With so much anxiety about our relationship with China, the joint meeting produced trivial results
The meetings between President Xi and President Obama Friday represented a tangible opportunity to change the dynamic of the U.S.-China economic relationship, which is currently so lopsided. Unfortunately, many of the statements and commitments made Friday by the U.S. government and China will perpetuate a system in which American factories continue to lose ground, and workers lose both jobs and hope.
Assurances from President Obama and President Xi are no substitute for consequences and effective deterrents against currency manipulation. There is still no effective legal mechanism for U.S. industry and workers to seek relief from the devastating effects of China’s intentionally undervalued yuan.
At a time when there is so much anxiety about our economic relationship with China in the U.S., it’s appalling that the joint meeting produced these trivial results.
Also, President Xi noted bilateral relations would improve if the U.S. graduates China to market economy status for the purposes of adjudicating trade law. But here’s the rub: China is nowhere close to a market economy, nor will it be next year. The U.S. should continue to treat China as a non-market economy until it has truly transformed, which even under the most optimistic scenario could not occur for years down the road.
For example, foreign direct investment by Chinese state-owned entities (SOEs) in particular is not healthy for our economy or workers. Such investment also puts U.S. private sector firms in direct competition with SOEs that benefit from no cost of capital and lack of a profit motive.
Many of the statements and commitments made Friday by the U.S. government and China will perpetuate a system in which American factories continue to lose ground, and workers lose both jobs and hope.
Finally, there appeared to be no conversation whatsoever about the huge disparity between U.S. exports to China and Chinese imports into the U.S. – our $343 billion annual trade deficit. This sustained and growing deficit has hurt America’s middle class more than any other economic issue over the past 15 years.
At a time when there is so much anxiety about our economic relationship with China in the U.S., it’s appalling that the joint meeting produced these trivial results.