The Chinese blessing: what the American presidential candidates fail to admit
In every American presidential debate in the 2012 presidential race, anti-Chinese rhetoric is bound to come up sooner or later. It is true that China took over America as the world’s biggest manufacturer, but both Romney and Obama fail to mention that it were the Americans and not the Chinese that profited from this manufacturing shift in the last decades.
After Nixon’s meeting with Mao in 1972 the relationship between America and China gradually grew. After Deng Xiaoping started liberalising China, America pushed China to open up their economy. China had to play by American rules and join American made institutions as the International Monetary Funds (IMF) and World Trade Organisation (WTO). Consequently, they participated in an arena that was based on the dollar so that the United States could press money and borrow almost endlessly (mostly from China).
America always profited from their economic leadership position, but more specifically they were the ones that exploited the cheap Chinese labour so that they could buy goods for prices that were never imaginable if they were manufactured in America. Those who paid the price were the Chinese who worked in long hours in extremely hard circumstances for a few dollars or less a day to produce one of the nineteen pair of shoes an average American women owns, while they themselves barely could afford one pare of old rags. The poor China produced cheap goods so that the rich west could own even more commodities and life luxurious lives. And to make things worse, although they didn’t produce it most of the profit was made in the developed world.
In yesterdays debate Romney pointed out that he wanted to bring back the manufacturing jobs of for example Apple. He stressed that China should raise their underappreciated currency, but forgets to mention that this will lead to an extreme increase in prices of the American products. Furthermore, it is not possible for America to compete with the low Chinese wages of low skilled jobs. Luckily, in America it is not possible to treat people the way Foxconn, where iPad, iPhones etc. are produced, does. There, the depressing and degrading situation of the workers lead to series of suicides. Still, Romney isn’t concerned about Chinese working conditions, he just wants to “bring the jobs back to America.” It is false rhetoric to create an external enemy to blame and fight, just to win votes.
Is it false? Yes it is. Here is the real catch; most profit is still made in the West. It is estimated that the Chinese added value of the iPhones manufactured in China is only 3.6 percent of final wholesale cost. The high-end jobs such as marketing and design are still done in America. This means that most money is still being earned in America where the people can enjoy cheap goods, even if the actual production takes place in China. In this case Obama was more honest when he said that: “There are some jobs that are not coming back, because they are low-wage and unskilled jobs. I want high-wage, high skilled jobs.”
Unfortunately for Obama, also on this field America will face increasing competition. China is investing in educated and high skilled jobs too. There is definitely a shift in economic power between these countries. But isn’t that just fair? China reformed drastically to play by American rules and to get exploited. Now it is finally paying somewhat off for China. As a result, the country is perceived as a threat even though the Western banks and governments are really the ones responsible for the financial crisis. America should look at their own economic mistakes and systems if they want to fight unemployment. Instead of perceiving the Chinese as a threat, the American public should be thankful for their level of wealth that they would never have reached without China.