Global Ethics Corner: China and the U.S.: Trade Wars or Mutual Advantage

Friday, October 1, 2010

Does a "dreadful choice" face the U.S. in its trading relationship with China?

Samuelson in The Washington Post argues for standing up to China. He sees the U.S. damaged by Chinese political choices.

China undervalues its currency and pursues an export-led growth model. Both lead to the loss of U.S. jobs, an imbalanced trading system, and an American disadvantage. Rather than following the rules of mutual advantage, China cherry picks benefits and increasingly asserts its prerogatives.

Samuleson suggests that the U.S. needs to confront China or to allow China to "remake the trading system." The options are "resisting Chinese ambitions" or doing nothing and loosing the current system. Confrontation means tariffs, quotas, and restrictions on Chinese imports.

A more benign view counsels patience, emphasizes incremental steps, and sees China slowly becoming a stakeholder, and hence, naturally having more authority.

In addition, China's choices lead to cheap goods for U.S. consumers, to Chinese lending which funds U.S. deficits, to a growing Chinese middle class, and to millions of Chinese lifted from abject poverty. The last two offer the promise, to some, of political reform in China.

However, forces push both countries: nationalism can run high, domestic politics demands assertiveness, and global economics trends threaten jobs and personal security.

Samuelson believes the choice is stark, that a confrontation is dangerous but that doing nothing is potentially disastrous.

What do you think? Are these forces pushing the U.S. toward a Hobson's choice between trade wars and doing nothing? How would you respond to China's growing wealth, power, and authority?

By William Vocke

For more information see:

Robert J. Samuelson, "Standing up to China: A trade war may be the lesser of two evils," The Washington Post, September 27, 2010, A15.

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World Economic Forum
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