After a year’s honeymoon in the wake of China’s WTO
entry, there seems to be a new tone of criticism in the US
regarding China’s trade regime. Lindsey Gordon, Republican
Senator for South Carolina, has called for action on Chinese
textile imports, claiming that China “cheats”, while
Commerce Secretary Donald Evans has pronounced that “We're
going to be taking aggressive action. They need to be doing more.
They need to be doing much more.” Part of the perceived
problem is that China has not done enough to open its own economy
to other countries. But for Gordon and others, the bigger issue is
the continuing growth of Chinese imports, which are seen as taking
US jobs.
However new research by Professor Shaun Breslin from the
University of Warwick argues that in fact much US investment in
China is hidden as it takes place through intermediaries in East
Asia. Trade and investment figures will show intra-Asian
relationships, but it is often major companies in the US that are
the real originators.
He says:
“I would not suggest that all that is done in China
conforms with principles of free trade, or even with what China
signed up to when it joined the WTO. But I do suggest that if
people like Gordon didn’t just look at bilateral figures
based on the nation state as the unit of analysis, they might
realise that many US based companies (and shareholders) are getting
much more out of China than the figures suggest.”
In summary Professor Breslin accepts that there is a growing
trade deficit between the US and China but that US corporations are
benefiting from intermediaries in East Asia investing and
manufacturing in China on their behalf. So while the US ordinary
shop floor worker will loose out from this trade deficit as jobs
are lost to China, many US corporation’s will benefit from
intermediaries actions in China and US corporate profits will
actually increase.
