from climate change to unemployment, blaming china won’t help the us solve its problems

Despite US President Joe Biden’s soaring words at COP26, his ambitious climate agenda has been stalled and pared down by one Democratic senator from West Virginia.

Even grimmer is the prospect that many of the modest climate proposals Biden manages to get through Congress may be reversed by a Republican president. For all the faults of an authoritarian state, China looks the most credible in terms of being able to deliver on its climate commitments.

Beyond its trade and technological suppression of China, does the United States seriously believe it can weaponise climate change to further slow China’s growth in this critical decade when the country is poised to surpass the US economically?

Climate action, just like trade restrictions, can adversely affect China’s economy, as evident in its recent power shortages. Is any advanced economy prepared to pay such a high price?

The US has ganged up with the European Union against China’s “dirty” steel. Biden called out Chinese President Xi Jinping’s failure to attend COP26 as a “big mistake”, while keeping silent on Australia, a top per capita carbon emitter, which refused to reduce its reliance on coal.

Australia’s per capita greenhouse gas emissions are almost three times China’s. Australian Prime Minister Scott Morrison has pinned his hopes on future technologies helping the country achieve its climate change commitments, without supporting these with concrete policy action.

As a leading producer and adopter of green technologies, China has made solar and wind power cost competitive, ready for adoption now if only Australia were not held back by domestic politics.

The often-quoted examples of China’s excess capacity in steel and solar panels, which are blamed for displacing US jobs, actually resulted from Beijing’s failures to coordinate overinvestment by local governments, which competed destructively with one another, leading to bankruptcies and capacity rationalisation.

Far from being an evil genius seeking world domination, Beijing was often the victim of irrational exuberance from below.

This came with silver linings. China’s dirtiest steel plants have been phased out. In becoming the world’s leading steel producer, China has made good progress in cleaning up steel production. And the price of solar power has dropped by 90 per cent in a decade, becoming competitive with fossil fuels far sooner than expected.

Short-term spikes in unnecessary pollution have shaped industries which have lowered or replaced fossil fuel usage. The rapid expansion of China’s solar panel industry admittedly undermined US industrial interests but has greatly advanced global interests – hardly a zero-sum outcome.

The rhetoric on protecting US workers’ interests overlooks the fact China is not the cause of their plight. More than global trade, automation – projected to eliminate 1.5 million US jobs in the next decade – is the main threat to blue-collar workers.

Its impact on China will be even greater – with more than 12 million jobs expected to be “automated” in the same period. To mitigate the effects, more than 11 million American workers and 50 million Chinese workers will need to be retrained.

Without confronting the real issues, there can be no solutions. The root of the problems facing American workers is the nation’s declining manufacturing competitiveness. Globalisation is the great equaliser.

Unless US manufacturing can compete with German quality and Japanese productivity, its workers will suffer. US Trade Representative Katherine Tai is right that the solutions must start at home, through investing in workers and infrastructure.

US workers have been harmed by their government’s lack of coordinated action to mitigate globalisation’s inevitable social impact, which Biden is trying to address with his Build Back Better programme.

from climate change to unemployment, blaming china won’t help the us solve its problems

US President Joe Biden talks about the passage of the Bipartisan Infrastructure Deal, at the White House in Washington on November 6. Getting Democrats to sign onto the bill proved a challenge. Photo: AFP

International trade offers wins for both exporters and importers regardless of the bilateral trade balance. Behind the huge US-China trade deficit is an enormous consumer surplus and competitive advantages gained by US manufacturers using Chinese components.

It was ironic that Tai accused the Chinese government of having a zero-sum mentality when it is the US that is fixated on its bilateral trade balance with China.

The US is the ultimate practitioner of the zero-sum approach, epitomised by its “phase one” trade deal with China. The US imposed predetermined trade targets – which can be realised only at the expense of American allies like Australia. Moreover, the US’ total trade deficit is defined by its low savings.

Artificially narrowing the trade deficit with China can only be offset by higher trade deficits with other countries, while leaving US consumers and companies worse off. American politicians have often prioritised parochial political interests above bettering the lives of the people or averting the global consequences of climate change.

From climate change to domestic unemployment, the US’ ruling class can divert responsibility by blaming China. But American workers have been suffering less from China’s unfair trade practices but more from the US government’s dereliction of duty.

from climate change to unemployment, blaming china won’t help the us solve its problems

Workers assemble steel tool chests at a Stanley Black & Decker Inc Craftsman Tools manufacturing facility in Sedalia, Missouri, on July 17, 2018. The US is projected to lose 1.5 million jobs to automation in the next decade. Photo: Bloomberg

Following the tortuous passage last week of the infrastructure bill in the House, only after being stripped of its most important clean energy provisions, investment in the country’s deteriorating infrastructure may finally be imminent. But Biden’s broader legislative programme to help America’s middle class and working class families faces uncertain prospects.

The solution to growing inequality in rich countries is neither freer trade nor protectionism, but training of workers and social redistribution. Globalisation’s social consequences can only be addressed by domestic policy initiatives.

What theologian Reinhold Niebuhr’s wrote in 1932 is very poignant: “America pursued a selfish and foolhardy tariff policy until it, together with other imbecilities in international life, contributed to the ruin of the prosperity of the whole world.”

US trade policies cannot fix the country’s myriad socioeconomic problems. But the harm they do to consumers and workers, and to Sino-US cooperation on critical challenges facing humanity, can be avoided.

Winston Mok, a private investor, was previously a private equity investor

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