Economy & Budget

Yankee Utopians in a Chinese Century

For those who can yet recall the backyard blast furnaces of Mao’s China in the 1950s and the Great Proletarian Cultural Revolution to re-instill peasant values in the 1970s, the news was jarring.

In 2011, said the Financial Times, China will surpass the United States as first manufacturing power, a title America has held since surpassing Great Britain around 1890.

Each year, China passes a new milestone.

Last year, China surpassed Germany as the greatest exporting nation. This year, China surpasses Japan as the world’s second-largest economy. This year, China became the first auto manufacturer on earth.

For a decade, China has been running history’s largest trade surpluses with the United States and has amassed a hoard of $2.3 trillion in foreign currency. She now holds the mortgage on America.

How has China vaulted to the forefront in manufacturing, trade and technology? Export-driven economic nationalism.

Beijing cut the value of its currency in half in 1994, doubling the price of imports, slashing the price of exports and making Chinese labor the best bargain in Asia. Foreign firms were invited to relocate their plants in China and told this was the price of access to the Chinese market. Beijing began looting these firms of technology, as she sent her sons to study in America. Industrial espionage and intellectual property theft became Chinese specialties.

And how has America fared in the new century?

One in every three manufacturing jobs we had in 2000, nearly 6 million, vanished. Some 50,000 U.S. factories shut down. We have run trade deficits totaling $5 trillion since NAFTA passed. The real wages of working Americans have been stagnant for a decade.

While China has resumed her 12 percent growth rate, the United States, with 25 million unemployed or underemployed, appears headed for a double-dip recession.

Yet, even as the end of America’s tenure as the world’s first manufacturing power was being announced, The Wall Street Journal admonished us to keep our eyes on the prize: a new world order where it does not matter who produces what or where.

"The pursuit of some ideal global ‘balance’ in trade and capital flows is an illusion. … World leaders would do better to worry less about (trade) imbalances and more about whether their own nations are pursuing policies that contribute to global prosperity."

There you have it — the conflict in visions between us.

For decades, America’s leaders have followed the Wall Street Journal ideology. We put a mythical world economy before our own economy. We put "global prosperity" before national interest. We forced our workers to compete, in their own country, against the products of foreign laborers earning a tenth of their pay. And we let in tens of millions of semi-skilled and unskilled immigrants, legal and illegal, to take the jobs of our countrymen.

And the Chinese? They put China first, second and third.

And who won the decade? And who is winning the future?

Inside the July 1 Washington Post is a small story about how the World Trade Organization finally ruled that European nations have been unfairly subsidizing Airbus — for 40 years.

While welcome, what good will it do now for scores of thousands of U.S. workers who built commercial jets for Lockheed and McDonnell Douglas, which Airbus took down, or Boeing, which was outsourcing jobs even before Airbus dethroned it as the world’s No. 1 aircraft manufacturer.

Why did some U.S. president not tell the Europeans when they started this: Either stop subsidizing Airbus to kill our U.S. aircraft companies — or start defending yourselves against the Russians.

The day the FT reported that China was sweeping past us to become No. 1 in manufacturing, The New York Times ran a front-page story on the closing of the Whirlpool refrigerator plant in Evansville, Ind., and the loss of 1,100 jobs. The plant is moving to Mexico.

The Times spoke with Natalie Ford, a worker, whose husband and son also worked at Whirlpool, as had her dad, "This is all about corporate greed," Mrs. Ford said, "It’s devastating to our family and to everyone in the plant. I wonder where we’ll be two years from now. There aren’t any jobs here. How is this community going to survive?"

"My mom and dad told me that when they were young, there were jobs everywhere. They said we had Whirlpool, Bristol-Myers, Mead Johnson, Windsor Plastics, Guardian Automotive, Zenith. Now if you want to find a job, there’s nothing around."

"Free trade! Free trade!" said Henry Clay in the tariff debate of 1833. "The call for free trade is as unavailing as the cry of a spoiled child in its nurse’s arms for the moon or the stars that glitter in the firmament of heaven. It has never existed. It will never exist."

It will only place us, said Clay, "under the commercial dominion of Great Britain." Today, it is the dominion of China.

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