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| No | 19% | 92 votes | Total: 491 votes | |
| Yes | 81% | 399 votes |
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Add to FavoritesNo. We need a more mature relationship than that. It would become "tit for tat". Engage, yes!, provoke, no! Financial penalties would lead to escalation of uncooperative relations with one of the world's most important nations. What the US needs to do is to implement countermeasures in the same fields as the problems, by taking thoughtful actions and avoid not knee-jerk reactions.
The US needs to act with considered forethought and focus attention on the problem,
not create new ones! For example, if China is unwilling or unable to enforce copyright laws, then GATT and other multi-lateral organizations should be invoked to investigate and act to effect change. That would be more effective and direct in the long run, because there is strength in numbers. The US needs to be more reflective and avoid preemptive strikes on other countries.
I don't even know how or from whom any such financial penalties would be assessed. Do you charge the government of the PRC? They wouldn't pay anyway. How would you enforce it? If you couldn't, then it would merely lead to an image of ineffectual foreign relations. Would you send FBI and the CIA commandos into China to arrest the perpetrators of the injustices, starting WWIII? I think not! Really, fellow American citizens, we need to avoid the urge to give into temper tantrums, in their many different forms!
The fact is that we need the cooperation of China in many ways. The Federal Reserve desperately hopes that China will not suddenly shift its enormous foreign reserves from the dollar to the Euro or a basket of currencies. We need China's help to ensure that North Korea does not get totally out of line or launch a nuclear tipped missile, since only the Chinese really have leverage. We also rely on China to avoid being obstructionistic with vetoes at the U.N. security council. When acting capriciously, the US should expect repercussions, which could be painful and lead to diversions.
The continental US and China are of roughly similar size geographically and both are world leaders. We are both better served by finding ways to resolve our disagreements peacefully and without fostering enmity. China is a vitally important trading partner and fellow stakeholder of spaceship earth. Slapping financial penalties on China for unfair export practices would prove only that the US is still foolishly naive in its foreign trade policy.
It would be shortsighted and protectionistic to invoke financial penalties on China. There are better ways to channel American dissatisfaction at the fact that Chinese manufacturing costs are substantially lower, such as focusing US resources where we have our competitive advantages, such as in services, entertainment, high tech, bio-tech, pharmaceuticals, etc. The fact is that China has a natural economic advantage in basic manufactured goods, making them extremely price competitive.
Get used to it, because it won't change anytime soon. However, eventually China will get more developed and its costs will rise and some other countries will take over the low cost manufacturing sector. Already in my lifetime alone, the competitive goods country has shifted from Japan to Korea and S.E. Asia to China and it seems that Vietnam and India are on the horizon. Competitiveness due to low costs is a temporary
situation and there is nothing wrong or immoral about it.
America would be better served to separate its domestic politics from its foreign trade policy. The idea that the US could or should cause China to "face financial penalties for unfair export practices" is a populist idea based more on hype and innuendo than on fact. When the US makes trade policies based on emotions and ideological politics, it causes unfair and uneconomic distortions in the international marketplace. In the end, it is the American consumers who would bear the cost of any such financial penalties on China.
Learn more about this author, Robert C. Sage.
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Yes
Everything is fair in love and war, but other than that everyone needs to follow some minimum code of conduct, in whatever sphere it may be, and trade is no exception!
The whole idea of free and fair trade is based upon the notion that when two parties trade, each one of them becomes better off. This happens only when the forces of the market are allowed to operate unhindered by the interference of government intervention. Unfortunately exactly the reverse is true in case of China, where the government controls the whole economy in a way that will promote its exports and minimize its imports, using a highly undervalued currency that makes its exports incredibly cheap for other countries, while also making imports from outside equally expensive for its own people. The result is a huge trade surplus which leads to a continuous flow of wealth from the rest of the world to China. It is a model followed earlier by many other Asian countries including Japan, but China has taken this art to a new height, resulting in enormously swollen trade surpluses, unprecedented foreign currency reserves, and incredible capital inflows.
If this can be done by China, why is it that other governments, including more developed countries, do not choose to use this model? The main reason is that this is just not accepted as a fair practice.
As a matter of fact, no other country can get away with this kind of a strategy for long, except of course China, with its great wall encircling a communist political system and government, and a very long history of inflexible and rigid international postures that has not flinched an inch during the last six decades or so. It is more an outcome of international politics, where China has occupied a unique and absolutely crucial space, first in the middle of cold war manipulations that prompted Nixon to embrace it, and lately the US war on terror, which has held the US back from confronting China directly, in view of its strategic importance as a permanent member of UN Security Council, as the most populated country in the world, and now also as the next superpower in a very foreseeable future. It is this inability of the US led committee of developed countries that has allowed China to get away with what no one else can even dare to try, and in all probability, it is this very attitude that will lead to the final shift of global power balance within the next decade.
The US initially adopted the strategy of engaging China instead of confronting it, to ensure that the communist block remains divided. It was a political strategy, and allowing China to continue with its unfair economic practices was the cost paid for this strategy. Even as capital flows to China blossomed in the nineties, there was little to worry about till the turn of the millennium, but in the last few years, matters have changed dramatically. The trade surplus of China, significantly at the cost of US, has grown exponentially to nearly a quarter of a trillion dollars per annum, and threatens to derail the US economy altogether, a phenomenon nobody could have imagined even as late as circa 2000 A.D. Finally, US seems to have realized the threat to its economy, the ultimate source of its power, and begun deliberations, but having tolerated the same for over a decade now, it is unlikely that mild diplomatic dialogs alone can achieve much. In fact even the officials do not believe such negotiations are going to bear any real fruit.
It is a self-woven trap that the US has allowed itself to be trapped in - in the belief that US was too big and too powerful for a third world economy, even if that happens to be the largest of them all. Now that this illusion is breaking up, there is considerable anxiety, but there are few remedies. The geo-political balance of power is unlikely to allow any radical shifts in attitude, and US will have to confront itself on the question of hardening its stance against China very soon. It may be a matter of trade but is deeply interwoven in politics, and any tough stand will require an even broader coalition of forces across the globe than the one required against the war on terror.
It is a difficult decision to make. Here US is not dealing with a terrorist outfit, but an organized government of the largest country in the world, a permanent member of UN security council and the next super power likely to take over from US as the biggest economy. No one doubts that China should not be allowed to get away, but there is one question that really needs to be answered first.
Is it too late for action?
Learn more about this author, V. Kumar.
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