds me of a little gem I picked up when visiting friends in NY in September 2016. I tiny metal box with NATIONAL EMBARRASSMINTS produced by the ‘Unemployed Philosophers Guild’. MINTS MADE IN USA, TIN BUILT IN CHINA (PAID FOR BY MEXICO). I see they’re back (in addition a new T. (im)peach flavoured one) so don’t miss it : https://philosophersguild.com/collections/mints/products/trump-embarrassmints. What’s more, you’ll be funding worthwhile projects :- ).
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Bill Clinton gave China the go ahead via PTNR from the Atlantic Magazine article: https://www.theatlantic.com/ideas/archive/2018/06/normalizing-trade-relations-with-china-was-a-mistake/562403/
In 2000, Congress made the fateful decision to extend “permanent normal trade relations,” or PNTR, to China. As the economists Justin Pierce and Peter Schott have argued, the permanence of PNTR status made an enormous difference: Without PNTR, there was always a danger that China’s favorable access to the U.S. market would be revoked, which in turn deterred U.S. firms from increasing their reliance on Chinese suppliers. With PNTR in hand, the floodgates of investment were opened, and U.S. multinationals worked hand in glove with Beijing to create new China-centric supply chains. The age of “Chimerica” had begun.
Under the Trade Act of 1974, China was designated, alongside the Soviet Union and other socialist states, a non-market economy. As such, it could only be granted MFN status under certain preconditions.
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Ever since the year 2000, China has had all the advantages: Multi-National Investments, technology transfers and the ability to subsidize their manufacturing process, at the same time we pretended that China was a market economy. It was a perfect place for Steroid Capitalism, no labor rights, weak or non-existent pollution regulations, no human rights, and the Chinese allowed their own Oligopoly to amass huge fortunes in a so-called Communist Society.
At the same time the Chinese bought up our national debt. My computer, my display screen, my printer and my mouse are all made in China.
If there is a full blown trade war, Chinese Leadership will simply tighten the screws on their own people. There will be no public demonstrations permitted. Chinese Leadership understands the weak point in our political system, which is a Corporately bought elected officials.
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I keep going back to Paul Kennedy’s amazing book ‘The Rise & Fall of the Great Powers’, in which he claims Britain’s ‘mercantilism’ system was actually starting to lose money for UK by the mid 1850’s. Reason being the cost to militarily defend shipments of say, raw cotton, to produce clothing wasn’t worth the expenditure. We know how Britain “solved” the problem: sweatshops & child labor.
China, being the victim of Britain’s ‘Opium Wars’, has played in far smarter: if Ralph Lauren wants to make clothes there with cheap labor, they’re on their own* for raw materials. (*Not really: US Military picks up the cost.) I think that’s where we are today, and financial figures prove it: a horrendous military budget & soaring profits for, err, “private enterprise”.
The Western public is not guilt free in this calamity either: I remember when this “globalisation” nonsense was starting: it clicked into our greed. “Oh boy! I get 5 Polo shirts for the (old) cost of 1!” Didn’t work out that way: a Polo is still 90$ made in some hell hole.
ML’s last paragraph I believe is wrong: the trade war is over, and China won. But he’s right Chinese Leadership understands the West’s weaknesses in bought Corporate elected officials. Meanwhile, affluent friends who travel a lot tell me the “workers” of China are all over the globe, vacationing, in 4* hotels, wearing the latest styles. Maybe Karl Marx was right: “In the end Capitalism destroys itself”.
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@BMCKS
Except we are now at a point where capitalism is working in essentially the same manner that it did in the 1920’s. By imposition of proper governmental controls almost a century ago it changed so that the same economic system delivered unparalleled prosperity to the middle and working classes in the 1950’s, 1960’s and 1970’s. It was the removal of those controls, initiated by Democrats, that began the return to the corporate performance of the 1920’s. The problem is not capitalism; the problem is the failure of government to regulate it so that it benefits society.
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Forgive me Bill H for my sarcasm ie KM quote, but all sarcasm has a truth to it also.
In honesty, today I fear more for Western Capitalism than in my 70+ years. Something is structurally wrong. You bring up government regulations, which I’m all for, yet Enron, AIG, Madoff, fleeced Billion$ under “regulators” noses. In manufacturing, Boeing, VW, Renault-Nissan broke all rules, causing terrible market & life damage. Supposedly, “regulated”.
You bring up 1950’s – 70’s of America’s magical capitalism bounty, yet both industrial powers, Europe & Japan, were devastated then. Not since their recovery has our Balance of Payments been positive.
What worries me most today is our recent ‘Gangster Capitalism’ I call it. Not allowing Huawei into other countries, yet we make parts for them? Insanity. As for CITGO’s robbery from Venezuela’s state owned oil company, this is beyond the pale. A Mafia Don would at least “make an offer they can’t refuse”……
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Yeah BMCKS, it’s interesting you mention Polo shirts because I’ve noted the exact same thing to my wife. Like any other ‘fashion name’ they’ve always been ridiculously overpriced and I personally never bought them because I’d feel pretentious, but it was humorous to price-check and see how outrageously costly they were. Seems like in the 70’s & maybe 80’s they were significantly better quality than most shirts and might’ve been made in the USA sometimes. Nowadays the quality differential is slight when compared with a $20 or $30 no-name or house-brand shirt, but the Polo is STILL $90 for a simple pull-over!
And I really agree with your holding the general public significantly responsible for this globalization —- too many people think we can just transfer whole industries offshore and somehow magically STILL have high employment (and I’m talking decent paying jobs with benefits, NOT ‘Mc-jobs’ that are all-too plentiful) in this country. And turning our economy virtually entirely over to business has had the predictable results—the financial sector is doing quite well, thank you. Too many people believe that business should control the economy rather than be part of it.
I do think a strong regulatory hand is needed though. Starting in the late 70’s and really accelerating under the Reagan conservatives, there was the movement to ‘get government off our back’ and then the Clinton conservatives helped push through more deregulation later, and it was during this era that the Enron, AIG, Madoff, et al really took-off beyond the standard ‘background noise’ corruption of any system, capitalist, socialist, communist,etc. Strong laws & regulations obviously don’t stop all transgressors, but they do keep a lid on things. My daily commute on the freeway is dicey enough even WITH speed limits and infrequent enforcement, I’d sure hate to do it without any regulation or enforcement.
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As my Taiwanese wife likes to remind me: “Any Chinese can get the better of an American in a business deal. That doesn’t prove anything. But to get the better of another Chinese in a business deal, well, that‘s something to crow about.”
I once had a short-term, six-month job in China with a Thai-Chinese company that installed bowling allies and amusement centers in hotels around the Beijing area. Since I spoke “good-enough” Mandarin and Japanese, I had the task of showing around and assisting Japanese technicians and businessmen from whom we imported second-hand gaming machines after the Japanese themselves had moved on to more cutting-edge technology. I’ll never forget one of my Chinese colleagues telling me: “Never trust your interpreter. He’s the one selling your secrets to the competition.”
Once, I had an interesting conversation with the manager of the bowling and entertainment center at the Friendship Hotel, formerly a showpiece of the Communist Regime. A native Taiwanese, he went by the name of “Tony” and spoke English well, having lived and studied in the United States for several years. He complained to me about the newly rich Chinese businessmen who came into the entertainment center at night and chose a different girl as escort every time. You don’t do this in Asia, as it demeans the girls by making them feel like cheap, disposable merchandise. Trying to play the diplomat by not wishing to criticize another Chinese, I told him: “Every country has good people and bad people.” His immediate response: “Yes. Good people are good people everywhere. It’s the bad people you have to watch out for.”
How true.
At any rate, as for “Trump’s ‘tough’ tactic of raising tariffs to ‘punish’ the Chinese” [which] ” just passes higher costs to American consumers,” the Chinese had a much more sophisticated response than just counter-tariffs which raised the cost of imports for American consumers. The Chinese knew that Donald Trump owed his election to several mid-western farm states, so they stopped buying certain kinds of farm produce (like soybeans) from the United States. Russia and Brazil happily filled in the missing supply and American farmers — and, more importantly, huge agricultural corporations — lost out on a significant portion of the Chinese market. These interests began to scream. Trump began to divert US tax dollars from other interests so as to subsidize their losses. These other interests, in turn, began to scream. Now, unsurprisingly, President Trump has changed his tune and offers to let up on sanctions against tech-giant Huawei if the Chinese will only buy more American farm products. The Chinese will probably do a little of this — as little as possible — so that President Trump can save a little face (Asians always try to leave the other person a graceful way out).
Smart people are smart people everywhere, and President Donald Trump has begun to discover the hard way how many of those smart people do not call the United States their native country (although many no doubt have significant business and real-estate holdings in America).
The world continues to change. Some nations will keep up and forge ahead. Others will decline and fall behind. I heard someone say a few years back that “China seems poised to resume the world position it held for 22 off the last 25 centuries: on top.” Something to think about.
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Trump is all bluster and image. All show and no go. How is a man like that going to out-play the Chinese? It’s laughable.
I’m sure Trump will boast of some “concession” from China. As you say, Mike, the Chinese will give him a face-saving gesture. But Trump will win nothing of substance.
When it comes to making a deal, Trump is artless. But he sure knows how to generate rancor and to project a false image of himself. Indeed, he’s very good at generating a crisis and then “resolving” it, but his resolution usually worsens matters for the U.S.
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Beautifully deciphered WJA. First one innocent. A nice young guy in the neighbourhood invited himself over for drinks – older brothers gone, just kids left. Me single, blah blah blah, OK he could walk home. His wonderful parents weren’t upset with our cocktail hours, but, they informed me: “He’s reading ‘Art of the Deal’.” “Did he tell you?” both knowing he was confused and growing up. “Of course not. We talk of art & philosophy etc.” We laughed, both knowing a fraud.
Second fraud of Trump could have cost me my lifesavings/lifestyle. A Swiss/Italian supplier begged me to use his picture frame products in the new “Taj Mahal”. Initially it just didn’t make sense; everything was fine with personal clients, and he was always paid fast! He pushed hard, offering me PERSONAL credit, which I rejected. He got angry with ME, but I continued with him, on the personal basis.
I don’t understand those people, taken in by such a charlatan, and I’m not than smart. Maybe what saved me, unlike the foolish supplier, who lost his shirt on Trump, I always believed America is great country, in a great world – that’s all – nothing “magical”.
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I have no small difficulty sorting and synthesizing myriad interpretations of how American manufacturing and economic growth were shipped to Asia. However, I’d like to make two points I rarely see acknowledged. First, those of us who might want to buy American or even buy local have very few realistic options (besides unprocessed foodstuffs) and a huge burden to identify those products we can feel secure will keep our money circulating here rather than overseas. Second, economic growth — “steroid capitalism” noted above — is a whole lot easier to achieve when the starting point is low. If it were a foot race, the difficulty of adding a 4% speed increase to a winning time is considerably hardly that adding that same 4% year after year to the slow beginner’s pace of a nonathlete or someone who had not competed before. The overall race (purchasing power? creature comforts? standard of living?) may still be won by the experienced athlete, but the novice is gradually catching up.
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