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It’s not China’s fault that some US companies are going out of business

By Zhong Sheng (People's Daily)    09:16, August 22, 2019

It is already an old trick for some people in the US to pass the buck for whatever crises that arise in their own country.

Recently, they brought up the theory that China dumped goods onto the US market, striking their industries and causing native companies to close down.

Filled with anger, they condemned China as if the country has to take the blame for the collapse of American companies. How unreasonable is that?

Anyone with some insight will know immediately that the US is trying to frame China and make the latter a scapegoat for its own fault.

China has always traded with other countries legally and legitimately on the basis of free trade. It is a natural economic phenomenon that Chinese goods show strong competitiveness in international markets with relatively low costs of production and high quality.

Some US officials keep preaching free market competition, yet what they have done doesn’t seem to conform to their words.

The US randomly compared the price of products from a third-party country with that from China and then determined that China dumped goods on the American market.

In 2014, the World Trade Organization decided that the 25 anti-dumping and anti-subsidy investigations conducted by the US against China from 2006 to 2012 violated the WTO rules. Clearly, the US has abused the punitive measures.

Since the US falsely diagnosed its problem, it is impossible for it to provide right prescriptions.

In 2009, United Steelworkers (USW) claimed that a total of five US tire factories closed and 5,100 workers became unemployed from 2004 to 2008.

Using this as an excuse, America added 35 percent, 30 percent, and 25 percent punitive tariffs for three consecutive years respectively on Chinese passenger car and light truck tires. At one point, the export volume of affected tire products to the US declined by more than 60 percent.

However, the market share of US products didn’t increase and the country failed to protect domestic industries or improve employment.

Within three years, 1,200 jobs were added in the US tire industry. However, American consumers spent $1.1 billion more on tire and related products and the retail industry lost more than 3,700 jobs.

It is a proven fact that accusing others with no warrant and even abusing punitive tariffs could only bring unfortunate consequences.

With the economy developing and the industry being upgraded, it is economic normalcy as well as an objective law to eliminate some outdated production capacity.

In the book The Choice: A Fable of Free Trade and Protectionism, American economist Russell Roberts told a story about Ed Johnson, a fictional US television manufacturer, who traveled to the future with David Ricardo, proponent of comparative advantage theory.

Johnson was very depressed when his television factory collapsed. But Ricardo told him that the secret of success lies in comparative advantage and opportunity cost.

The US can only maximize its profits by converting to the industry that it is better at and making the products that bring more profits. Then it could use the money it earns to buy TV sets. In the process, the US is still a winner.

Today, the US has upgraded its industries to high-end manufacturing, modern service, and etc. Over 80 percent of the job losses can be traced back to the improved efficiency brought by new technologies.

This is an inevitable trend in line with economic development as well as a pragmatic choice made by the US itself. It is hard for the world to understand why the US becomes so resentful and angry.

It seems that the US got sick, yet it forced others to take medicine.

In the era of economic globalization, market encourages countries to join the international industrial chain with their advantages. The international production system is increasingly connected and the division of labor is becoming clearer.

While enjoying the benefits brought about by the division of labor in the global market, some US officials pretended to be the victims and even blamed other countries for the collapse of American businesses in market competition.

This fully exposed the bullying nature of some Americans, who are good at making things up to satisfy their greed for profits.

It is impossible to address the issue in America by spreading rumors and smearing other countries or by setting up thresholds and adopting trade protectionism.

The escalating US-China economic and trade frictions unilaterally provoked by the US have caused more and more American companies to lay off their staff, which is a convincing evidence.

(Zhong Sheng is a pen name often used by People’s Daily to express its views on foreign policy.) 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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