Following Up: Welcome Shrinkage of China’s Ties with U.S. News Organizations

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Boston Globe, Chicago Tribune, China, China Daily, ChinaWatch, Following Up, Houston Chronicle, journalism, Mainstream Media, news media, propaganda, The Los Angeles Times, The New York Times, The Wall Street Journal, The Washington Free Beacon, The Washington Post, transparency

Since Memorial Day is – or at least should be – a remembance and tribute to what’s best about America, it seems appropriate to report some good news: Some of the nation’s leading news organizations have cut some not-at-all-trivial ties with China.

These ties concern their decision to stop distributing with their print editions and posting on their websites a Chinese government propaganda vehicle called ChinaWatch. As I wrote more than two years ago, their decision to present ChinaWatch and the form of this presentation created two problems. First, although the Constitution’s First Amendment should authorize giving even possibly genocidal, increasingly hostile dictatorships the right to present their material in the United States, journalistic ethics and (I believe) the law should require the clear labeling of any such material as foreign government products.

I argued that neither the Chinese government nor the news organization’s carrying their material met these obligations.

Second, since ChinaWatch was paid advertising, it became a source of revenue for the news organizations that featured it, and because these news organizations covered the Chinese government, its appearance raised conflict of interest questions that at least should have – but weren’t – have been forthrightly acknowledged. Importantly, some news organizations have received millions of dollars from Beijing – not decisive sums in terms of the overall finances of some of them, but not trivial, either.

Happily, these problems have now been reduced, although not eliminated. The New York Times said about a year after my post that it had stopped accepting such material from all state-run media. According to this Tibetan dissident publication, the same goes for The Wall Street Journal. The Washington Post says it has not run or distributed ChinaWatch specifically since 2019.

Official U.S. government lobbying records show, however, that multi-million dollar relationships still exist between several major U.S. news organizations and Beijing’s propaganda machine. As reported last week by the Washington Free Beacon, over the last six months,

“China Daily [the parent organization of ChinaWatch] paid more than $1.6 million for advertising in Time magazine, the Los Angeles Times, Financial Times, and Foreign Policy magazine, according to disclosures filed with the Justice Department. The Beijing-controlled news agency paid another $1 million to American newspapers, including the L.A. Times, Chicago Tribune, and Houston Chronicle, to print copies of its own publications.”

And unlike the The New York Times, the Post, and the Journal, the Free Beacon observes,

“Many of the newspapers [still] working with China Daily face severe financial problems. The Los Angeles Times furloughed workers last year as advertising revenue cratered during the coronavirus pandemic. Papers like the Chicago Tribune and Boston Globe have failed to turn a profit for years.”

The nation’s news organizations have more than enough credibility problems these days (see, e.g., here and here). Severing all official ties with Chinese and other foreign government media, or at least making every effort to publicize them to their readers, could only help them regain some of that trust.

(What’s Left of) Our Economy: More Evidence of U.S. Manufacturing’s Tariff-Bolstered Resilience

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CCP Virus, China, Commerce Department, coronavirus, COVID 19, imports, Jobs, Labor Department, manufacturing, recession, recovery, tariffs, The Wall Street Journal, Trade, Trump, value added, Wuhan virus, {What's Left of) Our Economy

I must confess that I’m more than a little confused. On the one hand, I read in The Wall Street Journal two days ago that the Trump administration “used tariffs to try to drive manufacturing back home, although growth in factory jobs stalled once the administration resorted to levies that drove up costs for many factories.”

On the other hand, I read in The Wall Street Journal yesterday that U.S.-based manufacturing is recovering “quicker than expected” from the CCP Virus- and lockdowns-induced American recession. Moreover, this stellar performance is taking place amid “higher costs for materials used in everything from kitchen cabinets to washing machines to automobiles.”

Stranger still: Unquestionably, among the cost drivers for these materials have been those Trump tariffs, especially on imports from China – which are not only wide-ranging (covering some $360 billion worth of Chinese-made products when they were imposed in phases), and steep (with most standing at 25 percent).

In fact, “stellar” really isn’t the best adjective for the manufacturing surge. Try “record-shattering.” For the Commerce Department’s “GDP by Industry” statistics show that between the second and third quarters of this year, manufacturing value-added (an output measure that tries to eliminate the double-counting that results from including in manufacturing production levels both final products and all the parts, components, and materials that go into those products) shot up by 13.34 percent at an annual rate. That’s not only never happened before. It’s never come close to happening before – at least since 2005, when the relevant data series began.

To be fair, this growth stemmed from the rubberband-like effect of partial virus-related reopenings of economic activity. Specifically, it followed a record 12.47 percent nosedive between the first and second quarters. But who can reasonably doubt that the immense scale of the Trump tariffs suppressed the amount of Chinese goods that could have satisfied this renewed demand, as they had done so typically in the recent past – especially since China’s export machine recovered exceptionally quickly from the People’s Republic’s own virus outbreak and massive shutdowns?

Moreover, who can reasonably doubt that the exclusion of these imports from the U.S. market more than offset whatever price increases the tariffs created? Because however much these levies are reducing companies’ earnings and profits, every sale lost to a China-based rival – whether at home or abroad – means much less in the way of earnings and profits. 

And this strong American manufacturing growth pickup has put an end to that short-lived manufacturing jobs slowdown. From April of last year (when the CCP Virus’ economic impact peaked on a monthly basis ) through December, Labor Department data show that U.S. industry’s payrolls are up by 820,000 – much faster growth than the 37,000 increase during the same period in 2019. Of course, the incredibly abnormal sudden stop-and-start of virus-era economies not just in the United States but the world over (and in largely unsynchronized ways) sharply limits the use of all such comparisons, because they have so relatively little to do with the economic fundamentals.

At the same time, though, it’s entirely reasonable to expect U.S. manufacturing production and employment to keep expanding as post-CCP Virus normality returns. And as long as the Trump tariffs remain largely in place, the prospect of a renewed Chinese import flood will be one major headwind that domestic industry won’t have to fear.

Im-Politic: The Swalwell Spy Scandal News Blackout Extends Far Beyond the NY Times

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ABC News, Associated Press, Bloomberg.com, CBS News, China, Christine Fang, Eric Swalwell, espionage, Fang Fang, Fox News, Im-Politic, Mainstream Media, McClatchy News Service, media bias, Michael Bloomberg, MSM, MSNBC, NBC News, NPR, PBS, Reuters, spying, The New York Times, The Wall Street Journal, USAToday

If you’re a news hound, you know that The New York Times, long – and long justifiably – seen as the most important newspaper in the world, has devoted exactly zero coverage to a bombshell report earlier this month that California Democratic Congressman Eric Swalwell several years ago was pretty successfully targeted by a spy from China.

And if you don’t know about this Swalwell story, you should. He’s a member of the House Intelligence Committee, which means that he’s been privy to many of the nation’s most important national security secrets. In addition, he has long been a genuine super-spreader of the myth that President Trump is a Russian agent. So although there’s no evidence so far that Swalwell either wittingly or unwittingly passed any classified or otherwise sensitive information to this alleged spy, understandable questions have been raised about his judgement and therefore his suitability for a seat on this important House panel. Further, he hasn’t denied having an affair with this accused operative, who was known as Christine Fang here, and Fang Fang in her native country.

In other words, it’s a pretty darned big story, and The Times decision to ignore it completely (not even posting on its website wire service accounts of developments) is a flagrant mockery of its trademark slogan “All the News That’s Fit to Print” and clearcut example of media bias – especially since the paper showed no reluctance to report on his abortive presidential campaign this past year or his (always unfounded) attacks on Mr. Trump.

At the same time, if you don’t know about l’affaire Swalwell, you’ve got a pretty compelling excuse. Because The Times has by no means been alone in its lack of interest. Joining it in the zero Swalwell coverage category since the China spy story broke on December 8 have been (based on reviews of their own search engines):

>The Associated Press – possibly the world’s biggest news-gathering organization

>Reuters – another gigantic global news organization

>Bloomberg.com – whose founder and Chairman, Michael Bloomberg, is a leading fan of pre-Trump offshoring-friendly China trade policies

>USAToday

>NBC News

>CBS News

>MSNBC (The FoxNews.com report linked above says this network covered this news once briefly, but noting shows up on its search engine.) 

>National Public Radio (partly funded by the American taxpayer)

>McClatchy (another big news syndicate)

Performing slightly – but only slightly – better have been:

>PBS (one reference on its weekly McLaughlin Group talk show – nothing on its nightly NewsHour)

>ABC News (one news report)

>The Wall Street Journal (one news article, one opinion column)

The Swalwell story isn’t the world’s, or the nation’s, or even Washington’s biggest. But it’s unmistakably a story, and the apparent blackout policy of so many pillars of journalism today, coming on the heels of similar treatment of the various Hunter Biden scandal charges, further strengthens the case that a national institution that’s supposed to play the critical role of watchdog of democracy has gone into a partisan tank.

The only bright spots in this picture? Social media giants Twitter and Facebook haven’t been censoring or arrogantly and selectively fact-checking Swalwell-related material. Yet.

(What’s Left of) Our Economy: Why China Trade Will Long Remain a Loser for Americans

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China, export-led growth, The Wall Street Journal, Trade, trade surpluses, Trefor Moss, Trump, {What's Left of) Our Economy

Since the United States decided to expand trade and commerce with China as fast as possible, numerous books and studies (including mine – see here and here) have tried to make the case first that this approach was certain to work out disastrously for the domestic economy, and later, that this scenario was actually unfolding.

If only when the major decisions were being made, or when they still could have been reversed relatively painlessly, could something like this new Wall Street Journal article have been published. For Trefor Moss’ report on China’s struggling export industries makes unusually clear that if pre-Trump presidents and Congresses (representing both Democrats and Republicans) truly tried to use trade policy to strengthen America’s productive core and its workers, facilitating business with China would have been one of their lowest priorities.

The reason, as Moss indicates: China’s economic strategy has always been so dependent on boosting exports much more than imports – in the words, on generating and increasing trade surpluses – that ever greater bilateral economic ties were never capable of creating more opportunities for domestic companies and workers than they wiped out.

Indeed, decades after Washington bipartisanly began to champion “coupling” the two countries, and throughout which Americans were constantly promised that China’s was going to become an economy driven more by domestic rather than by U.S. and other overseas demand, and therefore a huge winner for America on balance, Moss’ piece shows that these promises look more specious than ever. For even today, entire geographic regions of the People’s Republic and entire Chinese industries literally have nothing to do with supplying the needs and desires of Chinese customers, and everything to do with servicing foreign – and especially U.S. – markets.

Four particularly revealing observations in Moss’ article:

“Many of the products made [in the huge export hub of Yiwu], such as Christmas decorations and other low-cost, labor-intensive commodities, simply aren’t needed domestically in significant quantities. Only a small percentage of China’s 1.4 billion people are openly Christian, according to the U.S. human-rights group Freedom House.”

>”’Yiwu’s challenge is that the domestic market doesn’t have the stomach to consume all these products,’ said Dan Wang, chief economist at Hang Seng Bank China. ‘They’re not really suitable for domestic use.'”

>”Even getting products that Chinese people do want into domestic circulation will take time since Yiwu’s merchants lack local distribution connections, according to Andrew Batson, director of China research for Gavekal, a Hong Kong-based research firm.”

>”While consumption as a share of gross domestic product has risen over time in the U.S., reaching 68% in 2018, China’s has steadily declined to just 39%.”

Not explained by Moss, however, (and I’m not being critical here) is the fundamental explanation for this Chinese export orientation – and throughout the countries’ leading production cities and regions, not just Yiwu: It’s not simply a preference of the Chinese regime’s. It’s an iron necessity for achieving the country’s ambitious economic development goals, and as a result, for safeguarding China’s rulers paramount priority – keeping the populace happy enough to keep this dictatorship in power.

For as I pointed out most recently in this post, however much wealth it’s gained in recent decades, China’s population collectively still remains too poor by itself to fuel the growth needed to continue raising living standards robustly. Indeed, Chinese incomes have long remained so low in absolute terms that even after its lengthy run of spectacular progress, China still needs foreign incomes to fill the demand gap left by its inability to consume adequately.

In recent years, much of official Washington, and even the Swamp full of hangers on and consultants and lobbyists that surrounds it, have become aware that national security worries call for rethinking longstanding U.S. trade policies with China.  Moss’ article is a valuable reminder that the purely economic case for a trade policy reversal remain compelling, too.

Im-Politic: You Bet the Mainstream Media Has Become Troublingly Woke – & It Matters

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FredBauerBlog, Im-Politic, Mainstream Media, media bias, MSM, race relations, racism, Tablet, The New York Times, The Wall Street Journal, The Washington Post, wokeness, Zach Goldberg

As RealityChek regulars know, I’ve long been strongly critical of the American Mainstream Media (MSM), and presented any number of examples of its brazen bias – including, and in fact especially, in ostensible straight news reports. My main focus has the pronounced slant of these big, influential news organizations’ in favor of interventionist U.S. foreign policy globalism, supportive of Open Borders-like immigration policies, against any departures from jobs- and growth-killing trade agreements, and unremittingly hostile to anything said or done by President Trump.

But I’ve also paid attention to media bias on largely domestic issues, and in particular on the adoption (notably by The New York Times) of a clear perspective endorsing – and often embodying – the emergence of a highly intolerant strain of progressivism and in American life, and a view of the country’s society, politics, and history stressing the central role of what’s called systemic racism.

At the same time, even though I’ve cited numerous examples of all the above developments, there still aren’t enough to prove a trend. Recently, however, exhaustive evidence has emerged on the systemic racism front, and we can thank a political science student named Zach Goldberg who’s conducted wide-ranging research on the subject for his Ph.D. and just published in the on-line magazine Tablet.

Goldberg has performed the kind of content analysis that’s only become possible with new information technology tools, literally counting the number of times The Times, The Washington Post, and The Wall Street Journal in particular have used words describing what he calls “wokeness”: “a prevailing new political morality on questions of race and justice that has taken power at The Times and Post—a worldview sometimes abbreviated as “wokeness” that combines the sensibilities of highly educated and hyperliberal white professionals with elements of Black nationalism and academic critical race theory.”

His main finding: this racial wokeness’ takeover of The Times and the Post in particular preceded the death of George Floyd at the hands of Minneapolis police by several years; that it’s completely unrelated to any change in levels of racism in the United States; and that it at the very least correlates – and may have played a big role in triggering – a significant rise in the numbers of Americans who agree with the woke/systemic racism claims.

This graphic shows the skyrocketing increase in the use of wokeist race relations terms by these publications. The absolute percentages are of course tiny. But keep in mind that they represent shares of all the words in these publications, and that recent years haven’t exactly been devoid of major developments in countless other fields.

This graphic, when combined with the first, indicates how robustly American perceptions of racism’s pervasiveness has risen in tandem with the Mainstream Media’s treatment of the phenonemon. And the strongest effect has been among white liberals.

Indeed, although the graphic below covers a somewhat different timeframe, it makes clear that not only did white Democrats’ views on the power of American racism increase as the Mainstream Media became much more racially woke, but minority Democrats’ views of this subject actually decreased during the December, 2006-June, 2015 period. That’s compelling evidence that these news organizations became woke racially even though the racism-in-America situation might actually have improved.

Although I clearly disagree with most of what I see as the fundamentals of woke thinking, like Voltaire, I would resolutely defend anyone’s right to express them. And that includes Mainstream Media reporters and pundits and editorial writers alike. All I (and others like me) would insist upon is that news writing clearly be labeled newswriting, and opinion clearly be labeled opinion. Goldberg’s research makes a powerful case that way too much of what Americans have always regarded as reporting of the facts that at least tries to be objective has turned into propagandizing, and that the nation is a much more polarized and angrier place as a result.

P.S. Thanks to Fred Bauer, whose FredBauerBlog always makes excellent, important reading, for calling my attention to Goldberg’s work.  

 

Those Stubborn Facts: A High Cost of Easy Money?

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bailouts, capitalism, corporate finance, debt, interest rates, monetary policy, Ruchir Sharma, stimulus, The Wall Street Journal, Those Stiubborn Facts, zombie companies

Share of publicly traded companies in the U.S. that were zombie companies*, 1980s: 2 percent

Share of publicly traded companies in the U.S. that were zombie companies, “by the eve of the pandemic”: 19 percent

*”[C]ompanies that, over the previous three years, had not earned enough profit to make even the interest payments on their debt.”

(Source: “The Rescues Ruining Capitalism,” by Ruchir Sharma, The Wall Street Journal, July 24, 2020, https://www.wsj.com/articles/the-rescues-ruining-capitalism-11595603720 )

 

(What’s Left of) Our Economy: The Woke Street Journal (on Trade)?

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America First, free markets, free trade, Gerard Baker, globalization, Mainstream Media, The Wall Street Journal, Trade, {What's Left of) Our Economy

Since it’s already 11 AM as I begin writing, and the Biden presidential campaign still hasn’t released the full version of a broad manufacturing and economy blueprint scheduled to be issued today (as opposed to this summary), and since it’s still not clear when the document will appear, I’ll focus for now on a development that’s surely more startling, and possibly more important in the long run.

It’s a recent Wall Street Journal column and its viewpoint on trade policy, and it was so mind-blowing that my first reaction was that the author must be dropping acid.

More specifically, the piece was by Gerard Baker, who served as the Journal‘s Editor-in-Chief from 2013 to 2018, and is now an editor at large. That was clearly a demotion, but there’s no indication that the move stemmed from any unhappiness about Baker’s overall policy views. (He was thought by some to be soft on President Trump, but Trump trade policies were never brought up.) 

Yet on Monday, a publication whose editorial positions have from its beginnings practically been defined by all-but-uncritical worship of free markets and their international counterpart, free trade, ran a Baker piece making the following points:

> “The modern woke corporation publicly disdains and derides the values on which the nation—and its profits—were built, even as it pursues global opportunities at the expense of American communities”; and

> Cleaning out the “rot in American capitalism” must include “ensuring that corporations prioritize Americans over their globalist, progressive agendas.”

I know that I recently reported a big Journal position switch – opposing decades of pre-Trump policies that sought to tie America’s economy more closely to China’s. But much of the case made by the editorial board was grounded in national security – which is entirely understandable, but narrower than what Baker seems to be calling for.

After all, his new views didn’t mention national security at all. They were a full-throated demand that Washington’s international economic policies prioritize America First.

Baker isn’t the full editorial board. But neither is his column an example of the kind of tokenism that’s typically shaped Mainstream Media editorial departments’ (including the Journal’s) treatment of trade and related economic policy issues – interrupt a continuing flow of articles singing the praises of conventional trade and globalization policies with the occasional contrarian piece by a fringe figure (like left-wing consumer advocate Ralph Nader or far-right conservative Pat Buchanan), or every once in a while by a leading Democratic party trade critic like Ohio Senator Sherrod Brown.

The effect of these practices clearly was to foster the impression that for the most part only genuine oddballs could question the pro-free trade consensus. But even though Baker left his former position under something of a cloud, he’s not a professional gadfly. He’s a lifelong member of The Club. Just look at these credentials: the Bank of England, Lloyd’s, The Times of London, the Financial Times, the BBC. Even Oxford! So it’s tough to see his latest as anything but another significant (and welcome) straw in the wind.

In fact, it raises a fascinating question: Which part of the Journal will repudiate free trade idolatry fastest and most completely? Its highly and openly (and legitimately) opinionated editorial page? Or its straight news department, which like its counterparts elsewhere in the Mainstream Media, often act just as opinionated – but more subtly so?

Our So-Called Foreign Policy: Trump’s Potentially Disastrous Germany Troops Decision

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America First, Cold War, deterrence, free-riding, Germany, military spending, NATO, North Atlantic treaty Organization, nuclear war, Our So-Called Foreign Policy, Poland, The Wall Street Journal, tripwire, Trump

So where will President Trump send those U.S. troops he’ll be moving out of  Germany? That may sound like an odd question to post about, given the widespread anti-racism and police brutality protests in the United States, still deeply depressed activity across the national economy, some signs of a CCP Virus second wave, and of course the intensifying presidential election campaign.

But precisely because, as Americans hopefully are learning, crises can spring up seemingly out of nowhere, it’s a crucial subject to examine. For if President Trump comes up with the wrong answer – as is entirely possible based on what’s known so far – the stage could be set for a terrifying and completely needless nuclear showdown with Russia that could all too easily result in a nuclear attack on the U.S. homeland. And in a supreme irony, these dangers all stem from what’s been shaping up as one of the President’s sharpest and most dangerous departures from the America First principles on which he’s based much of his foreign policy.

But let’s begin at the beginning. As first reported last week in The Wall Street Journal, and pretty strongly confirmed last week, the President has decided to reduce the numbers of active duty American servicemen and women stationed permanently in Germany from 34,500 to 25,000, and cap this presence at that level.

If the troops would be heading further west on the European continent, or heading back home, that would be great news for Americans, as it would dramatically reduce nuclear war risk. As I’ve frequently written, for decades, (although in much greater numbers during the Cold War), U.S. forces have been deployed in Germany not to defend Germany militarily, but to function as a tripwire.

That is, American policymakers were under no illusion that these units would strong enough (even in tandem with the forces of U.S. allies in the North Atlantic Treaty Organization – NATO – like Germany) to beat back an attack from the conventional forces of the Soviet Union and its satellite allies. But Washington believed that the U.S. presence in West Germany – which bordered then-Communist East Germany) would deter a Soviet attack in the first place precisely because of its vulnerability. Specifically, the specter of American soldiers being  decimated would force an American President to try saving them with nuclear weapons. The resulting prospect of the conflict threatening to escalate to the all-out nuclear leve – which would destroy the Soviet Union, too –  would supposedly be enough to keep Moscow at bay.

As I’ve also written, this strategy arguably made sense during the Cold War, when its aim was keeping in the free world camp West Germany and Western Europe and all of its formidable economic power and therefore military potential. Today, however, it not only makes no sense from a U.S. standpoint. It has become positively deranged, as the likeliest targets of post-Soviet Russian aggression (and the arenas where the U.S. forces would likeliest be sent if the shooting starts) are not the longstanding NATO members of Western Europe. Instead, they’d be sent to the newer NATO members of Eastern Europe – most of which border Russia, but whose security was never viewed as a vital U.S. interest (that is, worth risking war over), even in the Cold War days.

Even less excusably, sizable American forces have remained in Germany and elsewhere in Western Europe in part because Germany and most of the other allies keep skimping so shamefully on their own militaries – even though most have hardly been short of resources.

No ally has been a more disgraceful military free-rider than uber-wealthy Germany, and the President has been right to complain about German and broader stinginess, and to threaten major consequences if the allies’ defense budgets aren’t significantly boosted. But as I’ve also explained, he’s focused on the wrong objective: securing a fairer deal for U.S. taxpayers.

Instead, all along, he should have been seeking the removal of the American military either from Europe altogether, or its transfer far enough from the front lines to reduce meaingfully the odds of it getting entrapped in a new East-West conflict immediately. For those are the kinds of moves that would shrink to insignificance the chances of the United States getting hit by Russian nuclear warheads because of a combination of its forces being placed in a completely impossible position militarily, and because U.S. allies have been too cheap to pay for their own security.

Worst of all, though, far from moving U.S. forces away from the front lines of a Russian attack, Mr. Trump consistently has been moving them closer, by cautiously but steadily stationing more in Poland and elsewhere in Eastern Europe. And numerous reports have suggested that Poland is exactly where at least some of the 9,500 U.S. troops leaving Germany will be heading.

Because a final decision to transfer the troops to Poland hasn’t been made yet, there’s still hope that this potentially disastrous mistake can be avoided. But that outcome seems unlikely without a serious intervention from a Trump advisor influential enough to produce an about-face. Anyone out there know how I can get a hold of Jared, Ivanka, or Melania?

(What’s Left of) Our Economy: Is The Wall Street Journal Now Getting Woke on China Trade?

Tags

allies, China, decoupling, dual-use technologies, health security, high tech goods, Huawei, investment, manufacturing, national security, technology, The Wall Street Journal, Trade, {What's Left of) Our Economy

Hell has frozen over! Death and taxes are no longer certain! Water is flowing uphill!

Those are just some of my calmer reactions upon learning that The Wall Street Journal editorial board has just endorsed the idea of a “partial decoupling” of America’s economy from China‘s.

Given today’s national mood, and the marked turn it’s taken against various domestic and international outrages committed by China, this may not sound surprising – especially if you (unlike me) haven’t immersed yourself in the trade policy wars Americans have waged against each in recent decades. But in a Mainstream Media long world filled with staunch supporters of the kinds of approaches to foreign trade and international commerce generally pursued by pre-Trump U.S. Presidents, the Journal‘s editorial writers have been far and away the staunchest. Indeed, their arguments usually read like they’ve been taken straight out of standard economic textbooks, without even paying lip service to real world complications.

Not that the Journal ever championed unfettered trade and commerce in war-time. (This exception was formally identified by the so-called Father of Capitalism, Adam Smith .) And not that it ever supported selling, say, weapons to the Soviet Union during the Cold War, or encouraging investment in North Vietnam during the 1960s and early 1970s.

But the editorial doesn’t describe today’s world in those terms. Instead, it notes that  “partial decoupling may be necessary to prevent China from accumulating more leverage to bully the free world.” and that “U.S. and allied dependence on Chinese technology in a crisis….could allow the Chinese Communist Party to disrupt or shut down parts of foreign economies—or use the threat as political leverage.”

And the Journal‘s editorial board is right. Those threats are more than serious enough to justify departures from conventional free trade and broader global economic policies – which understandably prize economic efficiency and low prices and individual economic freedoms during peacetime, but which have struggled to deal with those all too commonplace gray periods between tranquility and all-out conflict.

Yet however satisfying this apparent U-turn will be to the Journal‘s longtime trade antagonists (and take it from me – it’s really satisfying), for the sake of intellectual honesty, and of U.S. national interests, its editorial board will need to go much further. And so will other influential voices who are acting newly woke about the China threat, but who may mainly be looking for safe harbors during what they hope is merely a passing storm. Several reasons stand out, and all stem from the critical reality that no industry exists in isolation from other areas of the domestic economy – let alone other industries.

So to all the ostensible pragmatists who, for example have recognized – at least rhetorically – that national security needs to come before free trade and commerce, it’s high time to recognize the implications of a development you’ve long claimed to understand: that many products crucial for national defense also have major and even predominantly civilian functions, and that for such such dual-use goods and technologies (and not only semiconductors, but high-value manufactures of all kinds) strong domestic manufacturing bases are essential.

Moreover, maintaining strong domestic manufacturing bases requires maintaining robust production complexes for all the key parts and components of the final products.

These imperatives also apply to critical healthcare goods. For example, it doesn’t do much good to set as a goal making massive numbers of the most effective facemasks in America without also ensuring adequate domestic supplies of the raw materials and the machinery needed to make them. And currently, the global production centers are in China. Similarly, what’s the point of resolving to restore national self-sufficiency in ventilators when the nation remains woefully short of the circuit boards, sensors, computer chips, tubes, and numerous other parts they’re made of?

In addition, as pointed out repeatedly on RealityChek, the secure supply problem goes way beyond China. During the CCP Virus period, literally dozens of countries, including long-term treaty allies, have embargoed or curbed exports of healthcare equipment of all types. That is, as with war, there are few free traders during a pandemic.

The lessons of dealing with both China and the CCP Virus should be screamingly obvious: In their own ways, they both represent systemic problems, and therefore require systemic, not entity-by-entity or country-by-country, responses. Acknowledging these lessons will be the test of whether the Journal‘s editorial writers and others of their ilk actually are ready to play useful roles in developing realistic U.S. trade policies, or whether they’re simply posturing.

Glad I Didn’t Say That: No CCP Virus Learning Curve for Globalization Zealots

Tags

China, Daniel Griswold, free trade, George Mason University, Glad I Didn't Say That!, global supply chains, globalization, health security, healthcare goods, Mercatus Center, Paul Hannon, Stu Woo, supply chains, The Wall Street Journal, Trade

“US supply chains for medical goods are already diversified and are not overly reliant on China.”

Daniel Griswold, Mercatus Center, George Mason University, April 3, 2020

Number of countries that have imposed export curbs on healthcare-related goods, 2020: 85

Number of individual healthcare-related goods export controls imposed, 2020: 186

– The Wall Street Journal, May 25, 2020

(Sources: “The Coronavirus Should Not Prompt Us to Rethink Globalization,” The Bridge, Mercatus Center, George Mason University, April 3, 2020, https://www.mercatus.org/bridge/commentary/coronavirus-should-not-prompt-us-rethink-globalization and “Steep Drop in Trade Flows Shows Pitfalls of Cross-Border Supply Chains,” by Paul Hannon and Stu Woo, The Wall Street Journal, May 25, 2020, https://www.wsj.com/articles/steep-drop-in-trade-flows-shows-pitfalls-of-cross-border-supply-chains-11590416983)