US needs to knuckle down

The powerful Alliance for American Manufacturing has launched a campaign to lock Chinese suppliers out of large infrastructure projects, which is just one of the latest protectionist actions by the United States.

After imposing tariffs on solar panels imported from China because of "illegal government subsidies", the US Commerce Department recently ruled that China's State-owned enterprises preferential loans, cheap electricity and pensions to high-pressure steel cylinders constitute a 1.87 percent subsidy, making the total rate of China's involved tax rate 24.21 percent.

During his four years in office, US President Barack Obama has repeatedly introduced measures against China. His main opponent in the US elections, Mitt Romney, in his 59-point economic plan, has also vowed to crack down on China's trade policy if elected.

This once again proves the golden rule of US politics, that politicians never agree on anything except blaming China for "unfair trade practices", and sanctioning China supposedly to "defend jobs for US workers".

Without doubt China's manufacturing industry has been growing while the US' has declined, but the charge of unfair trade practices is groundless and absurd and protectionism will do nothing to create jobs in the US.

The main drivers of China's manufacturing strength are its abundant labor force, the accumulated effects of its development over the past three decades, and the innovations of its enterprises.

Besides, unlike many other developing countries that rely on just one or two industries, China's strategy has been to build a comprehensive industrial system, in which no single section is neglected. Today China has 39 general industry sections, 191 middle industry sections and 525 detailed industry sections, covering every industrial section listed by the United Nations. That has also strengthened its competitiveness in the age of globalization.

In a report "Apple, America and a squeezed middle class" in January this year, the New York Times quoted a former Apple executive as saying, "The entire supply chain is in China now". This is one of its irreplaceable advantages.

In fact, the so-called subsidies that China is alleged to offer to its enterprises, namely preferential loans, cheap electricity and pensions, and which have attracted so much criticism from the US, are also given by US government to its enterprises. In November 2011, after the US launched an investigation against China's photovoltaic products, the new energy branch of the All China Federation of Industry and Commerce and the China Chamber of Commerce applied to China's Ministry of Commerce to investigate US subsidies to the new energy industry. The investigation found the US offered six favorable policies to the new energy industry.

Therefore the accusation that subsidies have aided the growth of China's industries is totally groundless. China has only offered support to its industries that all other countries, including the US, offer to theirs.

The newly waged US trade dispute with China is actually more political than economic. As the US presidential election approaches, the competition between the Democrats and the Republicans is intensifying; trade protectionism is one of the areas where they are vying for the upper hand with voters. This occurs every election year so it is no surprise to see it this time around.

But Uncle Sam needs to bear in mind that however much the senators and officials point their fingers at China and accuse it of this and that, it will not create any jobs for US workers.

It is always easier to find a scapegoat than to find a solution.

If the US continues to blame China without doing anything to reform its own industry, its manufacturing will only experience further decline. It is time for the US to make a choice, between further politicizing the matter and bandy words or actually knuckling down and doing something to improve its own competitiveness.

The author is a senior researcher at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation.

(China Daily 03/29/2012 page9)