Cut Off the Blood Supply to China's Communist Party: End Trade

- GATESTONE INSTITUTE - JUNE 29, 2021 - Gordon G. Chang -

(Image source: iStock)
  • The real problem for Beijing is that consumption, the only sustainable part of the Chinese economy, looks far softer than officially reported, something evident from the widely followed China Beige Book survey. Spending will not fully recover until the coronavirus pandemic passes, and that is unlikely to happen soon due to China's barely effective vaccines.

  • In any event, Washington must begin enforcing laws, especially those banning the importation of products made with forced or slave labor.

  • Japan's Uniqlo is not the only brand that has been implicated. Nike and Apple have, through subcontractors, apparently used such labor. Enforcement has been hampered by, among other things, lack of personnel and a failure of political will.

  • The larger goal has to be an ending of trade relations with China. "Because the threat posed by China to the United States results from its hostile system and includes economic, technological, and military dimensions, only systemic, not piecemeal, responses can possibly protect critical U.S. interests," Washington, D.C.-based trade expert Alan Tonelson tells Gatestone. "Sanctions against individuals or companies will inevitably produce only pinprick effects, and even these are easily nullified with shell game corporate renamings and personnel changes."

"I want to be clear on this, our goal is not to hold China back," said U.S. Secretary of State Antony Blinken in a June 25 interview with Anne Claire Coudray of TF1. "It is not to establish a policy against China."


Really? The Chinese regime spread a disease that has at last count killed 604,000 Americans; last year it urged the violent overthrow of the American government; it is killing tens of thousands of Americans annually with fentanyl and related opioids; and it steals half a trillion dollars of American intellectual property every 12 months. It has even declared a "people's war" on America.


To defend itself, the United States should declare that its policy is to end the rule of China's Communist Party.


At the moment, the Party is especially vulnerable because China's economy is weaker than reported and the country is still dependent on the American market.


Beijing's National Bureau of Statistics reported an 18.3% growth of gross domestic product in the first quarter of this year compared to the same quarter in 2020. Fortune described the results as "eye-popping."


China's Q1 result, however, was probably inflated and in any event fell below consensus estimates. Tellingly, the country's Q1 GDP registered only a 0.6% increase from the previous quarter. That figure trailed the 2.6% quarter-on-quarter growth between the third and fourth quarters of last year.


The real problem for Beijing is that consumption, the only sustainable part of the Chinese economy, looks far softer than officially reported, something evident from the widely followed China Beige Book survey. Spending will not fully recover until the coronavirus pandemic passes, and that is unlikely to happen soon due to China's barely effective vaccines.


Until consumption recovers, China will have to rely on exports. Growth for China in recent quarters has been largely export-driven, but as Bo Zhuang of TS Lombard told Fortune, "Exports and industrial production have slowed down from very high levels." Export growth, he correctly says, "is running out of steam." That is especially true now that COVID-19 outbreaks are substantially slowing the movement of goods out of Guangdong province ports.

An export-dependent China is an America-dependent China. Last year, China's merchandise trade surplus with the U.S. was 58.0% of its overall merchandise trade surplus. China, therefore, remains extraordinarily dependent on its sales to America, a circumstance that gives Washington extraordinary leverage.


In any event, Washington must begin enforcing laws, especially those banning the importation of products made with forced or slave labor. U.S. Customs and Border Protection (CBP) in January seized Uniqlo-branded shirts arriving in Los Angeles on the suspicion they were made with such labor in the so-called Xinjiang Uygur Autonomous Region.


Beginning in 2020 and continuing into this year, CBP has dramatically stepped up enforcement. In the current federal fiscal year, beginning in October, the U.S. has seized 1,255 shipments, up from just 324 cargoes in the preceding fiscal year and 12 the year before that.


That is a great start, but so far CBP has just scratched the surface. Japan's Uniqlo is not the only brand that has been implicated. Nike and Apple have, through subcontractors, apparently used such labor. Enforcement has been hampered by, among other things, lack of personnel and a failure of political will.


The market still rewards companies utilizing forced and slave labor, "taking advantage of the weak," onshoring expert Jonathan Bass tells Gatestone. The permissive attitude toward slavery is not only "morally repugnant, it punishes American companies by making them uncompetitive," says Bass, CEO of Whom Home, which bought back its production to this side of the Pacific Ocean. "Who can," he asks, "compete with a company that pays virtually nothing for labor performed in facilities resembling concentration camps?"


At the moment, the Chinese economy is benefitting from U.S. Customs not effectively tracking country of origin. Furniture manufacturers in China, including American public companies, are transshipping products through Vietnam to evade increased U.S. tariffs. This evasion is evident. According to Furniture Today, Vietnam's furniture exports to the U.S. last year increased an astounding 31% from 2019. China's shipments fell a too-good-to-believe 25%.


Such changes do not occur in the absence of tariff fraud, Bass, who is in the furniture and furnishing business, argues. Customs can stop this age-old Chinese stratagem. Its use is criminal, and everyone involved knows it is happening. Customs needs to stop looking the other way.


Ultimately, it is everyday purchasing decisions that fuel a hostile China. Cleo Paskal of the Foundation for Defense of Democracies has been promoting a Shopping for Victory program. A 2020 Deutsche Bank survey reported that 41% of Americans didn't want to buy products made in China. "Online retailers deliberately make it difficult to know where products are made," she tells Gatestone. "There should be an online retail portal where country of origin is clearly marked. The site would give consumers the choice to join the battle for what is right, one purchase at a time." There are proposals in Congress to require online retailers to include COOL information, that's COOL as in country of origin labeling. We all should support these bills.


In any event, China is no longer the world's low-cost producer for many products, so even price-obsessed consumers can love products made elsewhere.


The larger — and longer-term — goal has to be ending trade relations with China. "Because the threat posed by China to the United States results from its hostile system and includes economic, technological, and military dimensions, only systemic, not piecemeal, responses can possibly protect critical U.S. interests," Washington, D.C.-based trade expert Alan Tonelson tells Gatestone. "Sanctions against individuals or companies will inevitably produce only pinprick effects, and even these are easily nullified with shell game corporate renamings and personnel changes."


China's Communist Party runs a system where all entities are in service of the party-state. That means all Chinese entities should be treated as one and their products banned.


"It is, for all our countries, a very complicated relationship that cannot be simplified with a single word or a single sentence," Blinken said in his TF1 interview, referring to Sino-U.S. ties.

No, Secretary Blinken, you are wrong. Sever ties with China right now, Mr. Secretary.


As Bass, the trade expert, says, "it's high time to cut off the blood supply to the Chinese Communist Party."

Gordon G. Chang is the author of The Coming Collapse of China, a Gatestone Institute distinguished senior fellow, and a member of its Advisory Board.

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