Remember the bike you learned to ride on? The bike you first fell and skinned your knee on? The bike that was, at least for a time, a constant in your childhood? The statistical likelihood is that that bike was built in China. What are some words that come to mind when you see the little made in China sticker on products? Cheap? Low quality? Knockoffs? Intellectual property rights violations? Walmart? Over the years, China has developed a pretty bad reputation in the eye of American consumers and why is this? What evidence do we have that, relatively speaking, China, the biggest bike producer in the world, is somehow objectively worse a trade partner than anyone else we do business with, or, for that matter, worse a trade partner to us than we are to them. If you looked up Chinese/American trade in the news today, you’d probably find articles with these big scary sounding terms like currency manipulation and trade deficits that make it sound as though China is this big scary trade giant that ruthlessly shapes the market to best benefit them without regard to the negative impacts on their trade partners. Are all those articles, all those news stories actually evidence that that picture of China is an accurate one? Does that picture of China make you think, ‘wow, I should really try to find an American made bike next time”? But is the evidence we have of corrupt or unjust business practices factual or objectively true? The answer, in many cases, is no. We believe things because they are in our language, within our mindsets, in line with our paradigms, supportive of our nation and just seem to make sense. But I ask you today to set those predisposed mindsets aside and be open to different evidence than you might be used to hearing regarding Chinese-American trade.
Let’s start out by dispelling some commonly accepted beliefs about buzzwords in the media that we tend to assume are inherently bad without really understanding their implications in an international economic context. Who here thinks that the US having a trade deficit is bad? It sounds bad right? Actually there’s nothing inherently wrong with having a trade deficit. All it means is that we buy more from a nation we trade with than they buy from us. It is the organic result of trading with a nation which holds the world’s largest manufacturing infrastructure and no, it does not leave the US with a net loss because at the end of the day we have the products we paid for an could not have made for ourselves because don’t have the same capacity for manufacturing that China does.
Currency manipulation. The big scary word that everyone hears but no one can really define. A really basic breakdown of what currency manipulation is is when one nation uses its own currency to buy or sell foreign currency. This can be used to artificially deflate currency by artificially inflating the currency of someone else. Yes, this screws over other countries. Yes, China does this. And yes, the united States of America does this as well. It’s a common practice done by many nations but no matter how much currency manipulation is just another day in the bureaucratic office, people will still be scared of it, of a half truth hidden in big economic vocabulary. That’s the power of using evidence. Sometimes people will actually believe you.
I’m afraid my third point is another example of the pot calling the kettle black. Lots of people don’t support trade with China because their environmental protections aren’t as progressive as ours. Who here owns a computer? Microwave? Cellphone? Of course you do. The us is the world’s leading producer of electronic waste and all that has to start somewhere. But where does all that e waste end up? The likelihood is China. Due to our lack of federal recycling laws, private companies don’t have a lot keeping them from exporting our waste overseas into China’s incredibly environmentally damaging 75 million dollar e waste industry. It’s estimated that over 75% of e waste in China comes from North America.
This isn’t a recent development, this isn’t the result of fake news or alternative facts. The evidence we’re given has systematically been left incomplete so the conclusions we draw from it are often wrong. If you feel comfortable buying from this country, you should feel comfortable buying from China. So don’t be scared of those buzzwords like deficits and manipulation, think twice when you consider international environmental regulations, and go buy a Chinese bike.