Cracking China’s Playbook of Unfair Trade

Graham Turner Intern, AAM

A Senate Committee on Foreign Relations subcommittee met with a panel of experts on Wednesday to discuss a response to “international predatory economic practices.” While the broad terminology was surely meant to include a broad range of topics, one country was on everyone’s mind: China.

Sen. Todd Young (R-Ind.) opened the event by stating his belief that U.S. national security lies largely in the security of our economy. While many countries engage in predatory economic practices, China’s practices are unique in “scope, nature, severity, and consequences.”

China is seeking to advance its Made in China 2025 plan by exploiting joint ventures and acquiring foreign enterprises through government subsidiaries, according to witness testimony from Dr. Robert Atkinson, president of the Information Technology and Innovation Foundation, and Michael Wessel, a member of the U.S.-China Economic and Security Review Commission .

“China is in its own league,” wrote Atkinson in his prepared statement, “fielding predatory economic and trade policies and practices.”

Young rattled off ways China exploits foreign businesses when granting access to its market, including forced technology transfer, forced local production, theft of intellectual property, and manipulation of technology standards. “And that’s not a comprehensive list!” Young punctuated.

Sen. Jeff Merkley (D-Ore.) added that American businesses have been “mesmerized” by the Chinese consumer market, but failed to respond to aggressive and often illegal Chinese methods that negate any benefits.

The brunt of Chinese malpractice has been felt most by American workers. The unfair economic aggression from China has driven down labor value, pushed jobs overseas, and deprived the American people of their economic security, speakers said.

“We cannot allow other nations to ignore labor and environmental standards in an attempt to undermine our markets and gain competitive advantage,” said Kimberly Glas of the BlueGreen Alliance.

Glas gave a handful of examples of Chinese recklessness in manufacturing that led to severe ecosystem pollution, including the San Francisco-Oakland Bay Bridge. Her organization estimates that if the bridge had been built with American steel, 180,000 tons of carbon emissions could have been averted (along with a number of other problems).

Atkinson brought up the “Chinese playbook,” an elegantly simple way to describe China’s trade policy boiled down to four parts. First, China wants to be globally competitive, if not dominant in virtually all technologies. But because China lacks the capability to rise to this dominance organically any time soon, its strategy is focused on stealing, coercing, or buying this technology (that’s step 2).

Once Chinese enterprises get hold of often illegally acquired technology, those entities receive grand subsidies, protections, and benefits from the Chinese government.

The final step is export subsidies and benefits to overtake global markets and industries. The World Trade Organization was never built to handle economies that don’t play by the rules, and it still isn’t equipped to preside over a nation like China. Atkinson called for drastic reform, spearheaded by the United States to combat China on a global scale. Stopping IP theft, dramatic funding reduction to China from the World Bank, and creating a special regime tasked with handling Chinese investment were all on the agenda.

The panel agreed that Congress currently has the tools to defend the U.S. and its economy from Chinese intervention. The Section 301 tariffs were a good start, but they could have been implemented as early as eight years ago. The panel called for heavier use of trade act sections and self-initiated cases to show the public they’re acting.

All speakers at the event were united in stating that when the playing field is level, the United States wins. But there are rule breakers like China out there, and it’s our responsibility to protect our own national economy and security.

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Reposted from AAM

Posted In: From Alliance for American Manufacturing, Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

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