Mercantilism and racism: the case of China

A article by Robert Kuttner sparked a debate on US-China politics and politics. This piece is part of that debate; you can read the counterpoint here.

Tobita Chow’s response invites me to take a closer look at US-China relations as a matter of political economy. How do we rebuild a socially more just economy in the United States, and how does this goal relate to a global economy more supportive of democracy, workers’ rights, and political pluralism?

China is mixing a Leninist one-party state with a new hybrid of state-run capitalism. Although its system of economic development is brutal in some ways, it has lifted hundreds of millions of people out of extreme poverty. What are China’s legitimate interests domestically and globally? And how do they intersect or collide with those of the United States?

Chinese commercialism has been one of the main instruments of destruction of a more egalitarian America, but far from the only one. It was easier to advocate for a more equal society when corporations and banks did not use trade as a battering ram to undermine wages and social standards in the country.

China’s system of mercantilism blocked exports from the West as it used state subsidies to build its own industry. He stole intellectual property. He conditioned Western investments on “partnerships” with Chinese companies. He priced exports below the cost of production, to displace domestic producers from the West.

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Bill Clinton argued that China’s admission to the WTO would make China more democratic and more normally capitalist. The opposite happened. Meanwhile, the US economy has become more dependent on Chinese exports, a dependency whose cost has been clearly illustrated in the supply chain crisis.

China has had a powerful ally in American businesses and banks. Wall Street has become a major underwriter of transactions in and with China. Companies quietly complain about Beijing’s terms, forcing them to share intellectual property, but they gladly accept subsidies and cheap, repressed labor.

President Trump broke with neoliberal orthodoxy on trade and on China, but he did so in a chauvinistic and xenophobic way. Its dispersed tariffs were not even an effective economic policy. In contrast, President Biden has worked to tie his China policy to a strategic industrial policy and has used tariffs both as an instrument to offset China’s illegal subsidies and dumping and as leverage for a negotiated reset. US-China relations in general.

THAT BRING ME CHOW’S responds to my recent article challenging efforts by him and others to label critics of China’s economic policies as racist. Chow largely responds by changing the subject. He argues that taking a tough stance against Chinese commercialism is “counterproductive for Democrats” and that it “fuels GOP narrative strategy, alienating AAPI voters and others.”

In order to make this point, Chow says that if the China issue deteriorates into which party is tougher, Republicans may win because voters will see them as more anti-China. The problem with that is that, with a few exceptions like Sen. Marco Rubio (R-FL), most Republicans have gotten too complacent about China’s alliance with U.S. multinationals, and virtually all Republicans are anti-union.

The question of Chinese politics is not only a question of “narrative”. It is about rebuilding American industry for the benefit of American workers. Democrats like Tim Ryan and the Biden administration are serious about this endeavor. Republicans are not. The idea that this competition operates primarily at the level of rhetoric does not reflect political reality.

As evidence, Chow cites research by Anat Shenker-Osorio, which he says has shown that a “blame China” messaging strategy backfires on Democrats. But this distorts the research. The ad studied in this research was a criticism of Trump for not being tough enough to blame COVID on China. Of course, that would backfire. Progressives don’t criticize the Beijing regime for spreading COVID; this is Trump nonsense. Progressives criticize China’s predatory trade and industrial policy.

Chow, in this article and his other works, mostly dodges the question of whether the United States and the West have a just complaint against Chinese commercialism. Most progressives would say yes, and that labeling such criticism as racist limits the ability to improve American policy.

To be fair to Chow, it’s clear that Trump’s xenophobic version of criticism of China has stoked anti-Asian racism. That legacy makes it harder for Biden and other progressive Democrats to voice entirely legitimate criticism of China without triggering anxiety from Asian Americans. But confusing Tim Ryan and Donald Trump as other racists is counterproductive to the goal of restoring a well-paid American working class and finding a modus vivendi with China.

Towards the end of his article, Chow writes in denial that there is a legitimate role for criticism of China. When he says that we need to focus on corporate threats to workers and defend the rights of workers to organize and join unions, I agree with him completely. But then he adds, “As a number of Ryan’s critics have noted, his ad failed to do so and instead joined Republicans in promoting their narrative, which makes China goats. emissaries for the problems facing American workers.”

There is much more to Ryan’s views, and mine, than scapegoating China for the problems facing American workers. China’s predatory trade practices are part of the problem. The same goes for the alliance of American capital with China. The same goes for the long slide of the Democratic Party towards neoliberalism. But citing other factors should not deny that China’s practices play a major role. It’s not really a “scapegoat” for China.

Chow also writes that we must reject “the now dominant position, shared by Kuttner, of embracing industrial policy in the United States while attacking it in China and other developing countries – an inconsistency that has been noted in many ‘other countries and undermines the credibility of the United States abroad.” This is a distortion from my point of view. I have long supported the right of all countries to have a greater degree of economic sovereignty, as a counterweight to global capital. But where industrial policy intersects with trade, there must be roughly symmetrical rules.

AS CHOW’S PIECE SUGGESTS, China presents an enigma to many on the left. For some, who see US imperialism as the main source of evil in the world, the rise of China is a long-awaited counterweight. Frequent Chow collaborator Jake Werner correctly pointed out that while China steals intellectual property and subsidizes infant industries, it is only doing what rich nations today were doing long before China. Others on the left are encouraged by the success of a self-proclaimed communist nation lifting itself out of poverty. The nation had a very thoughtful article on the left and China was sorting through those arguments.

While the Marxian ideal of the union of the working people of the world appeals to some, the fact is that if any social pact between labor and capital is to exist, it must operate at the level of the nation-state, where it there is some semblance of democratic accountability and the rule of law. In the United States, Biden is trying to correct decades of imbalance, and China’s alliance with financial elites in the name of corporate globalism is a major obstacle. To deny this is either naïve or dishonest. At the same time, even as we act to limit the impact of Chinese commercialism, the two nations need some sort of mutual accommodation.

Last year, Bernie Sanders published a clever article on China in Foreign Affairs. The title was almost totally out of step with the body of the piece. The article was titled “Washington’s Dangerous New Consensus on China: Don’t Start Another Cold War.” But 95% of the text was a criticism of Chinese profiteering, its impact on American workers and the naïveté of American officials who welcomed China into the WTO. Sander wrote:

I helped lead the opposition to this disastrous trade deal [letting China into the WTO]. What I knew then, and what many workers knew, was that allowing American companies to set up shop in China and hire workers there at poverty wages would trigger a race to the bottom, resulting in the loss well-paying union jobs in the United States. and lower wages for American workers. And that’s exactly what happened. In the two decades that followed, about two million American jobs were lost, more than 40,000 factories closed, and American workers saw stagnant wages, even as companies made billions and executives were richly rewarded.

I don’t recall anyone calling Sanders a racist for those views.

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