Tag Archives: currency

Important Bipartisan Currency Bill Introduced In House

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A new bill was introduced in the House today to fight currency manipulation, including China’s. The bipartisan Currency Reform for Fair Trade Act was introduced by Representatives Sander Levin (D-MI), Tim Murphy (R-PA), Tim Ryan (D-OH), and Mo Brooks (R-AL). This bill would treat undervalued currency as a subsidy under U.S. trade law, meaning we could apply tariffs to goods from countries that do this.

A nearly identical bill passed the House overwhelmingly in the 111th Congress and had 234 bipartisan cosponsors in the recent 112th Congress after passing overwhelmingly in the Senate. But Speaker Boehner refused to allow a vote, and the bill did not become law.

Currency Manipulation

Some countries go to great lengths to keep their currencies “weak” relative to where currency markets say they should be set. This means goods from these countries cost less than goods from countries with “stronger” currencies. This gives companies making things in these countries a competitive advantage in world markets, and the jobs and factories flow to those countries. It costs these countries money to accomplish this, but they get it back by gaining all those jobs and sales of goods and services.

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China Is Very “Business-Friendly”

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China is very, very “business-friendly.” Corporate conservatives lecture us that we should be more “business-friendly,” in order to “compete” with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay — even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be “business-friendly” enough to compete with China, and here is why.
Workers In Dormatories, 12 To A Room, Rousted At Midnight
China is very, very “business friendly.” Recent stories about Apple’s manufacturing contractors have started to reveal just how “business-friendly” China is. Recently the NY Times’ Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple’s Chinese suppliers, in How the U.S. Lost Out on iPhone Work. They describe how China’s massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, “Those jobs aren’t coming back.”

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. … New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift. And the corporate conservatives criticize America for this, not China, saying we are not “business-friendly” enough to compete. This is because we are a place where We, the People still have at least some say in how things are done. (Don’t we?) Later in the story,

The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones.

“Business-friendly” = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.
Forced Labor Is The Real “Business-Friendly”
Arun Gupta at AlterNet, in iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months’-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.
… Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.
… The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlterNet piece, iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think. These things are not “costs” that we can compete with by lowering our wages, these things are something else.
Not JUST Low Taxes — Massive Government Subsidies
These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies. The Chinese government is very “business-friendly.” They hand money to businesses so they are much more able to “compete.” They are so friendly to business that they even own many businesses.
Trade Secret Theft
Another area where China has very “business-friendly” policies is when their own businesses steal from non-Chinese businesses. This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the “unbelievably endemic” problem of Chinese theft of “intellectual property” — the trade secrets that keep businesses competitive. In this case China’s Sinovel sole the software that ran an American company’s products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China’s Sinovel, the world’s second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor’s wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm’s revenues.
… Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don’t have to pay them and you can just make the things yourself. When you get in bed with a very “business-friendly” country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating “market.”
Trade Deficit Drains Our Economy
As a result of our ideological blindness, refusing to understand China’s game, we have a massive trade deficit with them. This means hundreds of billions of dollars are drained from our economy, year after year. And to make up for this we borrow from them in order to keep buying from them. But this does not cause their currency to strengthen in the “markets” because China loves this game the way it is going, and intervenes against the markets to keep their currency low. And so it continues, year after year. We believe in “markets” they believe in rigging markets so they come out ahead…
Markets Can’t “Compete” With This
Corporate conservatives tell us we need to be more “business-friendly” to “compete” with China. But at the same time Steve Jobs was being a realist when he said “the jobs are never coming back” because he understood that the current political climate, controlled by a wealthy few who benefit from China’s “business-friendly” policies will not let us fight this. Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices? Why should they, unless We, the People tell them they can’t do that to people, and that we won’t let them profit from it?
As long as we continue to think that this is about “markets” competing, we will lose. China sees itself as a nation, and they have a national strategy to continue to be so “business-friendly” that our businesses can’t compete. Our leaders and corporations may have “moved on” past this quaint nation thing but China has not.
We, The People Need To Act To Fix This
As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose. But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem. Maybe the companies they manage won’t be around later, but that is not their problem. Others are concerned, but are forced to play the game because no one can compete with national systems like China’s.
When everyone is in a position where something isn’t their problem, or where they can’t do anything about it on their own, it means this is a larger problem, and this is where government — We, the People — needs to get involved. It is our problem but we have been convinced that we — government — shouldn’t interfere, or “protect” our industries, because “the markets” don’t like “government” — We, the People — butting in. This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.
We Need A Plan
In U.S. must end China’s rulers’ free pass at Politico, AAM’s Scott Paul writes, Read it, read it, read it!)

We shouldn’t fear China’s citizens. But we should be worried about the actions of its authoritarian — and, yes, still communist — regime that tightly controls the People’s Republic. And we should be downright terrified by some of our own leaders’ attitudes toward China.
… China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.
[. . .] History didn’t do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites — and seduced them into believing these policies were no longer necessary.
… There has been no strategy, no effort to prevail economically.
… No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China’s intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan. We need to understand that China is not competing with us in “markets’ they are competing with us as a nation. We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.
It’s not just price, it is things a democracy cannot allow. We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People — the 99% — are in a real fight here to keep our democracy, or we will lose what is left of it.
Democracy Is The Best Economics
When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job. We need more of that, not less of that. We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.
As long as we let democracy be a competitive disadvantage, We, the People will lose.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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61 House Republicans Co-Sponsored China Currency Bill, Now Side With China

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Last week, in These Are The House Republicans Blocking The Crackdown On China Currency Manipulation. Call Them. I named 61 House Republicans who had co-sponsored the China currency bill, but who now side with China by refusing to help force a vote on the bill. The bill has passed the Senate and Republican leaders are refusing to allow a vote in the House. This bill means jobs. This bill means confronting China over their trade cheating. Call these members of Congress and demand that they side with American workers instead of China.
From last week’s post,

We buy a lot from China, and they don’t buy much from us. Some call that “trade.” The result is that our jobs, factories, companies, industries and wealth are moving to China. One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a “discharge petition” that will make that vote happen.

Why Is This Important?
From Trade Deals Pass Congress — China Currency Bill More Important Than Ever,

Congress just passed three more NAFTA-like trade deals, so our country’s trade deficit is going to get even worse. And pressure on working people to accept pay and benefit cuts and longer and harder working hours is going to get even worse. And the rewards to the top 1%, at the expense of the rest of us, are going to get even greater. But we can still win the fight over China’s manipulation of its currency. If we win this it lessens the difference between prices of goods made there and goods made here and can bring some jobs, factories, countries, industries and wealth back to the 99% of our country that doesn’t benefit from these trade deals.
… China manipulates its currency to keep it “weak” (low) compared to the “strong” dollar. This means that goods made in China cost much less – up to 40% less – than goods made here, even before any wage differentials, exploitation of the environment, trade cheating, special subsidies and other trade violations are taken into account. China does this in order to capture the jobs, factories, companies and industries that make a country strong. We have let them do this for many years, leading to the economic situation we find ourselves in today.
One reason this continues is that big companies can threaten workers here with moving a job or factory there if they don’t go along with big cuts in wages and benefits and working standards — or just move the factory or company to take advantage of the differential. This benefits a wealthy few in the short term, and China in the long term after those wealthy few have sold the rest of out and cashed out for themselves.
This trade situation with China, while greatly enriching the top 1% here (and there), has hurt the rest of us so much, and drained so much wealth from the country, that even some Republicans are willing to support doing something about it. There are 61 Republican cosponsors of the bill to confront China over their currency manipulation!

The Club For Growth, a Wall Street front-group that backs China’s positions on these issues, has demanded that Republicans side with China on this, and has called it a “litmus test.” One Republican who actually did sign the discharge petition to force the House to vote, Harold Rogers, was forced by House leadership to remove his name!
What You Can Do
There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the “discharge petition.” They are:
Tim Murphy (PA)
Todd Aiken (MO)
Steve Austria (OH)
Lou Barletta (PA)
Brian Bilbray (CA)
Rob Bishop (UT)
Mo Brooks (AL)
Dan Burton (IN)
Shelley Moore Capito (WV)
Howard Coble (NC)
Chip Cravaack (MN)
Rick Crawford (AR)
Charles Dent (PA)
Jo Ann Emerson (MO)
Michael Fitzpatrick (PA)
Randy Forbes (VA)
Jeff Fortenberry (NE)
Jim Gerlach (PA)
Chris Gibson (NY)
Sam Graves (MO)
Morgan Griffith (VA)
Gregg Harper (MS)
Duncan Hunter (CA)
Bill Johnson (OH)
Tim Johnson (IL)
Walter Jones (NC)
Mike Kelly (PA)
Blaine Luetkemeyer (MO)
Steven LaTourette (OH)
Frank LoBiondo (NJ)
Donald Manzullo (IL)
Tom Marino (PA)
Thaddeus McCotter (MI)
Patrick McHenry (NC)
David McKinley (WV)
Patrick Meehan (PA)
Candice Miller (MI)
Sue Myrick (NC)
Tom Petri (WI)
Joe Pitts (PA)
Todd Platts (PA)
Jim Renacci (OH)
Scott Rigell (VA)
Dana Rohrabacher (CA)
Harold Rogers (KY)
Mike Rogers (AL)
Mike Rogers (MI)
Dennis Ross (FL)
John Runyan (NJ)
James Sensenbrenner (WI)
John Shimkus (IL)
Bill Shuster (PA)
Marlin Stutzman (IN)
Glenn Thompson (PA)
Michael Turner (OH)
Lynn Westmoreland (GA)
Ed Whitfield (KY)
Joe Wilson (SC)
Rob Wittman (VA)
Frank Wolf (VA)
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Here Are Reps To Contact On China Currency Manipulation

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We buy a lot from China, and they don’t buy much from us. Some call that “trade.” The result is that our jobs, factories, companies, industries and wealth are moving to China. One very big thing we can do about this right now is to confront China over their currency manipulation and the Senate passed a bill to do just that. The House leadership, under the control of lobbyists siding with China, refuses to allow the bill to come up for a vote. You can contact co-sponsors of the bill and ask them to sign a “discharge petition” that will make that vote happen.
As Steven Capozzola explained yesterday in Why Should Congress Pass China Currency Legislation?,

What few seem to understand is that we are already in a trade war with China. It’s not one that we launched, nor one that we wanted. But China’s undervaluation of its currency, which violates world trade rules, is part of a deliberate, well-coordinated strategy to undercut U.S. manufacturers.
Currency manipulation has helped fuel China’s massive rise as a manufacturing powerhouse. And it’s also helped drive our massive trade deficit with Beijing, which reached a record $273 billion in 2010. This huge trade gap has cost 2.8 million U.S. jobs over the past decade—jobs in every state and congressional district, jobs in manufacturing, jobs in high-tech sectors… It’s a terribly one-sided trade relationship.
How did this happen? China intervenes in the currency market to buy dollars and set its own currency at an artificially low exchange rate. This makes Chinese goods 40% cheaper when entering the U.S. market while making our goods significantly more costly when exported to China.
… This is a bipartisan issue, one that marks a clear chance for Congress to stand up to a very protectionist, predatory campaign. China can purchase dollars, which are freely traded, in order to set its currency peg. But conversely, it is illegal to buy China’s closely held currency.

I wrote yesterday, in Will The U.S. House Side With China On Currency?

If we want to bring jobs and wealth back to the United States for the 99% of us who have been under extreme pressure we’re going to have to do something about trade. The huge trade imbalances — especially with China — are sucking our jobs and factories and companies and industries and money out of the country. The biggest thing that can be done right now is to take action on China’s currency manipulation.
…Speaker of the House Boehner is siding with China and is refusing to allow it to come before the House for a vote. (Reminder to self: do some research into the Citizens United Supreme Court decision enabling foreign money to influence our elections.)
The bill can be forced onto the House floor using a “discharge petition.” You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

What You Can Do
There are 61 Republican members of the House of Representatives who co-sponsored legislation to confront China over their currency manipulation: Currency Reform for Fair Trade Act (HR639). Contact them and ask them to sign the “discharge petition.” They are:
Tim Murphy (PA)
Todd Aiken (MO)
Steve Austria (OH)
Lou Barletta (PA)
Brian Bilbray (CA)
Rob Bishop (UT)
Mo Brooks (AL)
Dan Burton (IN)
Shelley Moore Capito (WV)
Howard Coble (NC)
Chip Cravaack (MN)
Rick Crawford (AR)
Charles Dent (PA)
Jo Ann Emerson (MO)
Michael Fitzpatrick (PA)
Randy Forbes (VA)
Jeff Fortenberry (NE)
Jim Gerlach (PA)
Chris Gibson (NY)
Sam Graves (MO)
Morgan Griffith (VA)
Gregg Harper (MS)
Duncan Hunter (CA)
Bill Johnson (OH)
Tim Johnson (IL)
Walter Jones (NC)
Mike Kelly (PA)
Blaine Luetkemeyer (MO)
Steven LaTourette (OH)
Frank LoBiondo (NJ)
Donald Manzullo (IL)
Tom Marino (PA)
Thaddeus McCotter (MI)
Patrick McHenry (NC)
David McKinley (WV)
Patrick Meehan (PA)
Candice Miller (MI)
Sue Myrick (NC)
Tom Petri (WI)
Joe Pitts (PA)
Todd Platts (PA)
Jim Renacci (OH)
Scott Rigell (VA)
Dana Rohrabacher (CA)
Harold Rogers (KY)
Mike Rogers (AL)
Mike Rogers (MI)
Dennis Ross (FL)
John Runyan (NJ)
James Sensenbrenner (WI)
John Shimkus (IL)
Bill Shuster (PA)
Marlin Stutzman (IN)
Glenn Thompson (PA)
Michael Turner (OH)
Lynn Westmoreland (GA)
Ed Whitfield (KY)
Joe Wilson (SC)
Rob Wittman (VA)
Frank Wolf (VA)
Don Young (AK)
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Sign up here for the CAF daily summary.

Will The U.S. House Side With China On Currency?

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If we want to bring jobs and wealth back to the United States for the 99% of us who have been under extreme pressure we’re going to have to do something about trade. The huge trade imbalances — especially with China — are sucking our jobs and factories and companies and industries and money out of the country. The biggest thing that can be done right now is to take action on China’s currency manipulation. Here are two things you can do today.
The Senate votes today on a bill to push back against China’s (and a few other countries’) currency manipulation, and the bill is expected to pass. The bill also has to pass the House and be signed by the President before it can take effect. CNN explains, in Senate targets China’s currency,

For years, U.S. officials have been pressuring China to allow its renminbi — or yuan — to appreciate more rapidly. Between 2008 and 2010, China had pegged the yuan to the dollar, keeping its value artificially low and Chinese exports comparatively cheap.
Besides hiking tariffs on Chinese goods, the bill also takes aim at the administration, which already has some ability to point out nations that purposefully manipulate their currency but has avoided doing so.
The bill would:
— Force the administration to officially red-flag nations whose currencies are undervalued for long periods with the term “fundamentally misaligned currency.”
— Make it tougher for the Commerce Department to ignore calls to investigate accusations of undervalued currencies.
— Force the administration to give Congress a list of nations with “misaligned” currencies.
And if a nation is accused of having an undervalued currency and makes no effort to rebalance the currency for three months or more, that’s when the tariffs kick in.

Jobs And Wealth
It’s complicated, but by manipulating its currency instead of letting it “float” to world market value, China can sell goods to other countries at a much lower price than they would cost without the manipulation. In effect China puts its own money into the currency markets, which works out the same as subsidizing the products directly so they have a lower price, in order to get the orders. While this might seem like a dumb thing to do the long-term result is that China is buying themselves a very big chunk of the world’s manufacturing business. In the long term this pays off for them in jobs, industries, wealth and power.
And as we now know, the result for us is a big loss of jobs and wealth and factories and companies and industries — in other words, our ability to make a living in the world.
The House
Even as the bill likely passes the Senate today, Speaker of the House Boehner is siding with China and is refusing to allow it to come before the House for a vote. (Reminder to self: do some research into the Citizens United Supreme Court decision enabling foreign money to influence our elections.)
The bill can be forced onto the House floor using a “discharge petition.” You can take action to help get Republicans to sign the discharge petition so it comes to the floor. Click here to contact members of Congress and ask them to sign this discharge petition and end Chinese currency manipulation now.

Tell Congress to stop China’s cheating on currency manipulation, which stands in the way of free and fair trade, job creation, and a higher standard of living for millions of Americans.

Click here to see the actual discharge petition.
The President
In his news conference last week President Obama said that China is manipulating their currency but that he doesn’t want a law that is just “symbolic.” He was not clear about whether he would sign this bill or not, should it pass. He said,

“…China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States. And I have said that publicly, but I’ve also said it privately to Chinese leaders. And currency manipulation is one example of it. [. . .] My main concern — and I’ve expressed this to Senator Schumer — is whatever tools we put in place, let’s make sure that these are tools that can actually work, that they’re consistent with our international treaties and obligations. I don’t want a situation where we’re just passing laws that are symbolic knowing that they’re probably not going to be upheld by the World Trade Organization, for example, and then suddenly U.S. companies are subject to a whole bunch of sanctions. We’ve got a — I think we’ve got a strong case to make, but we’ve just got to make sure that we do it in a way that’s going to be effective.”

So it is not clear if he intends to sign this legislation. You can sign a petition encouraging him to sign it, should it pass, and take other steps to push China to stop their trade violations. Click the following: WE PETITION THE OBAMA ADMINISTRATION TO: Take Action to Stop China’s Job-Killing Currency Manipulation.
Please take the time to urge members of Congress to sign the discharge petition, and to urge President Obama to sign the bill if&when it passes.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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US – China Summit: If Trade Was Trade…

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Today the US-China Strategic and Economic Dialogue begins in Washington. This is the third such meeting, and it’s time for the Obama administration to get it right. China has not been engaging in “trade” with us, they have been engaging in something else entirely.
The Washington Post sets the stage, with an editorial, The U.S. must push back against China’s investment controls

…It is still holding the renminbi at about 25 or 30 percent below its probable market value. … Beijing has increasingly used government procurement rules, technical standards and tax laws to force foreign companies to transfer their technology to state-owned Chinese firms in return for access to the Chinese market. … Beijing’s objective is the mercantilist one of building up state-owned “national champion” firms that can then capture global markets from Japanese, European and U.S. competitors. No matter that the state-owned sector already receives massive official support, direct and indirect — while more efficient private-sector job- creators must scramble for resources.

Last week’s Let Trade Be Trade, explains,

Since China’s admission into the World Trade Organization we have been packing up our factories and sending them over there. We have been buying so many things made in China, but they have not been buying very many things made here, and the resulting “trade deficit” has gotten worse year after year. Everyone is afraid of what China might do with all those trillion$ in US Bonds they have accumulated. … There is a better way to solve the problem: let trade BE trade.

Time To Buy From Us
There is a simple solution: tell them to start actually trading with us,

When the meeting begins Secretaries Clinton (State) and Geithner (Treasury) and Locke (Commerce) should slide a big stack of order forms across the table and say, “Your turn. Let us take your orders now, please.”

China has been selling but not buying and it’s time for them to to start buying. That way we might be able use the word “trade” without wincing. It would also help fix our economy, our budget deficit, our unemployment rate and many other pressing problems.
China Holds $1.5 Trillion Of Our Debt
Trade by definition is a two-way street, buying from and selling to others. But China has accumulated $1.5 trillion by selling to us and not buying from us. This one-sided “trade” relationship has hurt or killed industries, companies, factories and jobs here in the United States, while forcing wages and living standards to drop. It has also placed China in an unhealthy position of power over us.
It is understandable that some American interests have benefited from this arrangement, becoming fabulously wealthy while at the same time strengthening their whip-hand by pitting China’s low-wage rights-suppressed workers against American employees who have enjoyed all the protections and benefits of democracy. But it is not clear why our own government has gone along. It is obvious now to all that the one-way arrangement with China has hurt us, closed our factories, devastated our “rust-belt” communities, created vast income disparities and created terrible imbalances in the world’s economy.
Placing Orders Here Fixes Both Economies
If China were to place orders tomorrow for $1.5 trillion in American-made goods, the effect on our economy, unemployment level, manufacturing base, budget deficit, state budget shortfalls, public-employee pensions, and a host of other problems would be immediate and dramatic.
And with our economy and wages restored, our own orders of goods from China would increase, boosting their economy, too. Their trade manipulations are costing them. Workers, facing labor-rights suppression and import restrictions from joining the world’s economy, are increasingly restless. They face inflation and a pending financial crisis. And that huge cash reserve is increasingly at risk from the worldwide imbalances it causes. If China repositioned its policies from mercantilism to trade it would fix so many problems. So why don’t they?
If Not Trade, What?
If China were using trade to build their economy they would use that $1.5 trillion dollar reserve to place orders here for American-made goods, boosting our economy, and boosting our ability to trade further with them. But they are not. They are sacrificing their own economic position to instead build their power position.
China is cleverly using the greed and power of our Chamber of Commerce, huge multinationals, Wall Street, etc, to manipulate our government into letting them to sell China the rope to hang us with. The more China continues these manipulations even at its own expense, the more we should perhaps be understanding these imbalances as a national security problem instead of a trade problem.
China isn’t trading, it is seizing the means of production. It is using manipulations of trade to gather wealth and power to itself at the expense of the rest of the world. It is vitally important for US opinion leaders and policymakers to address this. We have been hypnotized by the word “trade” and the result is we are ignoring our national security. We are not minding our business.
It is time to tell them to start trading fair or we’ll start minding our business with a big, fat tariff on imports so we can start paying down our deficits and rebuilding our manufacturing and jobs base.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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China Tells US To Mind Our Own Business – And We Should

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China’s Vice Finance Minister lectured US administration officials about our debt and told us to mind our own business when it comes to China’s currency manipulation. It is about time the United States started minding our own business by taking steps to protect our business and bring manufacturing and jobs back home.
Leading up to next week’s US-China Strategic And Economic Dialogue, China’s Vice Finance Minister Zhu Guangyao butted into our business and told the US we should reduce our debt. He also told us to keep out of their business and not bother them about their currency manipulation. In the story China Paying ‘Close Attention’ to U.S. Debate on Increasing Debt Ceiling, Bloomberg News reports,

“We are paying close attention to the domestic discussion in the U.S. on debt and deficits,” Zhu told reporters in Beijing today. “We hope the U.S. can take effective measures toward fiscal reorganization just as President Obama suggested.”
[. . .] Zhu also said that currency policy is the “sovereign right” of every country.

China says currency manipulation is their “sovereign right.” They say we should mind our own business. But they insist that “free trade” means America does not have a right to mind our own business and protect our own workers, companies and jobs.
It’s Time To Mind Our Own Business
It is time to finally mind our business and take action. For decades the United States has refused to mind our business by pursuing “free trade” policies that allow other countries to engage in all kinds of trade schemes, while we just sit back and let them. Our leaders have not protected American workers, companies and jobs, instead sending them out of the country. We are told that the resulting “low prices” at Wal-Mart justify letting manufacturing move out of the country,
It is time for us to mind our business, and engage in our own sovereign duty to protect American companies, workers and jobs from the trade manipulations and schemes others engage in. It is time to hold countries like China and Germany accountable for the damage done to our businesses by their mercantilist trade policies. Trade barriers, currency manipulation, even outright extortion – demanding that our companies transfer proprietary technologies and processes if they want to do business selling into other countries – has cost us factory after factory, job after job and company after company.
As an example of how this has worked, in 2008 George Bush made the following argument for a trade treaty with Columbia,

In other words, the current situation is one-sided. Our markets are open to Colombia products, but barriers exist to make it harder to sell American products in Colombia.
I think it makes sense to remedy this situation.

President Bush wasn’t saying he was going to do something about the one-sided arrangement and hold Columbia accountable, he was saying that since we just let Columbia do this to us, therefore we need to reward them with a free-trade treaty that gus American jobs even more! But why not just mind our business and stop it? All we really have to do is tell Columbia we are going to do what they do, until they stop doing that, start paying workers a decent wage and protecting their safety and rights.
Why China Really Cares
The fearmeisters say China is concerned that we might not meet our debt obligations. This is not at all what China is concerned about. China holds $1.15 trillion in Treasuries, accumulated as they sell goods to us, and don’t let us sell goods to them. What they are concerned about is that our currency might drop, which will help bring factories and jobs back to America. From the Bloomberg story,

“Reduced U.S. fiscal spending may lead to a higher possibility of the U.S. dollar appreciation, therefore it helps China to maintain the value of the U.S. debt it holds,” said Li Jun, a Shanghai-based strategist at Central China Securities Holdings.

Their concern about our debt is really just about keeping their currency low, which gives goods made in China a huge price advantage in world markets.
Let Trade Be Trade
It is time to mind our business and mind our businesses. It is time to take action on mercantilism and currency manipulation. It is time to stop China and others from flooding our markets with goods made without the wage, safety and environmental protections that democracy provides.
Let trade be trade. Trade is supposed to be about trading. It is not supposed to just be a scheme to drive wages and living standards down by packing up factories and moving them across borders. It is not supposed to be “take a pay cut and a cut in benefits or we’ll move your job.” It is not supposed to be “well, we have something called globalization now so everyone should expect to be poorer and poorer every year.”
Trade is supposed to be we buy what they make and they use the money we pay them to buy things we make. And then we use the money they paid us to buy things made there. And then they use the money we paid them to buy things made here. It is supposed to go on like that, and everyone does better and better. Better and better, not poorer and poorer.
It really is time to mind our own business and tell countries that can’t sell to us until they meet our conditions. Which is just what they do to us.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Consensus Grows: Confront China On Trade

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the day-to-day news about trade problems with China the bigger picture can get lost. America is giving up its competitive position in industries of the present and future and it is costing us. Even the people you would think would defend “free trade” are coming to understand that America is losing its vital ability to invent, keep and create industries and jobs and to keep a modern economy humming.
Robert J Samuelson has a significant op-ed today in the Washington Post, The makings of a trade war with China in which he says we need to confront China’s illegal trade manipulations. You should read the whole thing but here are excerpts,

… Confronting China’s export subsidies risks a similar tit-for-tat cycle at a time when the global economic recovery is weak. This is a risk, unfortunately, we need to take.
… The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don’t.
… China’s worst abuse involves its undervalued currency and its promotion of export-led economic growth.

Samuelson concludes,

The collision is between two concepts of the world order. As the old order’s main architect and guardian, the United States faces a dreadful choice: resist Chinese ambitions and risk a trade war in which everyone loses; or do nothing and let China remake the trading system. The first would be dangerous; the second, potentially disastrous.

It’s not just Samuelson concluding that we need to confront China’s cheating on trade. Many others have been weighing in that we are losing too much and have to take steps. For example, in July Andy Grove, Intel’s influential former CEO published a very important opinion piece on a similar topic, How to Make an American Job Before It’s Too Late. Grove wrote that we are not just losing jobs to China, we are losing the “chain of experience” that enables new companies and industries to form and to create new jobs and argues for a national economic strategy to preserve our manufacturing and technology base. (These are excerpts but Grove’s entire piece is an absolute must-read.)

You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?
…evidence stares at us from the performance of several Asian countries in the past few decades. These countries seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.

Grove also says that we need to fix this and fix the unemployment problem for other reasons as well,

Unemployment is corrosive. If what I’m suggesting sounds protectionist, so be it.

One after another our business leaders and economists are realizing that the “free trade” ideology has not worked out very well for us. We were told by the “experts” that moving our factories out of the country was a good idea, that new jobs would replace those lost. They didn’t. We were told that we don’t need or want a national strategy to be competitive in the world because an invisible hand would guide us. It didn’t. We were told that trade “partners” would reciprocate by buying from us equally. They didn’t. We were told that we would invent new industries to replace ones we lost. We did, but the new industries moved or are moving out of the country, too.
Now that we are in the midst of the resulting crisis even the “experts” are realizing that trade needs to be a two-way street for it to work, and it hasn’t been. “Free trade” was supposed to be a panacea, bringing us a prosperous future. The reality was different. A few corporate leaders (the ones who promoted these ideas) have gotten really, really rich at the expense of the rest of us (and that includes other corporations and corporate leaders). Now that the beneficiaries of the “free trade’ bamboozlement are off to their private islands in their private jets or private yachts the rest of us are looking around at the devastation of our economy and standard of living, wondering what to do and finally becoming aware that rigid ideologies and their enforcers have kept us from looking for practical solutions that actually work for all of us as a country and community.
So finally from the depth of the resulting crisis a rational national discussion may be beginning, one in which people on the “free trade’ side are not able to just shut down different opinions by shouting “protectionist” or other slogans. As this discussion gets underway here are three principles to help guide us:
1) Let’s drop ideological preconceptions and look at what has worked in history and what is working for other countries today. Science is supposed to DEscribe, but economics has too often been about “if only people would do such-and-such, so-and-so would result.” That is PREscribing and is not science.
2) We have to talk about how we handle mercantilist nations like China who are not playing by the trade rules and what we, together as a nation, can do about it. Let’s also talk about and multinational reactions to the mercantilists. We can join with countries interested in lifting each other with fair trade, interested in trade models that help us mutually lift each other, and together take on those who want it all for themselves.
3) Ultimately we can’t all export our way out of this mess. And ultimately we can’t return to unsustainable old economic models that have failed us over and over. We can’t continue with a few taking as much as they can get at the expense of the rest of us. As machines and technology solve more of our problems and do more of our work our overpopulated, undereducated world has to come to grips with equitable models for who gets what for what and how to take care of our planet and each other. That is the only thing that will work in the long run.
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House Committee Approves China Currency Bill

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The House Ways and Means Committee just approved a bill that pushes China to raise the value of its currency. It looks like the bill will go to a vote on the House floor next week. This is a very big deal because it is a “second front” pushing China to bring its currency to market rates. President Obama met with Chinese Premier Wen yesterday and most of their 2-hour meeting was taken up discussing this issue, and today he gets backing from the House. This tells China that we are serious, that it is more than just the administration talking, and they have to start doing the right thing.
China has been manipulating its currency to keep it low, which means goods made in China cost less in world markets. This, combined with other trade manipulations, has created a huge imbalance in world markets. It moves industries, jobs, expertise, money and power to China, and has created a huge “bubble” of imbalance that threatens the world’s economy. Currently the interests in China and elsewhere, including here, that benefit from the imbalance have the upper hand. But this vote demonstrates that the rest of us, here, in China and around the world, that would benefit from a rebalancing are rallying and challenging the current policies.
Bloomberg: China Currency Measure Heads for House Vote After Panel Approval

The measure would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency. President Barack Obama “does not take a position on this specific legislation,” Jeff Bader, his director of Asian affairs, said yesterday.
“China’s exchange-rate policy has a major impact on American businesses, and American jobs, which is what this is all about,” Levin said before the vote.
The U.S. trade deficit with China widened to $145 billion in the first seven months of this year, from $123 billion for the same period in 2009. The expanding deficit, the unemployment rate lingering at almost 10 percent and polls showing Democrats’ seats at risk heading into the elections have added support for the bill, which has been discussed since 2005.

China had agreed to start rebalancing its currency, but the currency has moved only 1 percent since the agreement – nothing near the 40% some claim it needs to move. Meanwhile our trade deficit with China has increased. China’s Wen claims that China is still a poor country and needs this protection to help it build the industries that will help its people rise out of poverty,

China might now be the second largest economy in the world, but Premier Wen insisted at the UN General Assembly that the “real China” was still in the “primary stage of socialism” and remains a developing country.
Pointing out that 150 million Chinese people still live in poverty, Wen said many regions in central and western China were still very poor and this is the “real China”.
“Taken as a whole, China is still in the primary stage of socialism and remains a developing country… These are our basic national conditions. This is the real China,” he said.

The way to bring China, now the second largest manufacturer in the world, out of poverty is to trade fairly and work with its trade partners, not to manipulate the rules and create a huge imbalance that threatens the economy of the entire world.
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China Currency Bill Moves — Why Some Corporate Interests Oppose

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As President Obama meets with Chinese Premier Wen, the House Ways and Means Committee announces it will vote tomorrow on a bill to take action if China does not bring its currency to market rates. This sends a loud and clear signal to China that action is coming, one way or another, and they are going to have to make adjustments. This has every appearance of a smart, coordinated strategy between the administration and the leadership of the Congress.
WaPo: Bill combating China currency to advance,

House leaders are moving forward with legislation to combat China’s currency policies, adding to pressure from the Obama administration and giving lawmakers an election-year chance to vote on a sensitive trade matter.
The House Ways and Means Committee plans to vote Friday on a bill that would expand the Commerce Department’s power to impose duties on Chinese imports in response to that country’s currency being undervalued on world markets.

But there is opposition from inside our own country.

Some business groups oppose the bill, arguing that it could backfire if it raises trade tensions with China and prompts the Chinese government to use the many tools at its disposal to interfere with American companies. China is a major destination for U.S. exports – about $70 billion a year – although the United States runs a trade deficit of about $200 billion a year with that country. Duties on Chinese imports might also raise prices for U.S. consumers.

There are competing interests at work. Robert Reich wrote about this a week ago in The Two Categories of American Corporation — And Their Politics and Harold Meyerson picks up the theme today in The real un-Americans.
Reich points out that some giant companies sell to Americans, and therefore want us strong and prosperous, and want policies that stimulate our economy, provide jobs with good pay and generally boost the middle class. Others, not so much.

The first group includes national telecoms like Verizon and AT&T that need a prosperous America because most of their sales are here. Same with finance companies like Bank of America and Travelers Insurance whose business strategy has been built around U.S. consumers. Ditto certain giant chains like Home Depot. Naturally, all these companies were especially hard hit by the Great Depression and its devastating impact on American consumers.
The second group includes companies like Coca Cola, Exxon-Mobil, Hewlett-Packard, Intel, and McDonalds, that get substantial revenues from their overseas operations. Increasingly this means China, India, and Brazil. Ford and GM are still largely dependent on US sales but becoming less so. …

What does this mean for Main Street? Reich says,

Large American corporations are going global as fast as they can. That’s good for their shareholders. But in a Washington ever more susceptible to their money and influence, that’s not necessarily good for most Americans.

Meyerson picks up on this today,

Consider the debate in Congress about whether to impose tariffs on Chinese imports if China continues to depress the value of its currency. … Unions and some domestic manufacturers support the bill. But a large number of American businesses, in a campaign coordinated by the U.S.-China Business Council, oppose it.
… The question here is whether the 220 corporations that belong to the council … are already so deeply invested in China as manufacturers, marketers or retailers that buy goods there to sell them here that their interests are more closely aligned with China’s than with America’s. [emphasis added]

It is important to understand that some of the country’s most powerful entrenched, wealthy interests no longer depend on the success of America’s economy and the prosperity of our people. They have a lot of power and money, and use it to influence our country’s politics to increase their own wealth and power. But their interests are not our interests. They want low taxes and don’t care whether we have good jobs, good schools, modern infrastructure and an economy that works for We, the People. They just don’t care about that. And they are willing to say and spend what it takes to set us against each other, poison our politics, and anything else they need to do to get us to act in their interests not ours. “Globalization” and “free trade’ policies work for them, because they enable them to evade the protections that our democracy gives us. But allowing them to just move factories and jobs out of the country and then bring the goods back here with no penalty does not work for the rest of us.
Keep this in mind when you hear the different arguments over taxes, infrastructure, education and government in general.
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China Currency Battle Heating Up

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Since China joined the World Trade Organization (WTO) our country’s balance of trade has gotten worse and worse and we have lost jobs and jobs (and money and money). Between 2001 and 2008 we lost 2.4 million jobs just to China. Normally a situation like this balances out because China’s currency would rise, making goods made here competitive and helping China’s workers be able to buy things we make. So we would benefit from the gains they make. That’s why trade can be a win-win when parties play fair.
But China isn’t playing fair. They manipulate their currency, “pegging” it to the dollar, so goods made there continue to have a lower price in world markets. Some say that they have a 40% pricing advantage just from the currency manipulation. And after that you can take into account the many other ways that China is cheating on trade. So we have a huge problem and a huge imbalance, both growing to extremes.
Japan got tired of waiting for China to stop cheating. Financial Times: Japan intervenes to weaken yen,

Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, sending it nearly Y3 lower against the dollar to mitigate the threat its strength posed to Japan’s export-reliant economy.

Note that this means we now have both China and Japan weakening their currencies against ours, giving both pricing advantages against our goods, which will add to the pressures on us.
Congress is looking into China’s currency manipulation with hearings beginning today, and may act soon. The Hill: Punishing China becomes issue for Democrats in midterm election,

Ryan’s bill would allow the Commerce Department to consider currency manipulation in calculating countervailing and antidumping duties on any imports from countries manipulating their currencies to lower the cost of their exports. … Many rank-and-file Democrats are frustrated with China, which promised in June to allow its currency to follow market trends. Since that announcement, China’s currency has increased by less than 1 percent.

Action by Congress would be politically popular. Harold Meyerson writes in the Wash. Post about this today, in Time to stand up to China on trade

There’s little dispute that the Chinese government controls such strategic industries as alternative energy and that it subsidizes that industry massively, in clear violation of WTO rules. Politically, the American public plainly supports policies that boost American industry and curtail offshoring. A Heartland Monitor poll, sponsored by Allstate Insurance and the National Journal, released last week, asked Americans to choose one of three options for how America should deal with the global economy. Thirty-six percent backed a program that instituted tariffs on imports and penalized companies for offshoring jobs. Thirty-two percent supported governmental programs to help strategic domestic industries. Just 23 percent backed a laissez-faire free-trade policy.

Business groups representing the huge multinationals are fighting on China’s side on this. Reuters, US groups urge Congress not pass China currency bill,

Thirty-six U.S. farm and business groups urged Congress on Tuesday not to pass legislation threatening China with duties on some of its goods if Beijing does not revalue its currency.

Meyerson again,

Consider what this says about contemporary American capitalism. American big business is now so inextricably invested in China that it won’t defend or promote American-based manufacturing. Those tasks have fallen to our largest manufacturing union. By any dispassionate measure, it’s our labor movement, not our leading businesses, that deserves the term “American.”

If China would play by the rules, this would balance itself and turn into a win-win. If the administration would insist that China plays by the rules, backed up with a strong tariff if they don’t, China would likely start coming around. And if nothing else works, a strong tariff on Chinese goods is needed. It is time for Congress to act.
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Big Weekend News On China Currency Problem

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
While publicly saying that China is manipulating its currency — a very big deal — Treasury Secretary Geithner announced over the weekend the administration is getting around the problem of an April 15 deadline for declaring that China is a currency manipulator by … pushing back the deadline. They are instead taking the issue to the G-20, beginning with meetings later this month in DC.
Geithner’s official statement makes it clear,

China’s continued maintenance of a currency peg has required increasingly large volumes of currency intervention. Additionally, China’s inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate. A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing.

So there we have it: China is manipulating its currency and this is harming us and blocking badly-needed global rebalancing. Acknowledging the problem is the first step toward dealing with the problem.
Senator Grassley pointed out that story teaches us we just have to face up to it and deal with this. Grassley criticizes delay of Treasury report regarding China,

Sen. Chuck Grassley (R-Iowa) criticized Treasury Secretary Timothy Geithner for delaying the release of the Department’s exchange rate report because it might strain relations with China.
. . . “If we want the Chinese to take us seriously, we need to be willing to say so in public,” he said in prepared remarks. “The past few years have proven that denying the problem doesn’t solve anything. The Treasury Department should cite China as a currency manipulator.”

But this time the problem isn’t denial it is action. Geither did cite China as a currency manipulator in his statement, but is not taking the official action of formally declaring them a currency manipulator.
Fox News’ take on it is different: “caving”,White House Denies Charges of Caving to China on Currency. (Note that the story in no way mentions “caving”, only the spin in the headline.)
The Way Forward
This is success. America’s manufacturers, economists, unions and Main Street applied pressure demanding relief from China’s assault on our economic base, and with this public acknowledgement have had some success. But not enough. The administration could not continue the pattern of years of denial.
So the question now is, what are we going to do about it?
News reports suggest that China is going to let its currency appreciate just a bit, maybe 5% over a year as a sop to placate the rest of the world. But this is an unacceptably small offering that does not even begin to address the magnitude of the problem and the damage being done. China currently enjoys a trade advantage of up to 40% because of their currency manipulation and continues to drain factories (and the accompanying knowledge and supply chains), jobs, markets, money and hope from the rest of the world. Productivity alone is rising enough to easily offset a 5% move. If this is the extent of China’s response the imbalances and resulting tensions will only continue to worsen.
This is exactly the time to expand the challenge to the administration. The Graham-Schumer bill, S. 295, intends to “level the playing field” with China,

Specifically, the amendment allows for a 180 day negotiation period between the US and China to revalue its currency, if the negotiations are not successful, a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States – a penalty that corresponds to their estimated currency advantage.

Beyond this one issue, there is a larger problem. What is America’s strategy going to be, in a world that is half-mercantilist? Almost every other industrialized country is pursuing a national strategy. How are we responding? Until we have a national industrial/economic policy we remain at the mercy of “free markets” that are not free but are actually rigged against the American Main Street’s economic interests.
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