Global Politician, NY
Prof. Peter Morici -
7/20/2007
http://globalpolitician.com/articledes.asp?ID=3125&cid=5&sid=30
The rash of dangerous Chinese imports, ranging from
defective tires to tainted toothpaste, makes apparent the perils in U.S.
and EU policies toward China. Since President Nixon, the United States has
sought constructive engagement to encourage economic and political reform.
By opening commerce, the United States seeks to expose Chinese citizens to
democratic values, instigate systemic change, and eventually add another
responsible, prosperous state to the community of western
nations.
The United States is betting that opening American markets
to China's products, through membership in the World Trade Organization,
will lift millions from poverty and create a government that respects
human rights. The Communist Party is betting it can manipulate WTO rules
to its unique advantage, accomplish export-led growth, and deliver
prosperity that allows it to hold on to power indefinitely.
China's economic miracle is giving capitalism a bad name. By
offering manufacturers export subsidies through a 40 percent undervalued
currency, cheap bank loans, generous tax rebates, lax product-safety and
environmental enforcement, and technology extorted from western
multinationals seeking Beijing's permission to sell products in China,
China is flooding U.S. and EU markets with artificially cheap, and too
often dangerous, products.
Aside from wholly corrupting the notion
of free trade based on comparative advantage, these policies have created
a profits-at-any-cost culture.
Chinese factories exploit workers,
purposely endanger consumers, transform lakes and rivers into noxious
reservoirs of industrial waste, and create the filthiest air on the
planet. Lacking the accountability imposed by open elections and a free
press, Beijing ignores these abuses until U.S. public outrage occasionally
puts an export markets at risk. Even worse, provincial governments
encourage this degradation.
China has tough national environmental
laws, but Communist Party officials in Beijing and the provinces are
rewarded for meeting growth targets, not enforcing abatement standards,
and the resulting corruption offers them great opportunities to amass
personal wealth.
To limit dissent, Beijing censors the internet,
with the cooperation of principled western companies like Google. It jails
political activists and members of "subversive religions," such as Falun
Gong. Prison and military hospitals harvest organs for the lucrative
transplant market. The atrocities Beijing encourages are endless and
beyond shame.
China, with the third largest GDP among nations,
holds $1.2 trillion in hard currency and securities. Yet, Beijing says it
is too poor to provide clean drinking water, sewers and decent housing for
its rural population. The income gap between rural areas and large coastal
export centers grows each day, as sure as the pollution and poisons spewed
from its factories multiplies.
All we get from Beijing are vague
promises, vacant of transformative actions. Meanwhile, leaders in
Washington counsel diplomacy instead of concrete steps, and apologists
among U.S. multinationals profiting from the China's criminal behavior
warn against disruptive consequences of curbing the peculiar enterprise
called U.S.-China free trade.
China's behavior is not without its
consequences for U.S. and other western economies. Its export juggernaut
is closing factories in the United States and EU, and casting into
unemployment workers that would be competitive but for China's
mercantilism. For example, technology-intensive autoparts factories,
semiconductor plants and software development labs moving to China gain
little from cheap labor. The resulting lost productivity in the United
States comes to nearly $2000 each year for every employed American, has
helped create a $6 trillion foreign debt, and is lowering sustainable U.S.
GDP growth from about 4 percent a year to about 3 percent.
By
2008, China will be the world's largest source of greenhouse gases, and
its reckless industrialization strategy is adding the equivalent of one
new Japan to the global warming equation every two years. At that pace,
the United States and EU, even by adopting the most aggressive emission
curtailment programs, could do little to derail global warming.
It
is high time for the United States and EU to exclude, on a broad and
comprehensive scale, Chinese products that are heavily subsidized, that
are made in factories that poison the atmosphere, or that are potentially
dangerous to consumers regardless of where they live. Only then can the
West hope to instigate positive change in China.
If the Americans
and Europeans do not act, eventually China will become too strong to
resist, and our shared future will darken.
Civilizations do not collapse under the weight of age. They
fail when they become too complacent to act on real threats.
Prof. Peter Morici teaches at Robert H. Smith School of Business at University of Maryland.