Feeling China’s Lead

by | 13 October 2007 | ChizBlog, Global Issues

Last Sunday I heard the women in the restaurant booth next to mine complain about toys from China.  One, in particular, was loud and vehement in her opinions.  “I’m going to buy American from now on!” she practically yelled. “China should just leave us alone!”

And no, I didn’t set down my bite of feta cheese omelet (which was pretty amazing), to counter her points.  Angry as she was, she would never have heard me.  More, her comments revealed some pretty basic misunderstandings of consumerism, free markets, and our trade deficit.

I won’t write here about the faulty inspection system in China (which does need to be addressed) or the poor inspection systems in the US.  No, I won’t remind anyone about the Tylenol scare of the 1980s or the Firestone tire worries of 2000.  I won’t talk about Sharp’s 2006 fiery battery recall or of the pet food recalls this past spring.  It would be wrong of me to write about the Nestle recall of chocolate bars with plastic in them this past April, or Gerber baby food recalls this summer, or that for the second time in three years Topps Meat Company was cited for poor inspections and this fall’s beef recall is the second largest in US history.  (Topps finally closed a couple of weeks ago.)

What’s that?  These aren’t toy recalls?  Okay, so I also won’t write about K-Mart recalls of toy rattles which choke babies, Hi-C drink recalls of “Cool Cuffs” toys, Kenner’s recall of its Colorblaster paint guns, or Lionel Train’s recall of its Snoopy train.

But none of that is really the point.  The fact is, China products are cheap, US consumers want cheap products fast, and free markets supported by US trade policy allow and encourage US companies to find their products and parts from China.  Put simply, the US buys far more from China than it sells to China, creating a trade imbalance or deficit.  As the US total trade deficit approaches $1 trillion (yes, that’s trillion), about one quarter of that is trade with China.  I mean really, what do you think Wal-Mart means when it talks about “Price Rollbacks,” “Beware Falling Prices,” and “Save Money. Live Better”?   It’s only those last two words which are cautionary.

And many of us do benefit.  America’s poor can afford $35 DVD players, Microsoft and Mattel can move more products, and Chinese workers get jobs.  US companies which haven’t outsourced to low-wage countries lose, of course, as do children who chew on their Barbie Dream Houses, but that is the price of a US policy (and an ignorant consumer-demand market) which perpetuates an unsustainable trade deficit.  [China made almost $25 billion in September alone as a trade surplus while the US lost nearly $60 billion the same month.]  According to BBC, even with all the toy recalls, the US purchase of Chinese toys continues to increase.  Worse, our US economists call these numbers “Good news,” because they are slightly better than the summer imbalance.

Truly, economics is complicated, far too much for a simple blog entry this evening, but there are bigger issues about the Chinese lead in its trade than some paint. (Yes, read that every way you want.)  Here are a few big-ticket issues which we should address now in order to better secure our global position with China:

  • Let’s get control of our mortgage and interest rates and of our housing market;
  • Let’s look at what our schools are doing to train students for a realistic global market, not one mandated by outdated notions of the industrial market;
  • Let’s talk about China’s artificial lowering of its own currency values to prevent higher-priced US products from reaching its people;
  • Let’s engage China in real discussion of its concerns over intellectual properties (books, music, film) which have created an enormous black market for pirated US art in China;
  • Let’s talk about Chinese unemployment rates while we talk about US unemployment. (Currently there are more Chinese without jobs than there are total jobs in the US);
  • And let’s get to work transforming our own economy, education, and awareness about what the US market must become.  The days of the manufacturing base are fading and the techno-information-service industry age is past-upon us.

To “Buy American” is a simplistic and perhaps outdated slogan for a complex problem.  And China is doing nothing to consumers that we haven’t demanded in Labor Day Sales and Sam’s Club wholesalers.

I paid my tip for a superior omelet (feta cheese from Germany, spinach from Mexico, side slice of pineapple from Panama, but tomato and eggs from Iowa and Wisconsin.  Mmm!), and thought about what I would say to her as she brought a fresh-brewed cup of genuine Colombian-bean coffee to her Revlon’ed lips.

Read more about the US-China trade issue:

 

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