Nonsense About China that “Everyone” Knows

June 15, 2020

I want to do a bit more beating up on a NYT piece this morning on breaking ties with China. There is a widely held view in policy circles that the pandemic showed that our extensive economic ties with China are a bad thing. I will ask a simple question, how?

First to get over some obvious points, yes, China has an authoritarian government that does not respect basic human rights. That is true, but what exactly do we hope to do about it? If we cut our imports from China by half or even put a complete embargo on them, do we think it will improve their human rights record?

I suppose we could have more impact if we got most of the rest of the world to go along, but apart from a few puppet states, no one would follow the U.S. in banning trade from China. Everyone knows that the U.S. doesn’t give a damn about democracy. Just last year we helped to overthrow a democratically elected government in Bolivia and installed someone who got almost no votes. No one here cared. 

So the question is if the U.S. and a few inconsequential puppets stopped buying stuff from China, would it prompt its leadership to show more respect for human rights? Be serious.

Okay, but the pandemic spread from China and this was in part because its government withheld information about the spread of the disease. That’s true and what does it have to do with our ties to China. I suppose if we had no trade and travel with China then we would have had to get the pandemic from somewhere else, which seems to be the case.

Alright, so we would have gotten the pandemic here even if we didn’t rely on China for anything. But when we were first hit with the pandemic we were short of items like face masks and other protective gear, which we were importing from China.

This is a common gotcha for those arguing the case against China reliance. But this actually shows nothing. We had a shortage of protective gear because we had not stockpiled it and saw a sudden surge in demand. The problem was that we had not stockpiled protective gear, not that it was coming from China. Suppose we made all our protective gear in the good old USA, could our factories suddenly ramp up production by a factor of five or ten? Not on this planet they couldn’t. So this argument about reliance on China is an argument about maintaining stockpiles of important medical gear.

What about other items where our supply chain was interrupted because China reduced or stopped production back in January or February? Well, there were some spot shortages of some items, but these were mostly inconveniences. Did people find themselves unable to buy cars, washing machines, iPhones, or anything else during the last five months? (Okay, toilet paper was in short supply, but I don’t think we can blame China.) And, for those folks who may have missed it, we also had some factories shut down here.

There are issues about our trade with China that I, and others, have raised. Most importantly, China has maintained an under-valued currency that allows them to undercut U.S. manufacturers and cost us millions of good-paying manufacturing jobs. For better or worse, this is a historical issue, not a present-day one.

Insofar as we have regained manufacturing jobs in the last decade (before the pandemic hit), they have not been good-paying union jobs.  In fact, they are little better paying than jobs in other sectors. If a new manufacturing job does not pay much more than a job in retail or restaurants, then there is no particular reason to be concerned about manufacturing jobs. In my book, we should want to make all jobs good-paying jobs.

Then we get to the issue about China stealing “our” intellectual property. Well, this is a great concern for the people who want to redistribute even more money upward. The “our” in that story is not the person serving food in a restaurant or cleaning toilets in a hotel. It refers to the privileged group in a position to benefit from stronger and longer patent monopolies, copyright monopolies, and other forms of intellectual property.

For my part, I am happy if China doesn’t respect Microsoft’s copyrights and Pfizer’s patents. That would be great if billions of people in China and elsewhere can get cheaper computers and software and even better if all drugs were sold around the world as cheap generics. I realize that most “liberals” in this country want to protect their incomes and those of their friends, but I care more about the non-rich both here and in the rest of the world. So I won’t be joining the China-bashing on this one.

The long and short is the story that the pandemic taught us some lessons about relying on China is utter nonsense, with no foundation in reality. In this way, it is very similar to the story about how we risked a Second Great Depression in 2008-09 if we didn’t save the banks. In both cases, the story was nearly universally accepted in policy circles, although no one could coherently argue the case. And, in both cases the story advanced the central policy concern of people in Washington, making the rich richer.

 

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