Making News: Back on National Radio Tonight on Defending the U.S. Against Protectionism Charges

Tags

Biden, CBS Eye on the World with John Batchelor, Donald Trump, global economy, Global Imbalances, globalization, Gordon G. Chang, Inflation Reduction Act, Making News, protectionism, Trade

I’m pleased to announce that I’m scheduled to be back tonight on the nationally syndicated “CBS Eye on the World with John Batchelor.” Our subject – the crucial question of whether recent U.S. moves bythe Trump and Biden administrations represent a worrisome new lurch toward destructive trade protectionism, or efforts to defend and promote legitimate American – and sometimes global – interests.

No specific air time had been set when the segment was recorded this morning, but the show – also featuring co-host Gordon G. Chang – is broadcast beginning at 10 PM EST, the entire program is always compelling, and you can listen live at links like this. As always, moreover, I’ll post a link to the podcast as soon as one’s available.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.

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Im-Politic: Where Republicans Should Definitely Listen to Trump

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abortion, conservatives, Donald Trump, election 2024, entitlements, establishment Republicans, GOP, Im-Politic, Medicare, Populism, Republicans, Social Security

And now for a sentence I’m stunned to be writing (but maybe shouldn’t be stunned to be writing): Donald Trump has once again shown that he’s one of the most interesting politicians in America – and in a good way.

The reason: In just the last few weeks, the former President has just staked out moderate and commonsensical positions on two critical issues that are frontally challenging a hardening, politically foolish and substantively counterproductive Republican/conservative consensus.

I’m stunned to see this because last month, I wrote that his continuing, off-putting – and, I emphasized, apparently irremediable – personal behavior and poor judgment  meant that he no longer deserved even to lead the conservative populist movement, much less win the Republican 2024 presidential nomination.

But I shouldn’t be so stunned because Trump has been opposing decades of Republican and conservative dogma since he first threw his hat in the ring in 2015. Trade and immigration policies are the obvious examples – and due to his efforts, the GOP is no longer the mouthpiece of the Open Borders-friendly corporate cheap labor lobby and of the China-coddling corporate offshoring lobby.

At the same time, Trump’s achievement in this respect has been even broader. As I’ve written, the unusual combinations of policies he supported contained the promise of not only redefining American conservatism (by uniting its traditional focus on allegedly excessive taxation and regulation with those aforementioned populist approaches to trade and immigration) but of bringing some long Democratic-voting constituencies into a new national political coalition broad enough to govern effectively. These include both households with members of industrial unions and working class minorities.

So it’s been all the more dispiriting that, in particular, the former President hasn’t been able to overcome his tendency to embrace even the most odious or simply dodgy figures as long as they profess admiration for him, and to blurt out the first often ill-considered opinions that pop into his head.

Nonetheless, there was Trump the day after New Year’s, writing on his own social media platform that “It wasn’t my fault that the Republicans didn’t live up to expectations [in the last midterm elections]….It was the ‘abortion issue,’ poorly handled by many Republicans, especially those that firmly insisted on No Exceptions, even in the case of Rape, Incest, or Life of the Mother, that lost large numbers of Voters.”

And as known by RealityChek regulars, evidence indeed abounds that contributing mightily to the Democrats’ better-than-expected November showing was a sharp, widespread reaction against (a) the sweeping Supreme Court ruling striking down the previously cited Constitutional right to privacy that legalized abortion nationally in most cases (approved to be sure by several Trump-appointed Justices); and (b) to the consequent stated determination of many Republican abortion foes to lengthen the list of draconian state bans.

Then, last Friday, Trump warned in a video message, “Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security.” He added, “Cut waste, fraud and abuse everywhere that we can find it and there is plenty there’s plenty of it,” Trump says. “But do not cut the benefits our seniors worked for and paid for their entire lives. Save Social Security, don’t destroy it.”

The former President was referring both to statements by Republican members of Congress supporting the idea of winning changes in eligibility for these hugely expensive but politically popular entitlement programs before agreeing to lift the federal debt ceiling, and to similar criticisms of entitlement spending expressed during the last campaign.

And as noted in the above-linked Politico article, support for Social Security and Medicare versus establishment Republican calls for significant change has been a long-standing Trump position.

Once again, I don’t believe that Trump has the personal discipline to stay on these most recent constructive messages and to avoid committing damaging own-goals. But these new statements add another big question about the future of Republicanism and conservatism:  How genuinely Trump will leaders who have shown signs of championing “Trump-ism without Trump” actually be?       

Im-Politic: A CCP Virus Lesson Learned and a Mystery Still Unsolved

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Biden, CCP Virus, CDC, Centers for Disease Control and Prevention, coronavirus, COVID 19, Donald Trump, hospitalizations, Im-Politic, mortality, National Center for Health Statistics, vaccines, Washington Post, Worldometers.info, Wuhan virus

As the third anniversary of the CCP Virus’ arrival in the United States approaches, new data from the U.S. Centers for Disease Control and Prevention (CDC) have upended a widely held belief about the U.S. government’s response, even as other recent statistics have left another conclusion firmly in place.

The upended belief: that President Biden has handled the pandemic much better than former President Trump. Recently released figures from the CDC say it ain’t so – at least when it comes to the virus’ death toll.

According to the agency’s National Center for Health Statistics, in 2020, the number of American deaths attributable to the CCP Virus was 350, 831. According to its latest report on the leading causes of mortality in the United States, Covid 19 took 416,893 lives in 2021. That’s an 18.83 percent increase.

In other words, in 2020, when Trump was President and his policies toward the pandemic were widely considered an unmitigated disaster (except for the Operation Warp Speed policy that produced vaccines in record time), the virus killed many fewer Americans than in 2021, when Joe Biden’s administration has gotten much better marks.

But maybe these results are skewed by the fact that the Trump Covid year only lasted eleven months (because the first recorded American CCP Virus death didn’t occur till February 29, 2020, and the Trump administration ended on January 20, 2021)? Nope. Even when you make the needed changes, and peg the start of the Biden administration in February, 2021, you get the same 18.83 percent gap (with monthly deaths under Trump coming in at 31,893 and under Mr. Biden at 37,899).

The big bump up in deaths under Biden are even stranger when you consider that when the pandemic hit the United States, it was a truly novel coronavirus, meaning that it was difficult to figure out what it even was, much less how rapidly it could spread (thanks in part to China’s refusal to share reliable information), let alone how to treat it. So healthcare providers (and public health agencies) literally were flying blind. Moreover, there was absolutely no vaccine. And relatively few had the chance to develop natural immunity.

It’s true that the vaccine rollout took some time to complete (partly because, again, it was a novel challenge), and that once it was widely available, many Americans refused to be jabbed. But according to this source, by July 30, half of the population was fully vaccinated, and by year-end, this level had hit 62 percent.

Biden supporters can point to the fact that. in fall, 2021, the seven-day daily average of CCP Virus-attributable deaths peaked at 2,093 (on September 22). That was 37.47 percent below the peak under Trump (a seven-day average of 3,347 on January 17, 2021). (These figures come from the Washington Post‘s Covid tracker feature.) But again, there was no vaccine available at all in fall, 2021, under Trump. And natural immunity was much more widespread during President Biden’s first year.

Of course, deaths aren’t the only metric needed to evaluate the effectiveness of CCP Virus responses. Hospitalizations are important, too. A flood of severe virus victims can strain the healthcare system to the breaking point, both making each of them harder to treat effectively, and leaving fewer personnel and resources available for dealing with other serious medical problems.

So it’s more than a little interesting to observe that, according to the Post‘s virus tracker, the peak of reported Covid-related hospital admissions under Trump came on January 6, 2021, at 139,752. During President Biden’s first year, it was 101,865 on December 31, 2021. That’s 27.11 percent fewer. But again, the Trump peak came during a vaccine-less period. Moreover, that Trump peak was the peak for that winter’s wave. That Biden peak wouldn’t arrive until January 19, 2022, when reported hospitalizations hit 161,789 – 15.77 percent higher than the worst Trump figure. And these Biden-era hospitalizations reached such levels even though this was the time when the virus’ Omicron variant became dominant in the United States – strain that was the most infectious, yet the least severe, yet.

But the conclusion that’s been left in place is that, whoever the President, the United States’ virus response has been much less effective than that of many other countries in terms of saving lives.

As of today, the Worldometers.info website reports that the CCP Virus has killed just under 6.69 million globally. The death toll in the United States: Just under 1.12 million. So the United States has suffered 16.74 percent of the world’s virus-related deaths even though it represents just 4.25 percent of the world’s population. That’s a discrepancy so big that it can’t possibly be explained to any meaningful extent by national differences in how virus-related deaths are defined.

A new U.S. Congress convenes next month, and supposedly lots of investigations will be launched – especially by the new Republican majority in the House. Let’s hope that a serious probe of the nation’s clearly bipartisan failure to cope adequately with the CCP Virus is at or near the top of the list.  

Im-Politic: Americans Really Do Seem Split Down the Middle Politically

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Congress, Democrats, Donald Trump, Election 2014, election 2016, election 2018, election 2020, election 2022, elections, House of Representatives, Im-Politic, incumbents, Republicans

As everyone is supposed to know, the United States has become a 50-50 country politically. As argued by this well known analyst,

“The two parties have been neck and neck since long before this midterm. Despite wild gyrations in the economy, the terrifying rise of antidemocratic politics on the right, and yawning policy differences between Democrats and Republicans, recent national electoral results keep coming in remarkably close, as if decided by a coin toss.”

And for a change, this time the conventional wisdom seems to be right – at least when it comes to elections for the House of Representatives. I just examined the results of these races going back to 2014 (the final election before the advent of what seems to be the ongoing Trump Era in American politics), and the evidence is strong that they keep becoming more competitive.

My yardstick is a margin of victory of five percentage points or fewer. And my sources are the New York Times tabulations. Here are the totals for the last six House political cycles:

2014: 28

2016: 16

2018: 48

2020: 39

2022: 38

Although the sample size is small, there’s a clear inflection point. But what’s a little surprising is that it wasn’t 2016, when Donald Trump shocked the nation, the world, and himself by winning the White House.

Instead, it was 2018 – which could mean that his impact on national politics didn’t start becoming clear until Americans had seen him as President for two years.

The above numbers indicate that this trend crested in 2018, but I’m not at all sure for one big reason: That year saw major (40-seat) gains for the Democrats.

The following two House elections saw much smaller shifts – indeed, these shifts (13- and 7-seat losses for the Democrats, respectively), were in the neighborhood of the 2014 and 2016 results (a 13-seat loss and a six-seat gain for the Democrats). But the number of close races by my criterion was much greater.

Moreover, despite the smaller shift produced by last month’s voting, nearly as many 2022 House races were decided by margins of a single percentage point or less (nine) than in 2018 (ten).

These results are even more surprising given that elections where lots of seats change hands mean that relatively large numbers of incumbents lose. Since all else equal, beating incumbents is difficult, you’d expect more elections during those years to be nail-biters. So a relatively large number of races were extremely close in a year that was pretty good for incumbents further strengthens the “50-50” argument.

The nail-biter count of course isn’t the only lens through which to view House, or any other, elections. Other major influences are the numbers of incumbent retirements and therefore open seats; the effect of presidential popularity and other coattail factors; voter turnout and how it tends to vary between presidential election and non-presidential election years; the overall condition of the country and how it’s perceived; and the importance of local issues in these most local of all national elections.

But even considering these considerations, increasing numbers of close races does seem to be a recent trend. So if you’re a politics junkie, and you think you’ve been staying up ever later on Election Night before knowing the final results or having a pretty good idea of them, it’s not your imagination.

P.S. As of this morning, two House races are still undecided. And they look like nail-biters!

(What’s Left of) Our Economy: Two New Must-Read Reports on U.S. Trade Policy

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African Americans, Ana Swanson, China, Donald Trump, globalization, imports, Information Technology and Innovation Foundation, intellectual property, ITIF, Jobs, manufacturing, mercantilism, minorities, non-market economy status, protectionism, Section 337, The New York Times, Trade, trade law, U.S. International Trade Commission, USITC, wages, {What's Left of) Our Economy

Good things just came in twos on the U.S. trade policy front, in the form of two separate reports that spotlighted a major, vastly under-appreciated result of America’s approach to the international economy for many decades, and that proposed an excellent new idea for shielding U.S.-based workers and businesses from Chinese (and some other foreign) predatory trade practices.

The first study was released November 14 by the U.S. International Trade Commission (USITC) and alertly covered by Ana Swanson of The New York Times. The USITC researchers usefully reviewed the academic literature on trade policy’s impact on various U.S. population groups and found that overall, and came to two major conclusions. First, “in the face of trade shocks [like the soaring levels of imports from China that followed Washington’s decision in the 1990s to expand greatly bilateral economic ties], Black and other Nonwhite workers [fared] worse than their White counterparts.” Second, “import competition had a large and disproportionately negative effect on wages of minority workers.”

The reasons, the USITC stressed, were many and varied, and included discrimination in hiring and firing practices and the generally lower education levels of minority groups, which has tended to concentrate them in labor-intensive manufacturing sectors that have been vulnerable the longest to penny-wage competition from China and other developing countries. But one conclusion that shone through was the historic importance of manufacturing generally – including the kind of heavy manufacturing found in the Midwest, to minority prospects for economic progress.

And these conclusions will come as no surprise to RealityChek regulars, as the harm done to minority communities by a trade policy that I’ve long argued has been offshoring- and import-friendly has been the subject of two posts from several years back. (See here and here.) But as the X indicated, and the USITC report emphasized, too many gaps remain in the data currently available and too much of what can be accessed is too poorly structured to create a genuinely satisfactory picture. So how about USITC folks getting on the horn to their Census Bureau counterparts to get cracking?

One other point worth mentioning (which the USITC understandably didn’t include): The first recent President who tried at all to change the trade policies that apparently have hit U.S. minorities hardest was one Donald Trump – who’s still being widely pilloried as a white supremacist.

The second, more forward-looking report was released Monday by the Infomation Technology and Innovation Foundation (ITIF), a Washington, D.C.-based think tank, and recommended a creative way to use U.S. trade law to shut out of the American market products whose competitiveness has benefited from “unfair trade practices in non-market, non-rule-of-law economies such as China.”

The trade law provision ITIF would employ is called Section 337. The reason? Unlike other U.S. trade law measures, rather than authorize the imposition of tariffs on imports that are sold to Americans at below-market prices (dumping) or enjoy certain kinds of subsidies, or profit from intellectual property theft (the main alleged trade crimes addressed by American trade law), in certain circumstances Section 337 authorizes completely banning U.S. imports from foreign entities shown to have profited from such practices.

ITIF proposes to increase greatly the number of these circumstances, especially for cases not involving intellectual property, for transgessions by China and other economic rogues.

Perhaps most important, in cases involving such outlier countries, it would eliminate the (already weakened) requirement that a plaintiff domestic company or industry has been injured by predatory trade practices. (In the U.S. trade law system, plaintiffs not only need to demonstrate that an outlawed practice exists, but that it has seriously harmed them.) As ITIF argues,

“It should be irrelevant if the domestic company is harmed in the here and now. The point is that the unfair practices should not be rewarded, period. The other point is that all too often, especially in technologically complex industries, by the time harm is determined it is too late: The company has suffered irreversible decline in its competitive position. Adjudicating blame becomes a coroner’s inquest over dead U.S. companies.”

Two other crucial ways ITIF would lower barriers to winning Section 337 cases involving non-market economies: First, it would spur U.S. trade law to cover foreign governments that provide predatory support for their entities, as well as specific foreign entities themselves. This improvement matters a lot because in so many instances (for example, in every single instance of Chinese transgressions), American businesses and workers are facing an entire national system aimed at creating advantages having nothing to do with free market forces. As a result, U.S. plaintiffs typically wind up facing a defendant with ultimately much deeper pockets, and the high costs of American trade lawyering and the uncertain chances of success deter many from going this route to begin with.

Second, current U.S. trade law implicitly assumes that the damage inflicted by foreign trade predation is limited to a plaintiff company or industry. But given all the linkages among industries nowadays, that view is way too narrow, and can leave the entire economy exposed to much wider-ranging and long-term damage.

To remedy both problems, ITIF would also entitle Washington to take up their causes by permitting any U.S. government agency to file a trade case against a non-market economy.

I’ve got a few bones to pick with these ITIF recommendations. For example, damaging trade predation is by no means confined to China. Many economies that it would let off the hook, especially in East Asia, operate national systems of protection and predation, too. At the same time, as the report suggests, this approach could induce the kind of international cooperation that would increase by orders of magnitude the price China – clearly a culpit in a class by itself – would pay for what ITIF rightly calls its “economic aggression.”

Moreover, the new trade law regime wouldn’t encompass “multinational firms operating in China.” That’s an awfully big loophole, not only because it’s these companies (including U.S.-owned companies) send stateside lots of products that benefit from China’s mercantilism, but because taking advantage of these predatory practices has been a prime reason for moving their factories to China to begin with (as well as lying behind their support for admitting China into the World Trade Organization, and thereby providing these exports with a vital layer of international legal protection against effective, unilateral responses from Washington).

But in the name of making sure the perfect doesn’t prevent the good, I can support this policy, too (at least as a start). And because ITIF’s proposals would go far toward adjusting the decades-old U.S. trade law system to recent global economic reality, I hope both major paties in Washington get behind it ASAP.

Im-Politic: Has Biden Become the Democrats’ Biggest (Though Not A Real Big) Asset?

Tags

2022 election, abortion, Biden, Capitol attack, Capitol riot, Congress, Democrats, Donald Trump, election 2022, FBI, generic ballot, Im-Politic, January 6, January 6 committee, Mar-a-Lago search, midterms, midterms 2022, Republicans

As next month’s U.S. midterms elections approach, some of the polling results are growing weirder and weirder. Principally, even as the Republicans have recovered virtually all of the lead they lost in the so-called Generic Congress Ballot (which tries to measure which major party voters would like to see control the House and Senate), President Biden’s approval ratings have rebounded pretty impressively. 

These trends (which of course could turn on a dime in this era of frequent bombshell news) are weird because the conventional wisdom holds that presidents’ popularity is an important determinant of how their party fares in the midterms. So all else equal, if Mr. Biden is being looked on more favorably by voters, Democratic candidates for Congress should be benefiting. But they’re not.

In other words, contrary to the signals being sent by so many Democratic politicians this election year (see, e.g., here), the President is far from the biggest problem troubling his party. Indeed, he might now be its biggest asset.  

Specifically, according to the widely followed average of polls compiled by the RealClearPolitics.com website, the GOP edge in the Generic Ballot today stands at 3.3 percentage points. That’s its highest level since June 24, when it was 3.4 percentage points.

Although this shift and these leads may seem small, keep in mind that during Mr. Biden’s term, the results have stayed within a distinctly narrow range. For example, the Democrats’ biggest lead was 6.7 percentage points, registered on June 21, 2021. The Republicans’ biggest lead – 4.8 percentage points – came this past April 28.

As for President Biden, his popularity is still underwater as of today – by 11.6 percentage points. But that’s up considerably from his worst showing – the 20.7 percentage gap reported by RealClearPolitics on July 21.

What I find especially notable are the changes in the Generic Ballot and Biden approval since three events that should have put the Republicans in scalding water: the Supreme Court’s decision striking down the right to an abortion, the beginning of public hearings held by the House of Representatives on the January 6^th Capitol attack, and the FBI’s search of former President Donald Trump’s home in Mar-a-Lago, Florida.

The abortion decision, which I speculated could seriously harm Republicans politically, was reported thanks to a leak to Politico.com on May 2. On that day, the GOP held a four percentage point Generic Ballot lead, and President Biden’s negatives exceeded his positives by 11 percentage points. As indicated above, the Biden gap doubled over the next two months, but his ratings have regained nearly all that lost ground.

After May 2, the Republicans’ Generic Ballot fortunes worsened so dramatically that the Democrats had built a 1.3 percentage point lead by September 21. Since then, however, these results have flipped markedly, so it seems reasonable to believe that the abortion decision has faded in importance for the midterms, even as Mr. Biden has become more popular.

The same conclusion looks warranted for the January 6^th Committee’s work. On June 9, when it held its first hearing, the Republican lead was 3.4 percentage points (just like its aforementioned June 24 margin), and President Biden’s approval ratings were 15.3 percentage points underwater. But thereafter, of course, both numbers trended in the Democrats’ direction until…they didn’t. On a relative basis, however, recently the President has been outperforming his party’s Congressional candidates.

And with the Mar-a-Lago search having taken place on August 9, the subsequent revelations about Trump’s handling of classified documents reveal a similar polling pattern.

The bottom line here isn’t that the Democrats are doomed to a wipeout next month, or that Mr. Biden has recently turned into Mr. Popularity. Instead, it seems to be that as unenthusiastic about the President voters clearly remain, they like what they see of Democrats in Congress today, and the slate of candidates offered by the party this year, even less.

At the same time, my belief that the abortion decision in particular has hurt the GOP politically isn’t completely dead yet. It’s still possible that it could wind up exacting an opportunity cost on the party’s 2022 performance. That is, even if the Republicans win both the House and Senate, it might still be plausible to contend that their margins might have been even greater had the Court stayed its hand.

But that case can’t be proven until the ultimate poll results come in – on Election Day itself.

(What’s Left of) Our Economy: Faint Recession Signs Visible in the Latest U.S. Trade Figures

Tags

CCP Virus, China, coronavirus, COVID 19, dollar, Donald Trump, energy, exchange rates, exports, goods trade, imports, manufacturing, non-oil goods, recession, services trade, tariffs, Trade, trade deficit, {What's Left of) Our Economy

If you’re in the market for (still more) signs of how weird the American economy remains as it emerges from the CCP Virus pandemic, last week’s latest official U.S. trade figures (for August) are just the ticket.

Among other results, they showed astronomical monthly deficits for the nation’s manufacturing-heavy China trade, and for industry as a whole – along with passage of industry’s cumulative trade gap this year beyond the trillion-dollar mark, and toward a fifth straight year of annual shortfalls exceeding this level.

But as reported in the latest official figures, domestic manufacturing keeps boosting output and hiring new workers so far anyway – due mainly to the enormous new demand for manufactured goods from everywhere created by the unprecedented stimulus still coursing through the economy.

Less encouragingly, even though the overall trade deficit fell again sequentially, total exports retreated for the first time in seven months. Combined goods and services imports fell, too – with these two developments suggesting that the gap is now beginning to narrow not because U.S. growth is becoming healthier (which would be the case if exports were expanding and imports decreasing), but because the economy is weakening – and maybe heading into a recession.

More specifically, the total trade deficit sank by 4.34 percent on month in August, from $70.46 billion to $67.40 billion. The sequential decrease was the fifth in a row (the longest such stretch since May-November, 2019) and the level the lowest since May, 2021’s $66.33 billion.

The aforementioned combined goods and services exports decrease was modest – just 0.26 percent. And the monthly total – $258.92 billion – was still the second highest on record. It was all the more noteworthy given the continuing rapid rise in the value of the U.S. dollar, which undercuts the price competitiveness of American-origin products and services the world over.

Overall imports were down for the third straight month – the longest such streak since the five-month stretch from December, 2019 to May, 2020, during the pandemic’s first wave – and decreased by 1.04 percent. So we’re hardly talking about a collapse.

The trade deficit in goods – which make up the vast majority of U.S. exports and imports – also shrank for the fifth straight month in August, and this streak also was the longest since May-November, 2019. Having fallen by 3.74 percent from $91.07 billion to $87.64 billion, this shortfall is now the smallest since October, 2021’s $86.23 billion.

Goods exports were off for the second straight month, slumping 0.36 percent, from a record $183.26 billion to $182.50 billion. But the total was still the third highest ever.

Goods imports decreased for the third straight month (the longest such stretch since pandemic-y December, 2019 to May, 2020, too), and fell by 1.49 percent, from $274.23 billion to $270.14 billion.

The nation’s long-time services trade surplus, however, narrowed in August for the first time in three months – by 1.82 percent, from $20.62 billion to $20.24 billion.

Services exports were fractionally lower, but the $76.42 billion total remained an all-time high for all intents and purposes.

Services imports climbed by 0.66 percent, from $55.81 billion to $56.18 billion – the third highest monthly level on record (after June’s $57.09 billion and May’s $56.41 billion).

It’s easy to conclude that the August drop in the overall trade deficit was entirely an energy story. And indeed, while the combined goods and services shortfall stood at $3.06 billion, the monthly improvement in the petroleum balance ($2.27 billion) and in the natural gas surplus ($1.09 billion), was slightly greater.

But significant movement came in other sectors of the economy as well. As indicated above, the chronic and huge deficit in manufacturing became huge-er, jumping 7.87 percent, from $122.09 billion to $131.71 billion – the third highest monthly total ever (after March’s $142.22 billion and May’s $132.60 billion).

Strikingly defying that high dollar, manufacturing exports improved by 3.50 percent, from $109.50 billion to $113.34 billion – the second best total ever after June’s $114.78

But the much greater volume of manufacturing imports also hit their second highest level on record (behind March’s $256.18 billion) after increasing from $231.59 billion to $245.05 billion.

The August data brought this year’s manufacturing deficit to $1.01033 trillion, and it’s running 19.37 percent ahead of last year’s annual record pace.

Since China accounts for so much of U.S. manufacturing trade, it’s no surprise that in August, the American goods deficit with the People’s Republic surged by 8.85 percent, from $34.40 billion to $37.44 billion.

U.S. goods exports to China expanded on month by 5.22 percent – from $12.27 billion to $12.91 billion. But goods imports from China are about four times greater, and they rose faster – by 7.90 percent, from $46.66 billion to $50.35 billion. That was the second highest total ever, after October, 2018’s $52.08 billion, when Chinese exporters and U.S. importers were scrambling to conclude transactions before former President Donald Trump’s tariffs came into force.

On a year-to-date basis, the China goods deficit is now up 25.23 percent – considerably faster than its closest global proxy, the non-oil goods deficit (19.33 percent). That could indicate that whatever the impact of the Trump tariffs, it’s faded.

But the story becomes much more complicated after examining the separate export and import flows. Year-to-date, goods imports from China have risen faster (18.31 percent) than their global non-oil goods counterparts (16.94 percent). But the difference isn’t all that big, especially considering China’s still formidable worldwide competitiveness edge in so many industries.

What is all that big is the difference on the China import side. U.S. foreign sales of non-oil goods have increased by 15.31 percent so far ths year. But goods exports to China edged up by just 2.43 percent. Since China’s economy this year is widely expected to grow about as fast as the global economy, clearly something wrong and indeed quite protectionist is going on. Time for some new U.S. tariffs in response, I’d say.

(What’s Left of) Our Economy: Two Needed Changes in U.S. China Policy

Tags

auditing, Biden, Biden administration, China, currency, dollar, Donald Trump, fraud, investors, national security, SEC, Securities and Exchange Commission, stock market, stocks, tariffs, Trade, Wall Street, yuan, {What's Left of) Our Economy

Although I’ve been pleasantly surprised by how much of former President Donald Trump’s China policies have been retained by President Biden (like the tariffs and tech-related sanctions and tighter export controls), two recent developments reveal how much room for improvement remains – on permitting Chinese entities to list on U.S. stock exchanges, and on those Trump tariffs.

Regarding the stock market issue, Washington incomprehensively keeps giving these entities (they shouldn’t be called “companies” or “businesses” becauuse they have nothing in common with organizations meriting those labels in largely free market economies) the kind of special treatment afforded to members of its stock exchanges from no other countries – including America itself.

Specifically, these Chinese entities continue to be able to raise vital capital in U.S. markets even though they haven’t yet been required to comply with the standards for opening their books fully that are mandatory for every single one of their domestic and foreign counterparts. Therefore, investors can’t make informed decisions, and regulators can’t discover much fraudulent activity.

It’s true that U.S. authorities have just struck a deal with Beijing that potentially gives them the access to Chinese records that they need. But that’s the problem. It’s still “potential.” And the U.S. Securities and Exchange Commission (SEC) may still be bending over backwards to coddle China. Why else would it have agreed with its Chinese counterparts to keep the text of the deal secret? What devils lie in the always crucial details? Full disclosure here is especially important because of Beijing’s long record of violating signed agreements (see, e.g., here) and because the Chinese government’s statement describing its interpretation of its obligation differs significantly from Washington’s – which is virtually guaranteed to produce protracted further bickering.

This typical bobbing and weaving, in fact, raises the question of why the United States has engaged recently – or ever – in any negotiatons in the first place. After all, Washington has been seeking adequate access to the entities since 2007. China has resisted American demands by citing the important national security and other state secrets that unfettered audits might reveal. But as the SEC itself has pointed out (see the preceding link), more than fifty other countries have required their companies to turn over all records as a condition for listing. China clearly has the right to withhold any information it wishes. The U.S. response from the beginning should have been that if a Chinese entity’s operations are so critical to China’s national security, it doesn’t belong in the U.S. financial system, and able to win U.S. and other investment attracted by the Good Housekeeping seal provided by being listed,to begin with.

Washington’s position all along also should have been that there’s literally nothing to talk about. The United States should have declared listing to be a take-it-or-leave-it proposition for China, and that it will serve as judge, jury, and court of appeals (as it is in all cases). As of this past spring, America’s long failure to do so has permitted these entities to amass a market value of $1.3 trillion. And because all of them are always subject to all of Beijing’s whims, that means these valuable resources have been put at the disposal of the Chinese regime.

What to do now?  Ditch the diplomacy stuff and tell Beijing that unless each of its listed entities turn over to U.S. auditors every scrap of information demanded by date certain (meaning real soon), they all get kicked off Wall Street immediately.

When it comes to trade issues, the Biden administration’s mistake is much simpler – and easier to correct. The President deserves considerable praise for the September announcement that the Trump tariffs will be kept in place for the foreseeable future. But China’s predatory trade policies have not remained in place, and in at least one vital respect, have gotten worse – on the value of its currency, the yuan.

For many years, especially in the first decade and a half of this century, Beijing kept the value of the yuan versus the U.S. dollar artificially low. As known by RealityChek regulars, this practice gave goods made in China (including by offshoring-happy U.S.- and other foreign-owned multinational companies) big price advantages the world over for reasons having nothing to do with market forces. The result were equally artificial boosts to Chinese exports and artificial reductions of Chinese imports.

This year, China has doubled down (not literally!) on this tactic, depressing the yuan’s value versus the greenback by fully nine percent. So the American response should be obvious: The tariffs on each of the roughly $370 billion worth of Chinese goods intended each year for the U.S. market should be raised by nine percent also. And each future Beijing move to devalues the yuan another one percent or more should be matched by another equivalent U.S. tariff hike.

This American retaliation isn’t likely to fuel inflation at home, because of falling U.S. demand due to a slowing economy and a shift in consumer spending to services. So importing U.S. companies won’t have the pricing power to pass on their higher costs. But it will put further pressure on a Chinese economy whose other growth engines (like the real estate sector and the domestic consumer market) are faltering mainly because of the deflation of a ginormous Chinese housing bubble and dictator Xi Jinping’s politically inspired crackdown on his own tech companies and his over-the-top Zero Covid policies.

P.S. If China starts strengthening the yuan again, I wouldn’t lower the tariffs in response. For the aim of U.S. policy toward the People’s Republic now can’t afford to be an indulgence like fairness, but weakening this increasingly hostile and dangerous government, and maximum U.S. economic disengagement (often called “decoupling”). But I’d be amenable to some easing of economic pressure and decoupling if I saw major evidence of big, concrete improvements in Beijing’s economic and military policies – say over a five- or ten-year period for starters.

Making News: Back on National Radio with a Trump China Tariffs Update — & More!

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anti-trust, CBS Eye on the World with John Batchelor, China, Donald Trump, Gordon G. Chang, Making News, manufacturing, monopoly, National Conservatism Conference, oligopoly, One America News, tariffs, Trade

I’m pleased to announce that the podcast of my interview Monday night on the nationally syndicated “CBS Eye on the World” with John Batchelor is now on-line. I’m a little late posting this because, as some of you know, I’ve been in Miami, Florida the last few days attending and speaking at this conference.

All the same, click here for a still timely discussion, with co-host Gordon G. Chang, of the latest evidence that the Trump tariffs continue both to put the squeeze on China’s economy, and to give U.S.-based manufacturing the breathing room needed to keep expanding output and employment.

In addition, speaking of that Miami conference, some of my presentation was excerpted here Sunday by One America News, followed by a short interview. The snippets strung together are missing some transition sections, but you can read the whole (lightly edited) text of the talk in yesterday’s post. And I’ll put up a link to the entire session once one’s available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Our So-Called Foreign Policy: The Deaf Leading the Blind on U.S. China Policy

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Barack Obama, Biden, Blob, China, Donald Trump, Fareed Zakaria, George W. Bush, globalism, Mainstream Media, national security, Our So-Called Foreign Policy, privacy, South China Sea, Taiwan, technology, Washington Post

Is “beyond clueless” or “beyond intellectually dishonest” the best way to describe Fareed Zakaria’s latest column for the Washington Post? It’s tough to tell. And you could ask the same of the editors at the Post‘s opinion pages, who clearly saw nothing wrong with letting this apologia for the United States’ thoroughly discredited (at least for those blessed with working and/or uncorrupted brains) pre-Trump China policies see the light of day.

Zakaria’s missive, from this past Thursday, suffers two glaringly obvious flaws. First, like America’s most influential leaders from both parties for decades before 2017 the author insists on the importance of Washington building and maintaining “a serious working relationship” with a regime that has developed (with oceans of reckless American assistance) into one of the world’s “two most powerful actors.”

And former President Donald Trump’s greatest sin (which Zakaria accuses President Biden of following)? Adopting a policy toward Beijing of “open hostility and criticism” that has caused the “collapse” of “communications channels for managing tensions,” and especially during crises or near crises such as that which appears to be developing over Taiwan.

But nothing could be clearer by now than the delusional nature of these procedure-obsessed and substance-free views (which of course despite Zakaria’s claim have continually been parroted by the Biden administration.) For by now it should go without saying that China’s top priority isn’t avoiding conflict with the United States. In particular, it lacks any interest in the President’s oft-stated  objective of creating clear “guard rails” and other rules of the road that result in a safe and orderly “competition” for goals like “winning the twenty-first century” whose definition seems just as vapid, utopian – and distracting – as his administration’s “liberal global order” references.

Instead, China’s top priority is specific and concrete: increasing its power (in all dimensions) and reducing America’s in every way possible. The reason? Eliminate the greatest obstacle to its plans to ensure its decisive control over every major trend shaping the globe’s future – whether the field is military prowess or technological advance or wealth creation or the evolution of society and culture (especially through privacy-threatening progress in cyber-hacking and facial recognition technology).

Not that the Chinese are eager for conflict or even any kind of frontal challenge or showdown – especially when prevailing is still anything but guaranteed. But the ultimate objective is prevailing, and the means entail building the domestic, regional, and global conditions needed to prevail, either without firing a shot or when clashes do break out.

And not that American leaders shouldn’t make sure to maintain those communication lines with Beijing. With both countries possessing vast nuclear arsenals, lowering the odds of accidental conflict is clearly imperative.

But communication, much less broader engagement, mustn’t become an end in and of itself. History too often has shown that they encourage the (1) U.S. acceptance of empty promises; (2) rationalization of failure to achieve or preserve particular valued objectives in the here and now for the sake of payoffs stemming from a sense of mutual obligation that could be entirely unilateral and imaginary, over a time frame that tends to keep lengthening; and (3) the substitution of wishful thinking about attainable goals for gaining and maintaining the ability to deter or successfully counter specific, dangerous Chinese initiatives.

The second glaringly obvious flaw in Zakaria’s column is its exclusive reliance on former Obama administration officials to support his analysis – which makes as much as sense as citing former Carter administration officials as inflation-fighting experts.

After all, it was under Trump’s immediate predecessor that the Chinese began running wild throughout the South China Sea, pushing aggressive territorial claims and literally building islands with military facilities capable of controlling those commercially vital waters – and according to one senior U.S. admiral at the time, precisely because Beijing concluded that Obama would keep sitting on his hands.

It was also Obama who continued enabling China to pursue the predatory economic policies that badly damaged numerous manufacturing industries vital to American national security, and who turned a blind eye to the massive transfer by U.S. and foreign companies of advanced, defense-related techology to the People’s Republic.

But at least Obama “upgraded” the George W. Bush-era “Senior Dialogue” and “Strategic Economic Dialogue” in order to merge “the economic and security tracks” to “break down the barriers inside both the U.S. and Chinese governments to more effectively tackle cross-cutting issues such as climate change, development, and energy security.” Which accomplished exactly what to advance and defend American interests?

And this is where Zakaria’s editors at the Post come in. Evidently none of them thought to say something like, “Hey, Fareed. Maybe quote someone on China policy whose advice isn’t widely seen as a proven failure?”

Maybe they’re just supposed to look for stray commas and dangling participles?  I suspect that the real reason is that they’re part of the same group-thinking, self-perpetuating globalist Blob that keeps working overtime to ensure that the American public is never exposed to any genuinely fresh ideas about promoting the United States’ security, prosperity, and optimal place in the world – and whose  decades-long record of squandering the nation’s blood and treasure on behalf of one grandiose goal after another is its only claim to success.