By Debasish Roy Chowdhury (China Daily)
Updated: 2007-07-31 15:22

Despite the din about how China is getting ahead with its undervalued yuan, real output of US factories has increased by 50 percent since China fixed its currency in 1994.

Despite the rhetoric of how ("substandard") Chinese products are stealing jobs from Americans rendered powerless by this unforeseen consequence of globalization, trade with China accounts for a mere 1 percent of annual job displacement in the US.

By Cato's estimates, at the most 150,000 jobs are lost in the US every year because of imports from China, compared with 15 million jobs that disappear annually in the US economy primarily as a result of technological changes and the consequent increase in productivity.

Productivity gains have actually taken a bigger toll on employment in China than the US. A study by Alliance Capital Management LP in New York finds that while the number of manufacturing workers in the US dropped by 11 percent from 1995 through 2002, in China it dropped by 15 percent.

And in any case, Chinese imports in the US are mostly replacing imports from other Asian countries, not American products themselves. And manufacturing is no longer the foundation of the American economy as it begins to deindustrialize as part of a global economic shift.

But then again, while there is no market for reason, there is a big one for fear. That is why a Utah-based health food company has launched a new label and ad blitz promoting its products as "China-Free". This despite the fact that FDA records show China is not even the leading source of contaminated imports to the US, as a Washington Post columnist points out. India and Mexico have surpassed China in "refused food shipments" over the past year, while the leader in rejected candy imports happens to be Denmark.

Then why pick on China? In a way China is paying the price for its success.

It is difficult to ignore the xenophobic, and even racist, overtones in the attacks against China. When the products are made in the US, it is just the company that is in focus. When they are found to have a China connection, even if it is an American company getting its products made in China, it is the country that takes the lashes. As if the company has no obligation toward quality control.

Protectionism needs a popular idiom. Xenophobia needs a whipping boy. China scare is the product of this marriage of convenience. As the poster boy of economic success and the visions it inspires of trumping the almighty US economy, China is the obvious target when it comes to manufactures. Quite in the same way as India is, when it comes to services, with outsourcing fears often vented by Western callers in torrents of racist abuses on Indian call center workers.

This xenophobia is what lies at the heart of the current product panic in US. If unchecked, and recklessly fanned, this has the potential of derailing the very process of globalization that developing countries are betting on for a better future. That is scarier than the China scare.

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