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Deconstructing the US Trade War Against China

 
 

Who is stealing American jobs? The question is not new, but it has become overheated thanks to U.S. President Donald Trump’s populist political passion to “Make America Great Again.” Unemployment – the result of economic and market changes – has always been a profound political concern for governments. That may at least partially explain why Trump and his administration have repeatedly accused China of plotting to steal American jobs.

In 2011, the BBC broadcast a two-episode documentary titled “The Chinese Are Coming.” It was an American story, told from the perspective of local American people. One man in the documentary complained about how important the town of Youngstown, Ohio was in America’s steel industry and how prosperous it used to be before “they… packed up all the machines” and “moved them to China.” The factory buildings remained, but are now mostly dilapidated. With no more jobs to be found in this “Steel Valley,” the man sighed, “What we are losing is much more than just a product that can be found in a store. We are losing a culture and a way of life.”

Such a mood has been common in certain sections of America for years, especially among those who used to be the backbone of the working class in traditional industries now in decline. By accusing China of stealing American jobs repeatedly, Trump proactively responded to these sentiments. Now he has finally turned many of his warnings against China into real actions: A trade war.

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Have the Chinese truly been stealing American jobs? It seems to be a simple question, but given the current situation across the Pacific, this is an overarching issue that leads to the core of overall U.S.-China tensions. Fear of a rising China — including its enormous manufacturing capability — stretches a long way in the West and the United States.

Of course, it was companies – many of them American companies — who “packed up all the machines” and moved them to China. An article titled “How U.S. Companies Stole American Jobs” published by Harvard Magazine argues that “the truly responsible parties are American companies that subcontract jobs in areas such as security, custodial services, and dining,” according to Lawrence F. Katz, a professor of economics. This article also claims that American workers themselves are also responsible for “increasingly moving toward ‘alternative work arrangements’ as temps and freelancers.”

Plus, just as American companies moved from the United States to China, now more and more American businesses are moving out of China and relocating to China’s neighboring countries. Today, many Chinese manufacturers in the so-called lower-end industries are facing fierce competition from other developing Asian countries. Take the clothing industry as an example. Although nearly 40 percent of clothes imported into the United States are manufactured by factories in China, an increasing proportion of American brands like Gap, Nike, and even Donald Trump’s collections are selling products made in countries like Bangladesh, Cambodia, and Vietnam.

To consider another sector, a lot of American jobs in the IT and software industries have transferred to subcontractors in India. Many American companies are attracted by India’s time-zone advantage, English language capabilities, and skilled IT professionals. Is India guilty of “stealing” American IT jobs?

Maybe it is not China, but the whole world that is “stealing” American jobs. In the era of globalization, capital always moves from developed areas to underdeveloped areas, often driven by the desire to avoid increasing manufacturing costs and conflicts between laborers and business owners. This phenomenon is brought about by irresistible market forces.

To accuse China of “stealing” American jobs is untenable. But it is undeniably tempting to make that claim, given that China – not Bangladesh, Cambodia, Vietnam, or India – is currently entering into a power transition vis-à-vis the United States.

China’s economy has been expanding extraordinarily in the past decades, leading to easy comparisons between China’s rapid emergence and the “relative decline” of the United States. Quite often those drawing such comparisons end by concluding that China will pass the United States and become the world’s largest economy in the near future. This oversimplified comparison may largely exaggerate the economic and institutional threat China poses to the United States and the still-prevailing Western liberal order. The fact is that China’s current total GDP only accounts for 63 percent of U.S. total GDP, not to mention America maintains absolute predominance in comprehensive national power, including military capability, science and technology, and overall global influence.

Nevertheless, some U.S. media, think tanks, and policymaking bodies have chronically emphasized China’s “extraordinary emergence and expansion” across a multitude of domains. This strategy of “over flattering” looks, from Beijing’s perspective, like a probable massive propaganda offensive meant to make the case for substantively containing a rising China.

Based on the Trump administration’s trade war measures, Washington’s acts against Beijing seem to comply with the so-called “gray zone strategy,” an option between war and peace. In Mastering the Gray Zone: Understanding a Changing Era of Conflict, author Michael J. Mazarr analyzes tools and techniques that can be used to assemble gray-zone campaigns, including three categories of economic measures: 1) high end measures, which include blockades, severe sanctions and energy coercion; 2) middle ground measures, which include targeted sectoral denial and limited sanctions; and 3) low end measures, which include trade policies and implied economic coercion.

The economic measures levied against China by the U.S. government have evolved and upgraded from low end to middle ground measures under the Trump administration. These steps not only include trade policy changes and implied economic coercion, but also targeted sectoral denial and limited sanctions. Nailing “Made in China 2025” as a strategic target and unrolling (albeit temporary) sanctions against Chinese company ZTE are two perfect examples of middle ground measures. So far, the United States has not undertaken high end measures like severe sanctions or even a blockade against China, which seems to suggest that a truly violent power transition has yet to come, much less a genuinely mature overall power transition.

Nevertheless, Washington has initiated a wave of “targeted strikes” — and pre-emptive ones at that — for example, against China’s high technology manufacturing industry. The problem is that war – either a literal military conflict or a trade war — is never constructive to mitigating divergences among great powers. Peaceful coexistence among states is all about compromise, coordination, and true political wisdom and courage, and so it is regarding the current relations between the United States and China. That was the logic behind the United state’s original post-Cold War China strategy. As Joseph Nye put it: “If we treated China as an enemy, we were guaranteeing a future enemy. If we treated China as a friend, we kept open the possibility of a more peaceful future.”

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