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Fair Trade Links

July 24, 2017 by Mr. Allen 3 Comments

When Trump was voted president last year, I was hopeful that the door for next level of U.S. China cooperation will be opened. I am still hopeful, but when things like this happen, it makes me realize just how hard change can be.

The U.S. and China share many differences that should be smoothed out. Here, I am not talking about garbage talks about “human rights” or “democracy,” or boastful jousts protecting “freedom of navigation” in the S. China Sea. I am talking about straight-forward win-win deals between Chinese and U.S. Companies.

In an earlier post, I had noted that a big part of the “deficit” between China and U.S. is because on the balance, many more U.S. companies invest in China as compared to Chinese companies investing in the U.S. I had written:

As part of China’s steady “opening up,” for example, American companies have become intimately involved in all aspects of China’s export business. It is estimated that American-owned ventures in China today captures some 52 .6 % of the value of all Chinese exports!

Foreign companies have directly invested over $100 billion annually in China for the last decade. Each time investors exchanges their U.S. dollar reserves for Chinese Renminbi to invest, however, a current account deficit is recorded China’s favor. China’s “huge” dollar reserve turns out to be a result of trade liberalization than “unfair trade”!

It is popular in America today to lament how trade has hallowed out the American industry. Facts show however that American manufacturing productivity and capacity are at their highest in history; America’s manufacturing wages have remained strong as well.

Manufacturing jobs have decreased because the American economy has become more service-oriented. Even had America isolated itself from trade, the regions of the nation that focused on assembly jobs would have become disproportionately poor with respect to rest of the nation anyways.

Both American companies and American consumers are big winners of global trade. What America needs is a new social contract to ensure more of its workers participate and share in the fruits of the new economy.

…

[Among many things, the U.S.] should also contemplate making it easier for foreign companies – especially Chinese companies, which are too often viewed with undue suspicion – to invest. Had Chinese leaders displayed the same level of paranoia that American leaders display today, very few American companies would have been allowed to invest in China over the years – to the detriment of China.

Since Trump got elected, I had thought things on the business front would change – especially if Trump’s policy is really about putting “American workers” first and bringing good paying jobs back to the States.

But then I read things like this.

WSJ: U.S. Message to China: Hands Off Our Companies Backers of several high-profile transactions have failed to get approval amid tougher scrutiny of Chinese investment.

CNBS: U.S. weighs restricting Chinese investment in artificial intelligence

Fortune: U.S. May Restrict Chinese Investment in Silicon Valley AI

The Hill:Pentagon worried about Chinese investment in US startups: report

ChinaFile: Does Chinese Investment Pose a Threat to Hollywood?

U.S. does all this while still pressuring China to give its companies more “access.”

So let me get this right: the U.S. has enacted technological export embargo against China, limited Chinese company investment in the U.S., belittled Chinese security concerns about security of U.S. software and hardware (even as if raises national concerns about Chinese “investment” in the U.S.), and rejected Chinese desire to build up native technological industries (from biotech to high tech); it has liberally used trade sanctions against other nations (e.g. Russia) over political disagreements … and China is supposed to defer to U.S. national interests while suppressing its own?

Next time Trump complains about the deficit, someone should tell him to pick up a mirror first before he lambasts anyone else as to why…

Filed Under: Analysis, politics Tagged With: fair trade, international trade, sino-u.s. relations, Trump

Reader Interactions

Comments

  1. alanking says

    July 24, 2017 at 10:18 pm

    By now it shoukd be clear that in the US, there will be no real changes. From Obamas “change you can believe in” to Trumps MAGA etc, Nothng will change. just look at how trump is now stuck with a confrontational backdrop with Putin. He cant change it any more than you or I ! Trump failed to drain the swamp, and is now part of the swamp.

  2. Allen says

    July 29, 2017 at 1:03 am

    So President Trump announced Foxconn’s $10B investment in the U.S. to build high tech factories and create high tech, high paying jobs in the U.S.

    https://twitter.com/realDonaldTrump/status/890361489126805504

    This is a win-win for everyone. If the U.S. can receive more Chinese investment in the U.S., the deficits will decrease…more American jobs will be created.

    Of course there are those who say if the U.S. let the Chinese invest here, and if they do well here, it’s bad because the Chinese will profit and perhaps even create new technologies that they can bring back home.

    Well, if that kind of myopic thinking prevails, what about Japan, and German, and British, and French investments. Aren’t they all bad also?

    Or is it scary only because it’s Chinese?

    The bottom line: if China succeeds, yes China will be a “competitor,” but so will it bring so many new wonderful productive things to the world. If Americans are really that “scared” about competition and the world, then they really ought to have left Japan and Europe in ruins … so America can be great!

  3. N.M.Cheung says

    July 29, 2017 at 2:01 am

    @Allen
    Foxconn is a Taiwanese company, not a Chinese company, there is a distinction. Just as much as Hong Kong billionaire Li divests his real estate holdings in China and moved his assets to London.

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