All Eyes on China

All eyes are on China this week as the summer Olympics get under way. You can't pick up a newspaper, watch a newscast, or browse a blog without some examination of China's new role on the world stage and its relationship with the United States.

 

Just where do things stand between the United States and China? Does China have to be a friend or a foe, or can it be either depending on the particular issue? Even with China's likely rise, can the 21st century still be another American Century? Is the best American policy engagement or confrontation?

 

Most Americans' views of China are shaped by perceptions that cheap Chinese labor is destroying the U.S. manufacturing base and that China is not engaging in free and fair trade. Parts of these perceptions are true and parts are not. For example, China is not destroying our manufacturing industry. In fact, China lost 10 times more manufacturing jobs from 1994 to 2004 than did the United States. American manufacturing is holding its own--our factories' share of the world's manufacturing output hardly budged between 1993 and 2005. It has also set new records in recent years for output, revenues, and return on investment.

 

U.S. job losses in manufacturing have been primarily driven by massive technological change, not by China. In fact, many factories have "help wanted" signs for technologically skilled workers. Instead of throwing blame, we must retrain those who have lost jobs for new and better opportunities.

 

Americans, however, are right to be concerned about certain unfair Chinese trade and investment practices, particularly discriminatory industrial and investment policies, ongoing challenges to intellectual property rights, market access limitations, and a Chinese currency that is still undervalued.

 

The U.S. Chamber believes that these problems should be solved through a smart mix of diplomacy, engagement, and pressure, as well as enforcement of world trade rules that China has promised to abide by. Starting a trade war with punitive tariffs or other unilateral actions that violate world trade rules is not in anyone's interest--beginning with the workers, consumers, and taxpayers of America.

 

Let's not forget--despite a serious trade imbalance between our countries--China is one of the fastest-growing markets for U.S. products and services. In fact, our exports to China have soared 150% since 2001. Our task is to expand business with this large and growing customer, while working to bring balance to our trade and insisting upon a level playing field in China for our companies.

 

The immediate contest at hand is the Olympic Games, and we'll all be proudly rooting for America's athletes!