China is not the source of our problems – corporate greed is (opinion)
China is not an enemy. It is a nation that is trying to raise its standard of living through education, international trade, investments in infrastructure and improved technologies. In short, it does what any country should do when faced with the historical reality of being poor and far behind more powerful countries. Yet the Trump administration is now aiming to halt China’s development, which could prove disastrous for the United States and the entire world.
China has become the scapegoat for rising inequality in the United States. While the United States’ trade relationship with China has been mutually beneficial over the years, some American workers have been left behind, including factory workers in the Midwest facing competition due to increasing productivity and relatively low (albeit rising) labor costs in China. Instead of blaming China for this normal phenomenon of market competition, we should tax the growing profits of our own multinational corporations and use the revenues to help working-class households, rebuild crumbling infrastructure, promote new skills. professionals and invest in cutting-edge science and technology.
We have to understand that China is simply trying to make up for lost time after a very long period of geopolitical setbacks and associated economic failures. Here is an important historical background that is useful for understanding China’s economic development over the past 40 years.
In 1839, Britain attacked China for refusing to allow British traders to continue supplying the Chinese with addictive opium. Britain prevailed, and the humiliation of China’s defeat in the First Opium War, which ended in 1842, contributed in part to a mass uprising against the Qing Dynasty called the Rebellion of Taiping which killed more than 20 million people. A second opium war against Britain and France ultimately led to the continued erosion of China’s power and internal stability.
Towards the end of the 19th century, China lost a war against newly industrialized Japan and was subjected to even more unilateral trade demands from Europe and the United States. These humiliations led to another rebellion, followed by another defeat, at the hands of foreign powers.
China’s Qing Dynasty fell in 1911, after which China quickly succumbed to warlords, internal strife, and Japan’s invasion of China from 1931. The end of World War II was followed by civil war, the creation of the People’s Republic of China in 1949, then the upheavals of Maoism, including millions of famine deaths in the Great Leap Forward, which ended in the early 1960s , and the massive destabilization of the Cultural Revolution and its consequences until 1977.
China’s rapid development on a market basis therefore did not begin until 1978, when Deng Xiaoping came to power and launched sweeping economic reforms. While China has experienced incredible growth over the past four decades, the legacy of more than a century of poverty, instability, invasion and foreign threats still looms large. The Chinese leadership would like to get it right this time around, which means they are unwilling to bow down to the United States or other Western powers again.
China is now the world’s second-largest economy, when GDP is measured at market prices. Yet it is a country that is still in the process of catching up with poverty. In 1980, according to IMF data, China’s GDP per capita was only 2.5% of that of the United States, and in 2018 had only reached 15.3% of the US level. When GDP is measured in terms of purchasing power parity, using a common set of “international prices” to assess GDP in all countries, China’s per capita income in 2018 was a bit higher at 28 , 9% of the United States.
China has followed much the same development strategy as Japan, Korea, Taiwan, Hong Kong and Singapore before it. From an economic standpoint, this does not do anything particularly unusual for a country that is catching up. The constant American refrain that China “steals” technology is very simplistic.
Countries that are lagging behind improve their technologies in a number of ways, through studies, imitations, purchases, mergers, foreign investment, heavy use of non-patent knowledge and, yes, of the copy. And with all the rapidly changing technologies, there are always ongoing battles over intellectual property. This is true even among American businesses today – this type of competition is simply part of the global economic system. Technology leaders know that they shouldn’t rely on maintaining their lead through protection, but through continuous innovation.
The United States relentlessly adopted British technology in the early 19th century. And when a country wants to bridge a technological gap, it recruits know-how from abroad. The American ballistic missile program, as it is well known, was built with the help of former Nazi rocket specialists recruited from the United States after World War II.
If China were a less populous Asian country, say like South Korea, with just over 50 million people, it would simply be hailed by the United States as a great development achievement – which ‘She is. But because it’s so big, China refutes America’s claims to rule the world. The United States, after all, only makes up 4.2% of the world’s population, less than a quarter of China’s. The truth is that neither country is in a position to dominate the world today, as technology and know-how spread across the world faster than ever.
Trade with China provides the United States with cheap consumer goods and increasingly high quality products. It is also causing job losses in sectors such as manufacturing that directly compete with China. This is how commerce works. To accuse China of injustice in this regard is false – many American companies have reaped the benefits of manufacturing in China or exporting goods there. And American consumers are enjoying a higher standard of living thanks to cheap products from China. The United States and China should continue to negotiate and develop improved rules for bilateral and multilateral trade instead of fueling a trade war with unilateral threats and exaggerated accusations.
The most basic lesson in trade theory, practice and policy is not to stop trade – which will lead to lower living standards, economic crisis and conflict. Instead, we should share the benefits of economic growth so that the winners who benefit from it outweigh the losers.
Yet under American capitalism, which has long strayed from the cooperative spirit of the New Deal era, today’s winners categorically refuse to share their gains. Because of this lack of sharing, American politics is riddled with trade disputes. Greed largely dominates Washington’s policies.
The real battle is not with China but with America’s own giant corporations, many of which are making fortunes while failing to pay their own workers living wages. American business leaders and the mega-rich are pushing for tax cuts, more monopoly and offshoring – anything that makes more profit – while rejecting any policies aimed at making American society more profitable. just.
Trump is going after China, ostensibly believing it will bow down again to a Western power. He is deliberately trying to crush successful companies like Huawei by brutally and unilaterally changing the rules of international trade. China has followed Western rules for the past 40 years, gradually catching up with how America’s Asian allies have done in the past. Now the United States is trying to pull the rug out from under China by launching a new cold war.
Unless greater wisdom prevails, we could slide into conflict with China, first economically, then geopolitically and militarily, with utter disaster for all. There will be no winners in such a conflict. Yet the deep superficiality and corruption of American politics today is such that we are on such a path.
A trade war with China will not solve our economic problems. Instead, we need local solutions: affordable health care, better schools, modernized infrastructure, higher minimum wages and a crackdown on corporate greed. In doing so, we would also learn that we have much more to gain from cooperation with China rather than reckless and unfair provocations.