Eating China's dust in the trade wars

A lot of us remember the World Trade Organization protests in Seattle in 1999. Often violent demonstrators numbering 40,000 or more shutdown streets and caused overwhelmed police to resort to tear gas in retaliation.

Hundreds were arrested in a scene that was not very mellow at all.

Rightly or wrongly, the protesters were portrayed as a bunch of hippies decrying free-trade as a wolf in sheep's clothing.

If you asked the people on the streets that day, most would have said they were sticking up for the developing world being subjected to neo-colonialism in the form of unfair trade agreements. They were the voice for the lowly and the exploited.

But a study released today is making me wonder whether someone should have been there speaking up for the old U-S-of-A.

The Economic Policy Institute in Washington, a progressive think tank, released a study that shows the U.S. has lost 2.166 million jobs since 1997 as a result of its trade deficit with China. The vast majority, 83 percent, have been lost since China joined the WTO in 2001.

The study shows a net job loss in every state. This includes 27,100 jobs lost in Missouri or about one percent of the state's total work force.

These are existing jobs in steel, textiles and computer industries that prefer the cheap labor, lenient laws and low-overhead world of China.

The facts are simple. In 2001 our trade balance with China (the total value of our exports minus the total value of our imports) was negative $84.1 billion.

Today that figure is negative $235.4 billion.

At the time China entered the WTO, U.S. leaders said we were gaining a great trading partner.

President Bill Clinton, whose administration negotiated the agreement, called it "a win-win for both countries." He said access to the China market would create vast amounts of new jobs and give our manufacturers a foothold in Asia.

But the exact opposite has occurred and the scales have been rapidly tipping toward China in the intervening years.

China continues to keep its currency, the yuan, artificially weak compared to the U.S. dollar. In 2006, China bought $200 billion in U.S. Treasury Bills and other securities to prop up the greenback.

China is in the process of amassing a Fort Knox of dollars, and the endgame is that its exports are cheap and U.S. imports are overpriced. China also suppresses labor rights, making its work force at least 50 percent cheaper than it would be under a free market.

It's an unfair ballgame, and the WTO helped make the rules.

Now some would argue that our relationship with China is beneficial because China's ownership of U.S. dollars keeps our interest rates low at home. We're able to get low-rate mortgages on real estate because the U.S. economy keeps chugging along, they say.

But to that I'd ask: At what cost?

We're digging a hole and seem to think the answer is borrowing more money. China is acting like a kindly creditor and ally, but it actually is using American consumers to grow its own economy at the astonishing rate of nine percent a year.

I'm certainly not an economist, and I do think globalization does far more good than it does harm, but I want to sound this note of caution. If this trade imbalance with China continues to grow at the current rate, we'll all be outside the next WTO meeting howling for fair trade.

TJ Greaney is a staff reporter for the Southeast Missourian.