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Tag Archives: globalization

Making News: National Radio Podcast Now On-Line on Fingering the World’s Real Protectionists…& More!

26 Thursday Jan 2023

Posted by Alan Tonelson in Following Up

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CBS Eye on the World with John Batchelor, China, economics, Following Up, global economy, Global Imbalances, globalization, Gordon G. Chang, Immigration, Jeremy Beck, labor shortages, NumbersUSA, protectionism, Trade

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is now on-line.

Click here for a timely discussion – with co-host Gordon G. Chang – on the crucial issue 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.

In addition, on January 10, in his blog for the immigration realist organization NumbersUSA, Jeremy Beck quoted from my December 29 post debunking the numerous recent claims blaming the labor shortages that have popped up in many U.S. industries on policies that have enabled too few foreigners to join the American labor force. 

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

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

25 Wednesday Jan 2023

Posted by Alan Tonelson in Making News

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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.

Our So-Called Foreign Policy: A Wall Street Kingpin Lays a Grand Strategy Egg

11 Wednesday Jan 2023

Posted by Alan Tonelson in Our So-Called Foreign Policy

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America First, China, climate change, ESG, fossil fuels, globalism, globalization, Immigration, industrial policy, Jamie Dimon, JPMorgan Chase, Our So-Called Foreign Policy, productivity, supply chains, The Wall Street Journal, Ukraine War, Wall Street, woke capitalism

In several senses, it’s not entirely surprising that The Wall Street Journal recently allowed Jamie Dimon to share his thoughts on the domestic and especially global grand strategies the United States should pursue in the post-Ukraine War world.

After all, Dimon heads JPMorgan Chase, the nation’s biggest and most important bank. As a result, he clearly needs to know a lot about the U.S. economy. And as Wall Street’s biggest poohbah, he surely must know a lot about the state of the world overall – in particular since he’s had extensive contacts with the heads of state, senior officials, and business leaders of many countries.

What is somewhat surprising, then, is how little of Dimon’s analysis and advice is new or even interesting, and how much of it could well put America ever further behind the eight-ball.

Dimon’s article wasn’t completely devoid of merit. Since he’s dabbled in some (symbolic) woke-ism himself, it was good to see him seemingly take a shot at what’s become mainstream liberal as well as radical lefty dogma by urging the education of “all Americans about the sacrifice of those who came before us for democracy at home and abroad.”

Given the strong support by the Biden administration and by some finance bigwigs for influential for encouraging and even requiring lenders to take climate change risks into account when extending credit, it was encouraging to read his pragmatic position that “Secure and reliable oil and gas production is compatible with reducing CO2 over the long run, and is far better than burning more coal.”

Dimon showed that, unlike many on Wall Street, he supports some forms of industrial policy to make sure that “we don’t rely on potential adversaries for critical goods and services.”

And he endorsed the larger point that the neoliberal globalization-based triumphalism that undergirded the policies of globalist pre-Trump Presidents needs to be buried for good:

“America and the West can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims—particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if it seems to recede in tranquil times.”

But on most of the biggest issues and just about all specifics, Dimon either punted or retreated into the same globalist territory that proved as profitable for Big Finance as it was too often dangerously naive for the nation as a whole.

For example, he wants Washington to “fix the immigration policies that are tearing us apart, dramatically reducing illegal immigration and dramatically increasing legal immigration.” Completely ignored is the depressing impact the latter would have on wages that have already been falling recently in inflation-adjusted terms, and on desperately needed productivity growth – as a bigger supply of cheap labor is bound to kill many incentives for businesses to improve their efficiency by innovating technology-wise or devising better management approaches.

And on China, Dimon’s clearly determined to talk his company’s book, insisting that “We should acknowledge that we have common interests in combating nuclear proliferation, climate change and terrorism.” and blithely predicting that “Tough but thoughtful negotiations over strategic, military and economic concerns—including unfair competition—should yield a better situation for all.”

But most important, Dimon fully endorses the foundations of the very globalist strategy that for decades perversely ignored the distinctive and paramount advantages the United States brings to world affairs and has thereby created many of the dangers and vulnerabilities with which the nation has been struggling.

The way Dimon seems to see it, there’s no reason to pay any attention to the extraordinary degree of security the America enjoys merely by virtue of its geographic isolation and powerful military; or to its extraordinary degree of economic self-sufficiency thanks to its immense and diverse natural resource base, its technological prowess, and its dynamic free market-dominated economic system. And evidently, it’s just as pointless to concentrate foreign and economic policy on the nation’s equally formidable potential to build on these advantages.

Instead, like other globalists, Dimon flatly rejects the idea that “America can stand alone,” or should seek to maximize its ability to do so. Instead, it should keep defining nothing less than “global peace and order” as “a vital American interest” – the standard globalist recipe for yoking the country’s fate to an agenda of more open-ended military interventions, more hastily approved and usually wasteful foreign aid, and more nation-building in areas lacking any ingredients of nation-hood.

Asa result, it would anchor America’s safety and prosperity on efforts to shape foreign conditions (over which is has relatively little control), rather than on efforts to shape domestic conditions (over which is has much more control). (For a much fuller description of this America First strategy and its differences with globalism, see this 2018 article.) 

In fact, and revealingly, Dimon’s piece was titled “The West Needs America’s Leadership.” If only he and other globalists would start thinking seriously about what America really needs. 

(Full disclosure:  I own several JPMorgan bond and preferred stock issues.)    

 

Following Up: Podcast On-Line of National Radio Interview on Apple’s Exodus from China

08 Thursday Dec 2022

Posted by Alan Tonelson in Following Up

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Apple, CBS Eye on the World with John Batchelor, China, Following Up, friend-shoring, globalization, Gordon G. Chang, manufacturing, offshoring, reshoring, supply chain, Tim Cook, Zero Covid

I’m pleased to announce that the podcast is now on-line of my interview last night on the nationally syndicated “CBS Eye on the World with John Batchelor.” 

Click here for a timely discussion – with co-host Gordon G. Chang – about the possibly sweeping implications for the futures of the U.S. and Chinese economies of Apple’s apparent decision to move more and more production out of the People’s Republic faster and faster.

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

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

23 Wednesday Nov 2022

Posted by Alan Tonelson in (What's Left of) Our Economy

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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.

(What’s Left of) Our Economy: Getting American Competition Priorities Right

13 Tuesday Sep 2022

Posted by Alan Tonelson in (What's Left of) Our Economy

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American Affairs, anti-trust policy, competition, globalization, monopoly oligopoly, National Conservatism Conference, tariffs, Trade, {What's Left of) Our Economy

Greetings from Miami, Florida, where I’m attending the final day of the third annual National Conservatism conference. (I spoke on Sunday.) I’ll be posting soon about my general impressions of this event, and the broader effort it represents to develop a new school of right-of-center policies and politics. But since today’s early afternoon sessions aren’t my speed, I’m back in the (cavernous!) hotel room because I thought folks would be interested in seeing a lightly edited version of the remarks I delivered.

The subject – the often weird and arguably counterproductive views long held by most U.S. leaders, along with the national policy and business establishments, about the different priorities deserved by promoting economic competition at home, and economic competition from abroad. In addition, I should note that the conference organizers plan to post videos of this and other presentations very soon, and I’ll send out an alert when it’s up. For more background, see this article in the journal American Affairs from 2019, when I first made versions of the following observations and arguments:

There seems to be broad agreement at this conference that the U.S. economy should undergo some kind of transformation from one that’s extremely open to the world economy – to all of its opportunities and benefits as well as all of its risks and dangers – to one that’s less open (because those risks and dangers don’t seem to have been accounted for adequately).

I’m sure that there’s also broad agreement that a major obstacle stands in the way – that very considerable degree of recent and current openness, which becomes clear from examining data like the strong rise of trade (both exports and imports) as a share of the nation’s economic output, the similarly strong rise of two way both outgoing and incoming investment, and the amount of U.S. net debt held by foeign lenders. It’s also clear from what we’ve been learning lately about how dependent the nation has become on other countries for lots of goods that are crucial economically and militarily and healthcare-wise.

Almost completely overlooked though is another major obstacle – an apparent belief that’s powerfully fueled all that openness, and helped create the costs and vulnerabilities that have been neglected for o long. It’s the apparent belief that foreign competition is better for the economy than domestic competition.

I say “apparent” because this view isn’t often voiced. But something like it must be broadly accepted, especially by those who have been making national economic policy. Because for decades, until very recently (the year 1980 is a good starting point) U.S. leaders have worked especially hard to open the American economy wide to foreign competition (through numerous international trade agreements) while simultaneously permitting levels of domestic competition to fall quite significantly in a great many industries.

And it’s difficult to understand how a much more self-reliant American System can be created if the prioritization of foreign over domestic competition isn’t reversed. That is, if there’s a strong consensus – as there seems to be – that vigorous competition is needed to maximize the benefits of capitalism (notably, to spur technological progress, better product quality, more affordability, greater choice of stuff to buy), then the emphasis should be placed on boosting domestic, rather than foreign, competition.

For those seeking to limit the U.S. economy’s exposure to the global economy, the rationale for stressing an increase in foreign competition seems to have two sources that are two sides of the same coin – at least as best as I can figure out, since again, the case for actively preferring it is seldom made explicitly. The first is that since competition is good, the more the merrier. Therefore boosting foreign competition is an obvious way to get more competition.

The second reason for emphasizing foreign competition is that it’s simply not possible to generate needed levels of competition without foreign competition.

But regarding the first rationale – just how much more competition does foreign competition create for the U.S.? If we’re a fourth of global output, does that mean that foreign competition can triple the level of competition? Or twice as much, or 72 percent more, or whatever? Maybe. What I can say confidently, though, isthat no one has even asked that question, let alone answered it. But the assumption seems dubious given that much the three-fourths of that global economy outside the U.S. is less advanced than we are, not more.

And as for foreign competition filling some unavoidable domestic competition gap – that may be true for many other countries. But it’s far from true for the United States. After all, we have advanced technology. We have manufacturing. We have services. We have energy and minerals. We have agriculture. We still have dynamic, innovation-fostering economic and social systems. .In other words, to borrow from that Michael Jackson song, “We are the world.” We have satisfactory supplies of petty muc every type of product and service that the rest of the world boasts all together.

That is, we have a matchless degree of self-sufficiency and capacity for self-sufficiency – despite having spent much of the last half-century or more trying our best to squander this priceless advantage. We don’t have tropical fruit. Or coffee. Or chocolate. But I think we can figure those challenges out.

It’s true of course that the transition toward a less globalized American economy isn’t a short-term proposition. And it probably will never result in 100 percent self-sufficiency – at least not in the foreseeable future.

For example, precisely because we’ve permitted so many major gaps to emerge in our productive economy, we face enough alarming shortages to require some temporary degree of cooperation with other countries before they’re filled. Semiconductor manufacturing is a prime example. In turn, these shortfalls also extend to the professional workforces needed to reestablish domestic production. So some flexibility on immigration and visa policy will be needed, too – at least until we get our own science and technology workforce back up to speed.

And maybe the best de-globalized American economy shouldn’t even aim to hermetically seal the economy, or even close. After all, recognizing that foreign competition isn’t superior to domestic competition by no means requires dismissing the former as totally worthless. Similarly, the prioritizing of domestic competition doesn’t mean that all corporate concentration at home should be broken up.

Instead, what’s important for fostering a less globalized economy is realizing that it’s not necessarily, much less mainly, foreign competition that’s needed for economic success. It’s competition, period. And since the United States is eminently capable of supplying so many of its economic needs and wants on its own, without many of the downsides of foreign competition, why not reorient our national economic strategy to recognize the proper relationship between trade and competition policy, view them through different lenses, and base them on different default positions?

So before even considering new international trade agreements, Washington should ask whether the added increment of foreign competition and its expected benefits are worth the national security costs, the economic costs, and the social pathologies produced by the latter?

And for industries that do need a competitive kick in the pants, let’s first ask if that kick can come from some new domestic anti-trust-type action.

Before approving more mergers and acquisitions at home, Washington could ask if the firms involved could realize the greater scale economies and other gains they’re seeking by limiting their foreign competition.

If de-globalizing the American economy is the name of the game, then recognizing and overcoming the usually implicit but broad basis in favor of foreign over domestic competition looms not just as an important step. It will be an essential step.

(What’s Left of) Our Economy: Apple Products Now Designed in China, Too

08 Thursday Sep 2022

Posted by Alan Tonelson in (What's Left of) Our Economy

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Apple, China, design, engineering, Federal Trade Commission, globalization, Made in America, manufacturing, offshoring, research and development, technology, The New York Times, Tripp Mickle, {What's Left of) Our Economy

Although Apple has long relied on factories in China to turn out its incredibly popular electronics products, the company has clearly sought to counter charges that it’s been a world champion outsourcer that’s contributed to U.S. industrial hollowing out and general economic weakening. How? By touting its products as “Designed by Apple in California.”

And that’s mattered in more than a public relations sense because it’s been that U.S.-located design – and engineering – that’s long comprised the vast majority of the value of Apple products. Even better, it’s also long been the case that almost none of the wealth generated by iPhones and iMacs and the rest have gone to China. Those factories in the People’s Republic, owned by contract manufacturers, have largely been snapping the sophisticated parts together according to Apple’s appealing designs and sophisticated blueprints.

Now, though, according to excellent reporting by The New York Times‘ Tripp Mickle, it’s clear that Apple’s going to have at least put a big asterisk on its slogan. He’s updated trends that I identified literally decades ago in my book The Race to the Bottom and have followed since (see, e.g., here) making clear that not only is much of the Apple’s most advanced manufacturing (of parts and components) now performed in China, but so is a large and surging share of that engineering and design.

According to Mickle’s sources,

“More than ever, Apple’s Chinese employees and suppliers contributed complex work and sophisticated components for the 15th year of its marquee device, including aspects of manufacturing design, speakers and batteries, according to four people familiar with the new operations and analysts. As a result, the iPhone has gone from being a product that is designed in California and made in China to one that is a creation of both countries.”

Mickle continues: China’s “engineers and suppliers have moved up the supply chain to claim a bigger slice of the money that U.S. companies spend to create high-tech gadgets.”

As a result, just as American leaders have belatedly been awakening to the dangers of heavy reliance on China for critical goods, both because of Beijing’s burgeoning power and challenges to U.S. global technological leadership and the national security created by this stature, Apple has been boosting its dependence on the People’s Republic – and helping to enrich and empower this hostile dictatorship. 

Some of Mickle’s specifics:

>”This year, Apple has posted 50 percent more [high wage] jobs in China than it did during all of 2020, according to GlobalData, which tracks hiring trends across tech.”

>”When China closed its borders in 2020, Apple was forced to overhaul its operations and abandon its practice of flying hordes of California-based engineers to China to design the assembly process for flagship iPhones. Instead of subjecting staff to lengthy quarantines, Apple began empowering and hiring more Chinese engineers in Shenzhen and Shanghai to lead critical design elements for its best-selling product….”

>In 2007, Chinese suppliers accounted for a mere 3.6 percent of an iPhone’s value. Now this figure is more than 25 percent.

The U.S. Federal Trade Commission has just begun to enforce new regulations aimed at ensuring that products labeled “Made in America” really are produced domestically.  It’s time for Washington to require Apple to start telling the truth about its operations, too.     

(What’s Left of) Our Economy: A Strong Case for Decoupling from China Much Faster

15 Monday Aug 2022

Posted by Alan Tonelson in (What's Left of) Our Economy

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China, China market, decoupling, exports, globalization, imports, Joseph C. Sternberg, protectionism, The Wall Street Journal, Trade, XiJinping, {What's Left of) Our Economy

What if Americans no longer had to pay so much attention to two of the biggest economic reasons for worry about China? Specifically, if Americans didn’t need to be nearly so concerned that much smarter, tougher measures against China’s predatory economic policies would cost their exporters access to a gigantic current and potentially bigger market? And they believed that decoupling from the hostile, dangerous People’s Republic could be much less economically damaging than widely supposed? 

Those are fascinating and important questions asked and suggested by Wall Street Journal columnist Joseph C. Sternberg in a piece over the weekend, and he presented some compelling evidence that, however “preposterous” it sounds now, these possibilities are surprisingly close to becoming realities. Moreover, they’re getting closer all the time, thanks to dictator Xi Jinping’s reversal of the free market-ish reforms and integration into the global economy begun by Beijing in the 1980s.

His evidence? The big payoff that supposedly motivated the U.S. and foreign governments and their multinational companies to push so hard to bring China into the world trading system – that aforementioned access to the Chinese market – is stalling out way short of expectations. In fact, as Sternberg documents, “China makes a disproportionately low contribution to Western firms’ bottom lines relative to its population and potential.”

To support these claims, the author cites data showing that the China market’s share of the revenues of several big Western economies’ multinational businesses (including America’s) remains well below ten percent. And this even though:

(a) more than twenty years have passed since China’s entry into the World Trade Organization (WTO), which entitled the People’s Republic to nearly all the benefits of integration with the global economy (while de facto enabling it to avoid most of the obligations); and

(b) China’s share of global economic output (which should approximate its share of the worldwide market for goods and services) had reached more than 15 percent in 2020 – and this percentage had jumped by some 50 percent in 2013.

But even these figures may be exaggerated, at least in the U.S. case. The financial research firm Calcbench has examined the share of revenues 67 of companies in the Standard & Poor’s 500 stock index earned in China in 2020. It came to a total of 10.48 percent – a little higher than Sternberg’s figure.

Most of the firms most reliant on China revenues, however, like Qualcomm (59.5 percent of its global total), Texas Instruments (55.5 percent), Lam Research (35.1 percent), and Applied Materials (31.7 percent) are either semiconductor manufacturers, producers of semiconductor manufacturing equipment, or makers of other advanced electronics parts and components. And large percentages of their China revenues are sold to the China-based factories that turn out consumer electronics products (like personal computers and cell phones), and that export huge shares of their own output. That is, those revenues aren’t really earned by sales to final customers located in China. They’re earned by sales to final customers located outside China (like the United States).

Just how large are some of these export percentages? According to this source and this source, 64.4 percent of all the cell phones made in China were sold overseas. According to this source and this source, 65.04 percent of the notebook computers made in the People’s Republic were exported that year. So that should more than satisfy the definition of “large”.   

One important claim that Sternberg gets wrong, however – that contention that “Countries wanted to open China to trade because of its population of more than 1.4 billion consumers. Their ascent into the global middle class, buying U.S. and European goods and services along the way, was the great prize to be won.”

In fact, as Ohio Democratic Senator Sherrod Brown explained in 2007, the companies “really had way more interest in one billion Chinese workers” when they were lobbying so hard to bring China into the WTO. I.e., they recognized at that point that China would long remain far too poor to become a major final market for their goods and services. But they were rightly confident that, with foreign training and management, China’s vast population could become highly productive (but still extremely cheap workers) long before that. A 2000 study by yours truly presented abundant evidence 

And China’s continuing heavy reliance on exports means that for all its spectacular progress, the People’s Republic is still far from the point where it can generate acceptable levels of growth and employment by relying on its own market for sales. In other words, for decades, the United States in particular -which has run the by far the world’s biggest trade deficit with China – has enjoyed much more leverage over China than vice versa. 

This doesn’t mean that Sternberg is under any illusions that further decoupling the U.S. and other foreign economies from China’s would be painless (though the still relatively self-sufficient U.S. economy would obviously feel much less – short-term – pain). But as he notes, China’s economy is running into big, growing problems – in particular a massive, already deflating real estate bubble that is undercutting the ability to China’s consumers to maintain current levels of spending on anything. In addition, Xi Jinping’s evident determination to squeeze foreign companies out of China as soon as feasible is leaving these foreign companies and economies little choice over the longer run.  So shouldn’t the United States and the rest of the world take these hints more closely to heart and greatly step up decoupling from China?  

Making News: On Internet Radio Tonight…& More!

09 Thursday Jun 2022

Posted by Alan Tonelson in Making News

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deglobalization, global economy, globalization, Gordon G. Chang, Making News, The Hrjove Moric Show, TNT Radio

I’m pleased to announce that I’m scheduled to appear tonight on “The Hrjove [pronounced “Her-vo-ye”) Moric Show” on the internet radio network TNT Radio. The segment is scheduled to begin at 9 PM EST, promises to cover a wide range of domestic and international subjects, and you can listen live at this link by clicking (wait for it!) “Listen Live” in the upper right hand corner.

As usual, if you can’t tune in, I’ll post a link to the podcast of the inteview as soon as it’s available.

In addition, it was great to see Gordon G. Chang quote me in his latest op-ed on the big changes transforming the global economy lately. Click here to read.

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

Following Up: Podcast Now On-Line of NYC Radio Interview on Ukraine & Inflation…& More!

19 Tuesday Apr 2022

Posted by Alan Tonelson in Following Up

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Biden administration, Buck Showalter, China, decoupling, Donald Trump, Following Up, Frank Morano, globalization, inflation, Major League Baseball, New York Mets, tariffs, The Other Side of Midnight, Trade, trade war, Ukraine, Ukraine-Russia war, VOA, Voice of America, WABC AM

I’m pleased to announce that the podcast is now on-line of my interview late last night on Frank Morano’s “The Other Side of Night” radio show on New York City’s WABC-AM. Click here for a lively conversation on the Ukraine war, inflation, global economic decoupling, tariffs…and Buck Showalter???

In addition, a video is finally available of a Voice of America (VOA) interview I did last Monday, April 11, on the state of U.S.-China economic relations. Happily, the Chinese language service of this U.S. government foreign broadcasting agency is now offering telecasts that feature the English-language audio of non-Chinese speakers (like me) with the Chinese content in subtitles. So it’s much easier for non-Chinese speakers to understand that non-Chinese content than under the previous system, which featured simultaneous Chinese translation over the interviewees’ barely audible voice.        

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

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Blogs I Follow

  • Current Thoughts on Trade
  • Protecting U.S. Workers
  • Marc to Market
  • Alastair Winter
  • Smaulgld
  • Reclaim the American Dream
  • Mickey Kaus
  • David Stockman's Contra Corner
  • Washington Decoded
  • Upon Closer inspection
  • Keep America At Work
  • Sober Look
  • Credit Writedowns
  • GubbmintCheese
  • VoxEU.org: Recent Articles
  • Michael Pettis' CHINA FINANCIAL MARKETS
  • RSS
  • George Magnus

(What’s Left Of) Our Economy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Our So-Called Foreign Policy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Im-Politic

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Signs of the Apocalypse

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Brighter Side

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Those Stubborn Facts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Snide World of Sports

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Guest Posts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

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Current Thoughts on Trade

Terence P. Stewart

Protecting U.S. Workers

Marc to Market

So Much Nonsense Out There, So Little Time....

Alastair Winter

Chief Economist at Daniel Stewart & Co - Trying to make sense of Global Markets, Macroeconomics & Politics

Smaulgld

Real Estate + Economics + Gold + Silver

Reclaim the American Dream

So Much Nonsense Out There, So Little Time....

Mickey Kaus

Kausfiles

David Stockman's Contra Corner

Washington Decoded

So Much Nonsense Out There, So Little Time....

Upon Closer inspection

Keep America At Work

Sober Look

So Much Nonsense Out There, So Little Time....

Credit Writedowns

Finance, Economics and Markets

GubbmintCheese

So Much Nonsense Out There, So Little Time....

VoxEU.org: Recent Articles

So Much Nonsense Out There, So Little Time....

Michael Pettis' CHINA FINANCIAL MARKETS

RSS

So Much Nonsense Out There, So Little Time....

George Magnus

So Much Nonsense Out There, So Little Time....

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