Decoupling viewed as risky bet for US
By: By LIA ZHU in San Francisco
S E E D E D C O N T E N T
Decoupling viewed as risky bet for US
A customer shops at a supermarket in Millbrae, California, the United States, Aug 10, 2022. [Photo/Xinhua]
Economic wager driven by anti-China policies leaves no winners, experts say
The US government's policies toward China are putting the country on the wrong track, according to China watchers who stress that a decoupling of the top two economies will harm the United States and the rest of the world.
The administration of US President Joe Biden has essentially maintained the hawkish stance toward China of his predecessor, Donald Trump, in an effort to deflect criticism by blaming China for the country's economic difficulties, said George Koo, a retired international business adviser in Silicon Valley, and Cyrus Janssen, a US video blogger focusing on China, in an episode on the latter's YouTube channel.
"They are looking to blame somebody for all the problems that we have, that we're not fixing, and China is the most obvious target to blame, because of the economic growth that is happening in China," said Koo.
"One single thing that the Democratic and Republican parties can agree on is to bash China and blackmail China's image. That's a very sad thing."
Koo said the US government's approach toward China is "self-destructing".
"We are insisting on pushing China's head underwater, so we can still be on top," he said. "That's a losing proposition, because sooner or later, they're gonna get out from under and be on top anyway.
"In the meantime, we've lost all the time and opportunity to create a more competitive position for ourselves."
Instead of investing in domestic development, the US government is investing in weapons and increasing the military budget in the name of "promoting democracy all around the world", said Koo.
The business figure's comments struck a chord with Janssen, who lived in China for a decade.
"Our infrastructure just pales in comparison to what is going on in China, and how their infrastructure is developed," he said.
"And there's this amazing thing where you do see China's government trying to pass policies that are in the best interest of its citizens. You've seen that in its economic rise over the last 50 years," he added.
'Emotional' response
By contrast, much of the US' foreign policy is "emotional-based" and "very reactionary", Janssen said. He pointed to the US' moves toward economic decoupling from China, in an effort to combat the rise of an economic competitor.
Janssen, who also advises international companies, said many people are concerned about the trend toward decoupling and have asked him if all US factories will pull out of China.
"It's almost impossible, though certainly some industries have moved out," he said. "For example, textiles have moved to Vietnam and other countries in Southeast Asia. But we've had so many American companies that have invested tens and hundreds of millions of dollars building these factories."
General Motors went to India to try to open up a vehicle plant only to find it didn't work out from the infrastructure and the logistical standpoint, said Janssen.
"China was just so much better. And it was so much easier to be doing business in China. So they eventually closed that plant in India and moved back to China," he said.
Koo said that what the US government is asking the companies to do is like "cutting their noses off to spite the American face".
Citing the last quarterly report of Lam Research, a major equipment company based in Silicon Valley, Koo said 31 percent of its business is in China and 8 percent in the US.
"Ostensibly, we're asking this company to stop selling to China. If you cut yourself off from the 31 percent of the business, you're really asking the company to shut down," he said.
Koo said it's important for people in the US to understand that working with China is potentially an all-around win-win situation that benefits everybody, given the integration of the economies and the complementary nature of each country's skills and strengths.
"But to turn it into a decoupled situation is a lose-lose situation," he said. "I don't think China will benefit from a decoupled situation. But I can certainly say that the US is also going to lose on a decoupled situation."
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In a way I feel sorry for the American people who would benefit from a win-win cooperative relationship between America and China, but unfortunately due to the American political system wherein the Republicans can call Biden "soft on China" to their advantage, the situation is locked by partisan politics.
We don't have to decouple. We only need to make fair deals.
If we can have both sides sign on to only trading goods with the same labor costs we would be on the right track.
Vic, you know very well that in China, the pay scale is as different from the USA as expenses are. What I pay to rent my apartment is a quarter or a fifth of what I would have to pay in America for the exact same situation. Each country purchases billions of dollars of the other's products notwithstanding the difference in income/expense. Did you want that to stop as well?
Unfortunately, Buzz, the US has to protect it's way of life. We supported and promoted unions that allowed workers to live decent lives. Most of those jobs as well as the manufacturing industry were lost here because of trade with countries that use cheap labor. I guess I've become protectionist because of all that. If China or Japan or Mexico wants to sell cars here, the key qualification should be that they pay UAW wages + benefits to those who built those cars.
A lot of automation and robotics have been going into the manufacturing process. I suppose you're against that as well. There was a time when unions were necessary, back at the time of the sweatshops, but now there are lots of laws on the books that protect the workers.
Labour in China is not going to have wages raised to match those in the USA when they are able to purchase or rent what they need with the wages they get, and if it's your preference that American labour produces everything instead, then you aren't going to believe what REAL inflation looks like when it happens, but I would have liked to be a bankruptcy lawyer in the USA if you get your wish.
I'm against anything that denies working people a living wage.
but now there are lots of laws on the books that protect the workers.
There are no laws protecting workers against globalization.
Exhibit A:
.
I know someone on the business end of that. He said to me "How can you blame them. Wages + benefits are only $6. an hour in Mexico."
Labour in China is not going to have wages raised to match those in the USA when they are able to purchase or rent what they need with the wages they get, and if it's your preference that American labour produces everything instead, then you aren't going to believe what REAL inflation looks like when it happens, but I would have liked to be a bankruptcy lawyer in the USA if you get your wish.
China can do what it wants, but any trade deal with China must have equal wages for any product they wish to sell here as a prerequisite to a trade deal. BTW, I also believe that foreign countries shouldn't be able to buy agricultural land in the US.
You can try to convince the American manufacturers to move their factories back to America. I have to admit it pissed me off when Rockport moved its shoe factory out of Massachusetts to Mexico because the Rockport Walkers that had been the most comfortable shoes I ever owned in my life became uncomfortable when the exact same model and size were made in Mexico.
The horse has left the barn on that one.
I have to admit it pissed me off when Rockport moved its shoe factory out of Massachusetts to Mexico because the Rockport Walkers that had been the most comfortable shoes I ever owned in my life became uncomfortable when the exact same model and size were made in Mexico.
Weren't those great Rockport Walkers a long time favorite of English Teachers?
Well, as a former English teacher, it was a favourite of mine. I still wear from time to time the last pair of them made in America, as ragged as they look, and the Mexican pair sits in the closet.
Seems the author of this article is trying to tiptoe around the sleeping gorilla sitting in the corner. The facts are that the United States has begun investing in domestic development. There has been a steady stream of announcements in the American press for domestic investments in semiconductors, EVs, and alternative energy. It's true that American capitalists have lost the ability to make money from productive activities so the transition back to industry will naturally be slow. But it's become all too obvious that the government favoritism toward a service economy that began in the 1980s has been an abject failure.
Neoliberalism has placed our economy at risk. Neoliberalism has placed our national security at risk. Neoliberalism has weakened America's capacity to support itself. Neoliberalism has weakened America's influence in international affairs. The shift will be gradual, for sure, but Maynard Keynes will be making a comeback in government policy. Milton Friedman is on the way out.
The investments in domestic development are only trickles and dribs, at present. For those who understand American politics, the jingoism directed toward China is actually a veiled threat directed at American capitalists. American capitalists relying upon China (and other foreign countries) doing the gritty work of production for the American marketplace is becoming a riskier proposition.
The growing concern is that the gorilla in the corner may be waking up. History really does show that an American industrial economy can dominate the world. A revival of American heavy industry, manufacturing, mining, and production poses a real and growing threat to China and other foreign countries who have become factories for American affluence. The United States remains the dominant economy with both hands tied behind its back. Just think what will happen if those hands are put to work.
Personally, I don't think I'll still be alive to see it. You 'ain't seen' real inflation yet but you will damn well accomplish it. And anyway, China is not a frail wisp, and is busy diversifying its interests within and elsewhere in the world so that America going anti-globalist and isolationist will only dent its fender.