As President Barack Obama prepares to wage a full-scale campaign to promote his jobs program, one key aspect of the global economy has not gotten enough attention: manufacturing.
The U.S. economy is shedding manufacturing jobs like there is no tomorrow, losing 5.7 million in the past 10 years. And more than 2 million of those jobs were lost because of our growing trade imbalances with China, which account for almost two-thirds of our global non-oil trade deficit.
What’s happening in the solar power industry puts the problem in perspective. Solar is a growth industry: It’s a clean energy source (adding zero pollution to our air), and it’s creating thousands of jobs — in China, which has nearly 60 percent of the world’s solar energy production capacity. In the United States, which should be taking the lead in a high-tech growth industry such as this one, three solar power companies have recently gone into bankruptcy.
This trend is not limited to solar. China has been gaining market share, and America losing it, in a range of high-value, high-tech industries. China is now the world’s No. 1 producer of steel, out-producing Japan, Russia, India and the United States combined. China has doubled its glass production, as the U.S. trade deficit in glass with China has tripled. It is widely known that China makes toys, clothing, home goods and plastics in all shapes and sizes, but it has also been expanding exports of computer and electronic products, aircraft, auto parts and machinery.
This trend is no accident — the Chinese government is engaged in a purposeful strategy to support its manufacturing sector across a spectrum of industries and undermine those sectors in the economies of its trading partners — including the U.S.
The Chinese government’s tactics include direct subsidies (cash grants and low-cost loans) to Chinese-located businesses; manipulation of its currency to make its goods cheaper and American goods more expensive; more favorable treatment for Chinese producers, products and services than for their American competitors; failure to crack down on counterfeit brands, pirated software and other forms of intellectual property theft and more.
All of these behaviors are prohibited by the international trade agreements China has joined. Yet, few governments have held China accountable. The U.S. government has done a bit (and the current administration has done much more than the previous one), but it is still too little, and in many cases, too late.
The Obama administration did challenge the Chinese government’s practice of awarding subsidies to Chinese wind turbine manufacturers that agreed not to buy imported components, and the Chinese government agreed this summer to discontinue the practice.
Unfortunately, by then, China had already built a wind turbine manufacturing industry that outstrips any other in the world. And this month the World Trade Organization upheld Obama’s decision to provide relief to the American tire industry against surging imports from China of passenger and light-truck tires.
What’s the answer? Enforcing our trade laws and holding trading partners accountable are key to leveling the playing field and making the United States competitive in the global market. Lopsided trade agreements and policies designed to benefit multinational corporations do nothing for working people or the U.S. economy.