Sunday Question

From Bloomberg
China has become a strong advocate for free trade after U.S. President Donald Trump’s election, with President Xi Jinping and other top leaders working to boost its role in global governance.
Asian countries are committed to globalization, Zhang said, mirroring Xi’s defense of free trade before the World Economic Forum in Davos. He said that it brings new pitfalls that must be taken seriously. Globalization should be made more inclusive and leaders must work hard to address unevenness to make development fair, he said.

For the first time in decades, China and the US are on different sides of the table with regard to free trade. This represents a fundamental shift from a policy that started with the Nixon Administration and has never looked back, until now.

Bernie Sanders ran on a similar platform of protectionism to President Trump.

Is this a phase that ends with President Trump or the new American reality? Does this really protect the American worker or is it just a feel good card trick that will hurt the US economy in the long term?

5 Comments

  1. It’s that old “free trade vs fair trade” concept that almost all sides of the economic spectrum have been harping on for decades now. The formula where China produces as the USA consumes (one way trade) isn’t a sustainable arrangement. Intuition tells me that each and every decision, action, comment, thought and trade made in China is scrutinized by “the state” to force everything to benefit China. It’s anything but free trade — it’s “fake trade”!

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  2. Sly- engaging in trade with China holds them accountable, on some level, to market realities and exposes them to the benefits of capitalism. Other nations are not going to deal with them without there being a benefit and so while not perfect it’s still a win win for both countries (especially for the US) as china benefits economically as does the US and moves China more into a free market system

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    1. You must zoom out and put things into context before you can analyze issues.

      As you can clearly see in politics, the USA isn’t a nation (with a culture, language or interests that its people share in common). It’s a BIG business. The thing about multinational corporations is that they have no borders. They aren’t people — so, it comes as no surprise that they don’t care about people. Indeed, the more they can squeeze out of folks (and pay them less) the better they do. Other than brief periods following the great WARS, this has been the history of the Divided States of ‘Murica.

      By contrast, China is an ancient, monolithic NATION with a common culture and shared interests. They have seen too many childish empires come and go to mention. China understands that long term strategies are more important than turning a quick profit. It’s like chess. They’re always thinking as far ahead as possible, while we’re only thinking about the current move.

      When multinational corporations exploit huge arbitrage opportunities in labor economies by trading with China to transfer hard fought jobs, wealth and the associated quality of life from the people in ‘Murica to people in Manchuria, China wins and the USA loses.

      Bastiat, you made a categorical error by equating the interests of multinationals with an ancient culture.

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  3. I certainly agree that culture plays a role to some degree and while culture and economics play into each other they are not one in the same. Communism in China is a tiny drop in the bucket when it comes to her history; to say or assume that the culture is tied to this model denies her history and the changes that have been taking place in the last 50 years – changes that have come about as a result of American influence (Tieniman Square sp?). And I also agree that the US is figuring itself out culturally (its the subject of my next article) there is a form of culture – especially regionally. Of course China is looking out for its own interests what makes you think a free market system isnt in their interest? I mean they have taken a stronger free market position than the US here, My argument that these interest are tempered by the free market, they are allowed to pursue their interests like everyone else but they have to play by the rules to some degree or folks arent going to want to deal with them. What you are concerned about happening is more evidenced in the histories of protectionist, nationalistic governments – the thing we are trying to and have been changing in China.

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  4. Free trade in a FAIR comparable work environment is great! Like Canada, Europe, America. The issue is China wants zero emission controls, zero worker rights, and zero fair trade practices. (like divesting China government from businesses). China, the government, has either majority ownership or in some way owns (directly or indirectly) most large businesses in China. Russia mirrors this with its Oligarch’s. In both countries if you speak out on the government, you are murdered. So if those countries get to be thugs, AND get to profit from it, of course they love free trade. It boils down to what should the rules be to engage in free trade? Can China government own the companies, fund them with government money, have no worker rights, no pollution regulation, violate international copyright, and then compete in free trade with American workers? America allowed unfair trade because big business profited. Now that may be changing, and so we may get support to require “free trade must come with FAIR trade” .

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