The headlines coming out of Communist China these days leave no question as to whether the nation is friend or foe. From its genocide of the Uyghurs, to its suppression of Hong Kong, to its provocations in the South China Sea, the recent actions of the Chinese Communist Party (CCP) have finally laid to rest the neoliberal delusion that free trade with this rogue state would inspire it to become a responsible actor. But now that America is aware of the problem, the question is what to do about it? There has been surprisingly little attention given to the everyday influence the CCP has on domestic affairs, so highlighting the areas where the nation is most vulnerable to Chinese subversion is necessary before finding the means to combat it.
American reliance on Chinese imports has eroded the domestic industrial base, causing the United states to fall behind in key industries. Free trade with China can be linked to “the direct or indirect loss of 3.7 million jobs across the country”, a smaller number than those lost to automation but still a substantial hollowing out of the manufacturing sector in particular. The trade deficit with China was a staggering $345.6 billion in 2019, but down 17% from 2018 as tariffs and other restrictions hampered Chinese access to the American market. Still, China has not been shy about threatening to use this dependency as leverage. Chinese state-run media earlier this year threatened to “cut off [the] supply of drugs…and plunge the U.S. into ‘the mighty sea of coronavirus’” in response to attacks from the president regarding the origins of COVID-19, highlighting how national security cannot be separated from discussion about relations with China.
The pharmaceutical industry in particular has been a casualty of the relationship with China, putting the United states in a position where the people’s health is at the mercy of the CCP. In 2020, “80% of antibiotics consumed in the U.S. are made in China,” along with other critical materials like face masks, which the nation saw the consequences of in the early months of the year. It was not always this way; in fact, “the bioscience industry [had] been an important part of Puerto Rico’s economy since the 1960s,” where a good portion of global drug manufacturing and research was conducted. But the repeal of tax credits to support the island and trade relations with China led to an economic slump in 2006, the effects of which hinder Puerto Rico to this day. Currently, the island is dependent on federal aid, since one of its main supporting industries was sacrificed for the sake of free trade and Chinese relations.
The tax credits for Puerto Rican pharma is not the only example of how free trade dogma has devastated American competitiveness and manufacturing. The American shipping industry was devastated when manufacturing subsidies were eliminated in the late 1980’s, wiping out 40,000 good paying jobs and pushing the US from #1 in shipbuilding to #19 today. And who is #1? Well, after “Beijing designated commercial shipbuilding as a strategic industry and began channeling massive state subsidies to the sector,” China quickly rose to dominate this industry and many others. The same pattern repeats whether it is for lithium batteries or rare earth minerals, and every other good the Chinese have manufactured an advantage in.
Along with state subsidies and sponsorship, outright theft from American corporations cemented China’s rise to power. Today, Chinese IP theft leads to “$600 billion annually in cost to the U.S. economy,” a staggering amount even in comparison to the roughly $22 trillion U.S GDP. Corporate and intellectual espionage are widespread, with the FBI “conducting about 1,000 investigations into suspected Chinese theft of U.S. technology involving every sector of the U.S. economy” as of May 2020. These investigations have led to high-level convictions, including “Charles Lieber, a prominent Harvard University professor,” arrested for receiving secret funding from the CCP. In China itself, the state uses coercion to acquire American technology, where “in some sectors, Beijing will only let foreign firms operate through joint ventures in which Chinese partners have the majority stake” or face heavy tariffs. The US-China trade war did not begin with the election of President Donald Trump. The only change is that now Americans on both sides of the isle are willing to fight back.
Playing catch-up is not going to be an easy task considering the sheer volume of goods purchased from China, and in many cases the President has let opportunities regarding trade go to waste. The tariffs on China have led to increased imports from other countries, with “some 46% [of the benefits] absorbed by Vietnam” and Mexican imports now coming to $320 billion in 2019, up from $278 billion in 2017. Both of these nations are relatively friendly to the United States, and in an ideal world America would form a coalition with such states to shift production out of China. But the President has engaged in trade wars with Europe, Canada, and other countries along with China, squandering the goodwill he could have used to organize such a group. The nation has to recognize that some jobs will always remain in one developing nation or another, and the only trade deficit that harms the national interest is the one with China. The rest of them are just a consequence of being a service based economy.
But certain commodities, such as those reserved for military use, should be subsidized to ensure that the United States is never forced to choose between submission and scarcity. As Senator Marco Rubio (R-Florida) said in a 2019 speech, “our nation does not exist to serve the interests of the market. The market exists to serve our nation and our people.” If unregulated competition jeopardizes the wellbeing of the nation, the government must step in, as it once did with drug manufacturing and shipbuilding, to preserve the industrial base. The free market is a great thing, but it is not sacrosanct. Some things are too important to leave up to the profit margins of corporations. American independence from Communist China is first amongst them.
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