China’s Cheatin’ Ways and the Politicians That Ignore Them: Why Pennsylvania Should Ask the Primary Questions

Wed, 06/18/2008

By Kerri Houston

A big red boot with a prominent yellow star is running roughshod over Pennsylvania, stomping on jobs in its wake. 

Pennsylvania’s workers and business owners are well aware of the impact of its footprint, as are the state’s governor, legislators and the employees of the Pennsylvania Unemployment Compensation office, who are processing job loss applications faster than they can say “big boot.”

It appears the only souls currently treading on Pennsylvanian soil that have not noticed the state’s devastating and ongoing job losses to China belong to presidential candidates of both parties.

Although manufacturing still accounts for $73.9 billion of Pennsylvania’s Gross State Product and is the largest individual contributor to the statewide economy, the state has lost more than 207,400 manufacturing jobs since 2000. Some 78,000 of those have been lost to China since 2001. 

As a result of its cheating on all economic fronts, China has accumulated the largest trade surplus in global history, and a $256 billion annual trade deficit with the United States alone. Despite winning through dishonest trade, China has so far incurred no cost for its bad behavior. 

Pennsylvania is an ideal manufacturing state. With a sophisticated highway and railway network and water transport links through its many inland waterways and Lake Erie, goods can be shipped from Pennsylvania quickly. 

The state also has a highly skilled workforce and an April 22 primary showdown between Democratic candidates Senator Hillary Clinton and Senator Barack Obama that is currently giving it a loud voice on the national stage.

Despite its many advantages, Pennsylvania’s unemployment rates took a sharp upward turn five years ago, and its current 4.9 percent unemployment rate, although higher than the national average, belies pockets of higher and more painful unemployment in the state. The economic and cultural devastation of job losses in the Pittsburgh area is palpable, and some mid-state counties such as Cambria and Somerset have unemployment rates above 6.1%. These job losses multiply across all economic sectors, making statewide recovery very difficult. 

In our global economy, it is reasonable to expect a flow of labor and trade, but Pennsylvanians should not have to compete with unrestrained economic cheating and worker exploitation from China.
 
China ignores international treaty obligations and flaunts its noncompliance fearlessly. Although it promised to end currency manipulation when joining the World Trade Organization in 2001, it continues undervaluing its currency, making its goods cheaper and ours more expensive. Chinese manufacturers, predominantly owned by the government in the first place, are given free land, infrastructure and “loans” with no expectation of payback. In effect, its “private” sector is highly subsidized by the Chinese government. 

In the last five years, the Chinese government poured $52 billion of subsidies into its state-owned steel industry alone.

Chinese manufacturing benefits financially from ignoring accepted environmental safety regulations. Waterways and wells in China run red and purple with dyes and toxins dumped into ground and river. Many Chinese factories disregard international norms for workers by embracing low pay, forced labor and deplorable conditions for workers.

The migration of jobs to China also has serious national security implications. Large military equipment sits idle in repair centers as the few American companies left that provide spare parts or the tools needed to attach them have dwindled to a trickle. Humvees receive armor plating at an agonizing pace as only one U.S. manufacturer of armored steel remains.

For China, its cheating results in profits from its highly subsidized manufacturers that allow it to increase its military funding rapidly—by 18.2 percent last year, much of it focused on emerging military space applications.

Despite the ability for the United States to address China’s cheating through existing trade laws, our government has done little to solve the problem. But Pennsylvania’s place as a primary battleground and an important swing state in November provides an opportunity for Pennsylvanians to pose questions to presidential hopefuls about U.S. job losses and China’s looming economic threat.

None of the frontrunners from either party have addressed China’s cheating or its effect on our nation’s manufacturing and security. Although Sen. John McCain already has the delegates to have won the Republican nomination, he will be returning to Pennsylvania prior to Nov. 4th to ask for your vote in the general election.  

And before Pennsylvania awards its 187 Democrat delegates to the candidate of its choice, its citizens have earned the right to ask: “if you are president, what are you going to do about enforcing our trade laws and reversing the cheating that makes it impossible for us to compete fairly in the global marketplace?” 

If the people don’t ask, the candidates can’t answer. 

Kerri Houston is a senior analyst with the Alliance for American Manufacturing, and served as a commissioner on the U.S.-China Economic and Security Review Commission.

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