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China threat serious
August, 2007, Bradenton Herald
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This is in response to the article Tuesday on the recall by Mattel of 250,000 lead-contaminated toys made in China. The lead paint problem is extremely grave in and of itself, endangering millions of young children. It is also, however, symptomatic of a much greater problem, which is the threat posed by Chinese fiscal and trade policies to the economic security of the United States.
While many U.S. companies currently are benefitting from lower manufacturing costs in China and American consumers are able to purchase lower-priced goods, the long-term costs may be crippling to our national economy. The United States has in recent years run record trade deficits with China, larger than with any other country. In 2005, the shortfall reached a staggering $202 billion. The principal reason for this huge gap is that the Chinese currency, the yuan, is undervalued by as much as 40 percent. This makes Chinese goods that much cheaper in this country and conversely American products more expensive in China.
The Chinese government has also repeatedly violated World Trade Organization rules in engaging in illegal manufacturing and other subsidies. In addition, China lacks effective laws and regulations to protect labor and the environment. For these reasons as well, Chinese manufacturers can produce products at much lower immediate costs.
Moreover, China lacks adequate consumer protections laws, regulations and practices and U.S. consumers have repeatedly suffered from these omissions.
The whole issue is further complicated by the fact China has in recent years become the second largest international holder of U.S. debt. It is very hard to argue with one's banker, and the magnitude of its holdings affords China significant control over the U.S. economy. If a sizeable portion of the debt securities were to be precipitously dumped on world financial markets, this alone could cause severe disruptions in the U.S. economy.
Some members of Congress are trying to do something about the Chinese trade/monetary menace. One such effort is the Currency Exchange Rate Oversight Reform Act of 2007 (S. 1607), which would impose significant sanctions on China for failure to realistically revalue its currency. Whether this legislation or alternative proposals, such initiatives aimed at protecting the U.S. economy are commendable and should be encouraged. We need to stop pandering to China.
Jan Schneider
Sarasota |
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