CNBC’s Becky Quick tosses off a dud over at Fortune, telling us all to “Stop the Beijing bashing!” because the “The health of the U.S. economy depends on trade with China.”
The people appearing in the pages of Fortune and on the pixels of CNBC would have you believe that’s true. It’s part of the air they breathe.
But it’s not really. Last year, we exported $69 billion worth of stuff to China. Our total GDP was $14.1 trillion. That means just under 0.5 percent of our economy is dependent on exports to China.
But we imported $296 billion from China. In other words, for every one dollar of stuff the Chinese buy from us, we buy more than $4 from them—and that was in a recession year that actually reduced our trade deficit with them.
Which guts Quick’s argument that we don’t have any leverage over the Chinese, and not just because of these overall numbers. The relative ones are even worse. Trade with China (and I realize it’s more complicated than this, but bear with me) represents 0.5 percent of our economic production. Exports to America account for 6 percent of China’s $4.9 trillion GDP.
You tell me who loses most in a trade war here?
Now, granted there is potentially a big opportunity to export stuff to a fast-growing Chinese consumer class. But that’ll only happen if the mercantilist Chinese let us (And even then, you’re still forcing working-class and middle-class Americans to compete with workers with far fewer protections than we grant our labor force and who make far less money).
Which is why it’s flat silly to tell people to “stop the Beijing bashing!” Beijing is manipulating its currency not “allegedly” manipulating it as Quick says. That makes our goods and services 40 percent to 50 percent more expensive than they should be to Chinese consumers. Conversely their goods are about 50 percent cheaper for ours than they should be.
What’s not to bash about that? This state of affairs hollows out our middle class, boosts rich executives’ bottom lines and undermines whatever little bit of power American labor has left to get decent wages.
Quick and Fortune, bizarrely, don’t mention just how staggering the Chinese manipulation is, although I note that they’re aware enough not to use the misleading “free trade” phrase anywhere here.
And look how quickly she glosses over critical problems with the relationship (emphasis mine):
Indeed, it often seems as if we’re on the losing side of any trade partnership with China. Its cheap labor has cost the U.S. countless manufacturing jobs, and to Rendell’s point, it is hard for us to compete with companies that receive considerable overt — and hidden — subsidies from their government. Regardless, we make lots of things better than China does, and its 1.3 billion consumers may soon be clamoring to buy them.
All righty then! But only if the prices for our stuff aren’t artificially inflated by half. We’ve heard this kind of thing for a couple of decades now and it never seems to come true.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.