Variables of Obama’s New Deal on China-U.S. Textile and Other Economic and Trade Relations
Obama’s New Economic Deal will not directly aggravate bilateral economic and trade disputes in real economic sectors, but it will indirectly trigger disputes. For example, the large-scale infrastructure construction in the United States will definitely attract manufacturers from other countries to participate in the competition. American manufacturers will inevitably use all means, including trade protection, to prevent companies from China and other countries from sharing the wealth. Related industries in the United States have strengthened their influence in the international market. The conflict between dumping capabilities and my country’s efforts to develop independent advanced manufacturing will intensify.
The new US President Obama has taken office, and his economic stimulus plan was announced on the 15th. What impact will this plan have on Sino-US economic and trade relations? Will it intensify trade protectionism against China?
To answer such a question, we must first look back at history.
Over the past 36 years, the depth and breadth of Sino-US economic and trade relations have far exceeded the original bold imagination of the pioneers of bilateral relations. The two countries have become each other’s second largest trading partner, and China has ranked second in the U.S. Treasury bill for several consecutive years. So large were foreign holders that economic historian Neil Ferguson coined a new English term “Chimerica” to describe this relationship.
In Sino-US economic and trade relations, the most eye-catching thing is undoubtedly the US trade protectionism and economic and trade disputes. Looking back at the root cause, Sino-US economic and trade frictions began soon after the two sides established normal economic and trade relations. In July 1979, the two countries signed the China-US Trade Relations Agreement; that year, the United States unilaterally announced export quotas for seven categories of textiles to China. China’s rapid economic development over the past 20 years has made the United States attach great importance to the potential of the Chinese market. Therefore, former US Trade Representative Ms. Barshefsky called the Sino-US bilateral protocol on China’s “WTO accession” “nearly 300 items negotiated by the Clinton administration.” “The crown jewel of trade agreements”; but China’s rapid growth into an export giant has made some interest groups in the United States feel threatened. As the scale of Sino-U.S. economic and trade exchanges expands, and as China becomes one of the countries with large trade surpluses and the source of the U.S.’s large trade deficit according to U.S. statistics, Sino-U.S. trade frictions become more intense, covering textiles, clothing, agricultural products, anti-dumping, intellectual property rights, and RMB exchange rate arrangements. In many fields, the United States has become a country with frequent and intense economic and trade frictions with China. During the economic and financial crisis, trade protectionism tended to rise across the board. During the election campaign, Obama made some rather protectionist remarks (such as pressuring China to increase the RMB exchange rate, supervising and restricting China’s textile exports). etc.) has aroused uneasy concern among the Chinese business community and government.
The author’s opinion is that since the main content of Obama’s economic stimulus plan is infrastructure construction, financial investment in specific industries and tax cuts, it is not trade protectionism. Its new economic policy will directly aggravate bilateral economic and trade disputes in real economic sectors and will not Not big, but it will indirectly trigger disputes through the following channels, and China needs to take corresponding countermeasures:
First of all, its economic stimulus plan, especially large-scale infrastructure construction, has created a market with relatively reliable payment capabilities, which will surely attract manufacturers from other countries to participate in the competition. U.S. manufacturers are bound to use everything including trade protection. Means to prevent companies from China and other countries from sharing the wealth. In particular, infrastructure construction requires a large amount of steel. The domestic steel industry in the United States has been in depression for a long time and sees this as an opportunity to save itself. China’s steel industry has long been a large producer in the world, and its competitiveness is increasing day by day. It competes with domestic steel companies in the United States for the United States. Intensified competition in the infrastructure market is inevitable. Given that the U.S. steel industry is accustomed to resorting to protectionist measures, it is almost certain that they will use protectionist tools.
Secondly, our country has greatly enhanced its efforts to develop independent advanced manufacturing industries in recent years. This economic and financial crisis is also seen as a good opportunity to promote industrial upgrading and accelerate the escape from the impact of external economic shocks. Considering that the United States, the stronghold of free market capitalism, has always tabooed terms like “industrial development policy,” one of the outstanding features of Obama’s economic stimulus plan is to provide large-scale financial investment in renewable energy, IT and other industries. In this way, relying on the financial support of the U.S. government, U.S.-related industries have enhanced their dumping capabilities in the international market, and the contradiction with my country’s efforts and intentions to develop independent advanced manufacturing industries will tend to intensify. It is expected that in the past two years, my country will moderately increase the use of anti-dumping, countervailing, safeguard measures and other tools to create a guaranteed domestic market for domestic industries (especially the key development of advanced manufacturing). These dumped U.S. industries have hit the Chinese Ministry of Commerce’s industries. The odds of harm being brought under the guns of the Bureau of Investigation and the Office of Fair Trading are rising. Therefore, the author advocates that we should change our thinking and not always regard ourselves as passive victims of trade protection measures. Instead, we should be as proactive as possible to fight for fair treatment for Chinese industries. For example, we should immediately start analyzing the Obama economic stimulus plan. Does the content of industrial development policies constitute illegal subsidies under WTO rules?
Not only that, Obama’s economic stimulus plan may also have the following negative impacts on China:
——Even if Obama’s $825 billion economic stimulus plan is not taken into account, the U.S. fiscal year 2009 deficit will still be�� Reaching US$1.2 trillion, if Obama’s plan can be successfully passed and implemented, it can only be financed through bond issuance. The size of the new bond issuance is huge, which is detrimental to old creditors like China.
——Due to the unprecedented huge scale of financing of his economic stimulus plan, the crowding-out effect on developing countries and regions in the international credit and bond markets has become increasingly significant. His economic stimulus plan may lead to import payments from emerging markets that my country is focusing on developing. Further shrinking of capabilities is detrimental to our market diversification strategy.
Despite this, there are still some factors that limit the negative impact of Obama’s economic stimulus plan on China. Some of his protectionist propositions are also incompatible with other of his propositions and goals, and therefore cannot be realized. For example, the interests of U.S. sellers and manufacturers of imported goods are often in conflict. In the past few years, U.S. furniture manufacturers complained and initiated restrictions on the import of Chinese furniture. Some U.S. sellers announced that they would cut off business ties with the sponsors, and even The goods of those sponsoring manufacturers were thrown into the streets. This time, the Textile Importers Association has made it clear that it hopes the Obama administration will completely exempt textile and clothing import taxes. Their proposal will form a force that restricts protectionism in the manufacturing sector.
Obama advocates raising the RMB exchange rate in order to “create a level playing field” for U.S. manufacturing; but this is not only inconsistent with the basic characteristics of the current international monetary system and the current international economic situation, but also conflicts with and is incompatible with his ultimate goal. . The United States’ monetary hegemony is the highest manifestation of its economic hegemony. Economic hegemony is the basis of its political and military hegemony, which in turn consolidates its economic hegemony. Therefore, when the subprime mortgage crisis was limited to the United States, market participants “fleeed to the U.S. dollar” one after another. Once Uncle Sam escalated this domestic crisis into a crisis, market participants would inevitably “flee to the U.S. dollar” and raise prices. USD exchange rate. Institutional investors are vigorously liquidating and withdrawing their investments in order to make up for shortfalls and repay maturing debts in the wave of deleveraging, which has further increased the appreciation pressure of the US dollar against other currencies, including the RMB. Because of this, when the subprime mortgage crisis began in 2008, the theory of “decoupling” the economies of emerging markets in Asia from the United States was all the rage, and the currencies of Asia and the “BRIC” countries appreciated significantly against the U.S. dollar. However, in October 2008, when the subprime mortgage crisis worsened sharply, In the background, although the horizontal comparison of China’s economic trends is very good, the RMB exchange rate against the US dollar has reversed. This is the reason. In addition, Obama’s ultimate goal is to end the subprime mortgage crisis as soon as possible and revive the U.S. economy. But if he can really improve the U.S. economy, the dollar will strengthen further.
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