Are you worried about your job being shipped to China?
Which presidential candidate's China trade policy will help save American jobs?
On the surface, the candidates positions on China don't differ much. After all, talking tough on China is apparently what every U.S. presidential candidate to get elected. No one questions the wisdom of this tactic, especially in Rust Belt states. Each candidate is willing to escalate the rhetoric to the point of asking voters: “Who is tougher on China? Me or the other guy?”
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But post-election, these same politicians often display an almost teenage crush on China. They portray China as the biggest consumer market that the U.S. can’t do without. Business leaders and their lobbyists, eager for a foothold in China, work to ensure that U.S. trade rules work for them, and not necessarily for American workers.
You may say: “No surprise there.” Politicians, by nature, are hypocrites.
But we the people also tend to be bipolar when it comes to China. China’s our convenient punching bag when we’re frustrated with the state of our economy while paying lip service to China when we see it as a customer for U.S. products.
Hence, what we are seeing on the campaign trail merely reflects what politicians think we want to hear about our Asian competitor.
This ambivalence doesn’t clarify U.S. messaging toward China. Beijing sees through all our posturing. Xinhua, China’s state-run news agency, recently described U.S. politicians’ statements on China as “self-contradictory.”
Xinhua stated the “two main accusations the U.S. presidential candidates, in particular Mitt Romney, [have] filed against China,” are that a) China “has ‘stolen’ American jobs by absorbing U.S. capital,” and b) that “it has ‘manipulated’ its currency, the yuan, to keep the exchange rate at a lower level and retain competitiveness in exports.”
Xinhua concluded: “The candidates should be pleased because all these so-called ‘stolen’ jobs have enabled American citizens to live decent lives with cheaper products at the cost of Chinese resources and manpower.”
Hard to argue with that.
Let’s break down where each presidential candidate stands on China.
Mitt Romney has famously promised, “On Day One I will label them [China] a currency manipulator which allows us to apply tariffs where they're taking jobs.” Romney said in the presidential debate on foreign policy, “They're stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods. They have to understand, we want to trade with them, we want a world that's stable, we like free enterprise. But you’ve got to play by the rules.”
It’s clear Romney is advocating aggressive trade rules with China. But far less clear is whether the former Massachusetts governor, who built his fortune as founder of Bain Capital, a private equity firm, would remain as tough on China once in the Oval Office.
Those are the statuatory rates, not the overall rates. The average corporation pays something in the mid to low twenties, most multi-nationals even less.
The only long-term solution to corporate tax policy (and tax policy for the wealthy) is global synchronization. It is a long road, but the only alternative is nations endlessly trying to poach jobs and factories from each other by offering better deals, which results in all sorts of subsidies, graft, and other foul elements of banana republics.
I think the Japanese (especially if the continue to de-nuclearize their power grid) will be the more probable destination for US energy exports; they are closer and willing to pay a premium and there are fewer security concerns.
Also strategically, it's much harder for China to cut off Japan's energy supply if it's coming across the Pacific rather than through the Indian Ocean to the Sea of Japan.
I think the relentless pace of iPad/iPhone development will eventually start to abate as the sector matures. At the limit, the iPad and iPhone become laptops.
More importantly, how many tablet, smartphone and laptop manufacturers can the world + dog support? The shakeup is already underway with TI looking to hock its OMAP SoC division to Amazon.
I think modern robotics will surprise you in terms of its dexterity and flexibility but it's probably not quite cost effective at this point.
I think your speculative destination for US energy exports is inaccurate; it will probably be Japan.
The Japanese are willing to pay a premium for our energy exports which in turn would help the balance of trade.
China will be fed largely by the oil and natgas extracted from Sakhalin or from the trans-asiatic pipeline if it ever gets built.
There's always coal gasification as feedstock for either coal-to-liquid-fuel or other important applications. I still think Clean Coal has a value proposition provided state, local and federal authorities are willing to provide loan guarantees.
If our glut of oil and gas is exported and if that exporting causes energy prices to increase sufficiently the US will accelerate production of the new nuclear reactors in the pipeline (the emerging class of mini-reactors has a compelling value proposition) or alternatively, take another look at clean coal.
Laying new pipeline is relatively easy from a technical standpoint; the real impediments are regulatory particularly right-of-way.
Sorry, I didn't see your comment before I posted mine above. It is a curious thing that the U.S. is now and will increasingly in the future be an energy exporter at the same time that we are also an energy importer.
But I think few would argue that it is a bad thing to have more oil produced by the U.S. and Canada relative to oil production in the middle east -- even if some of that North American oil gets sold on the global market, meaning mostly to China.
Interesting, but I think incorrect observations about the effect of the U.S. natural gas and oil production boom on lowering our energy costs and making U.S. manufacturing more competitive with China.
Yes we are the number one producer of natural gas and will soon surpass Saudia Arabia and become the number one oil producer.
But there's a problem -- inefficient means of distribution from the source to the end customer. This is why the price of North Dakota crude oil this week was 12% below the U.S. benchmark and 30% below the international benchmark. This is why some North Dakota producers are shipping crude oil to the Gulf coast any way they can -- railroad, river barge or truck. Because the pipelines don't yet exist.
You're probably aware that the U.S. is now exporting refinery products -- gasoline, diesel, etc. Where do you think those exports are going? You might also be aware that the natural gas & oil industries are lobbying for regulatory approval to export American natural gas and crude oil as well. If that North Dakota crude can find it's way to the refineries and seaports on the Gulf coast of Texas, it can command an additional $30 a barrel when sold on the open market -- which will often mean when sold to buyers in Asia.
It is unclear if allowing exports and building new pipelines will reduce the cost of energy for either the U.S. or China, since the goal isn't to reduce prices, but to reduce delivery costs and thus increase profits.
This oil & gas boom in the U.S. will certainly reduce dependence on middle eastern oil -- both for the U.S. and for China -- and whoever our elected politicians are, I think they will have a tough time explaining to the American people why this is a good thing for both countries, especially if there is little or no net reduction in energy costs for American consumers and businesses.