Next week, May 9 and 10, the US-China Strategic and Economic Dialogue will take place in Washington DC. Since 2009, high-level representatives of the US China, with their delegations, meet each year at one then the other capital. Let’s see if the administration will take on China’s mercantilist policies in an effort to start bringing back factories and jobs — and rebalancing the world’s economy.
This is the third such meeting. Prior meetings have been useful with the countries signed various memorandums of understanding, but the big kahuna of actually doing something about the massive imbalances that continue to destabilize the world’s economy has not yet been tackled.
The trade imbalances resulting from China’s ongoing efforts to grab the world’s manufacturing business continue. The world’s economy has gotten through the worst of the financial crisis but as we go back to the same old ways of things that didn’t work we only set the stage for worse.
China cheats. This advantages from this cheating bring them increasing wealth and power which are used to discourage a response to their cheating. And inside the affected countries there are internal groups benefiting from the imbalances, bringing them increasing wealth and influence to discourage their governments from confronting the situation. (You know who you are.) Low wages and short-term profit at the expense of a long-term sustainable economy might be good for some, it is terrible for most.
The public understands that our trade relationship with China is a problem. People want to buy things made here and want jobs making things here. We want our factories and jobs back. It’s that simple and the public gets it. The coming election will hinge on jobs and jobs hinge on responding to China.
The world is still out of balance. Our economy is still out of balance. The problems are not going to get better by themselves. Simply putting off the things that have to get done allow the imbalances to worsen.
Stay tuned — I’ll be going into detail as this economic dialogue approaches and proceeds.