America's best jobs program? Trade reform with China.
China has flagrantly violated trade rules since joining the World Trade Organization – and the US has lost 50,000 factories and 6 million manufacturing jobs.
The best jobs program is trade reform with China – not more government stimulus. The presidential candidate who best conveys this singular, ineluctable truth to the American people between now and election day will carry the manufacturing swing states of Michigan, Ohio, Virginia, and Wisconsin and thereby win the election.
The case for China trade reform as both a winning political and economic strategy is firmly rooted in the history of U.S.-China trade relations and its destructive consequences. In 2001, China joined the World Trade Organization with strong bipartisan support, and in lobbying for China’s entry into the WTO, President Bill Clinton promised “for the first time, China will agree to play by the same open trading rules we do” and “for the first time our companies will be able to sell and distribute products in China.”
Instead, since 2001, China has flagrantly violated WTO rules by flooding our markets with illegally subsidized exports. Meanwhile, putatively “American” multinationals like Boeing, Caterpillar, and GM have shut down plants in cities like Seattle, Peoria, and Detroit while opening massive operations in places like Beijing, Chengdu, and Shanghai – all to leverage China’s illegal subsidies and ultra-lax environmental and worker rules and then dump their products back into American markets.
As a result of this twin assault on America’s manufacturing base by state-run Chinese companies and offshoring multinationals, our once great country has devolved into a “Triple Zero Economy” characterized by near zero growth in jobs, wages, and, stock returns even as over 50,000 factories have disappeared along with 6 million manufacturing jobs.
Here is an even more chilling set of statistics: For the five and half decades prior to China’s entry into the WTO, our gross domestic product grew at a rate of 3.5 percent. Since 2001, however, that rate has fallen to a mere 1.6 percent annual growth rate. This slower growth, in turn, has led to the failure to create more than 20 million jobs – not coincidentally, exactly what we need to put America back to work.
Perhaps the most astonishing element of the US-China relationship is the inability of so many of our politicians, journalists, and academics to firmly connect the dots between China’s unfair trade practices and the abject failure of trillions of dollars of government stimulus to jump start our economy. Indeed, as recently as last week on the stump in Ohio, President Obama insisted that we have “a constructive economic relationship with China” and that our differences can be resolved through “dialogue.” However, the history of his administration as well as that of his predecessor has been the abject failure of dialogue to halt China’s massive unfair trade practices and its gross human rights and environmental abuses.
On the media front, editorial boards of influential papers like the Wall Street Journal and Financial Times have been mercury quick to jump on candidate Mitt Romney for cracking down on China’s cheating – oblivious to the irony of these free trader newspapers supporting China’s mercantilist and protectionist cheating. Meanwhile, pundits like Tom Friedman and Fareed Zakaria insist our manufacturing jobs are gone forever to the forces of globalization and are never coming back – this despite the fact that Germany has 25 percent of its workforce in manufacturing compared with only 9 percent here in the US.
Perhaps most alarming, the academic world itself is becoming increasingly co-opted by Chinese funding of US-China institutes that are springing up at cash-strapped American universities all around the country. Few of these institutes and the academics they employ are willing to bite the hand that feeds them.
In the end, the biggest victims of China’s unfair trade practices are not just American manufacturers and workers. It is also the Chinese people – almost a million of whom die each year for industrial accidents and the effects of air pollution.
In this election season, it would be refreshing to see both presidential candidates along with our media get it right on the China issue. To that end, I would love to see both candidates asked during the upcoming debates whether they believe that the best jobs program truly is trade reform with China – not more government spending. Their answers would be quite revealing – and possibly change the course of not just the election but our economy.
– Peter Navarro is the director of the new documentary film "Death By China" and a business professor at the University of California-Irvine.