The Washington Outsider

Free Trade: 8 benefits for the Chinese government

11/15/2014

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Using the Asia-Pacific Economic Cooperation (APEC) summit to promote the Free-Trade Area of the Asia Pacific initiative, China revealed how it intends to counter the effects of the proposed Trans-Pacific Partnership (TPP), which excludes China.  In persuading the US and Russia to spend the next-two years studying the impact of the proposal, China is seeking to undermine any disadvantage TPP would have created for the world’s second largest economy.

Where TPP would give the United States an advantage when competing with China and help drive US consumers away from Chinese imports and encourage greater investment/consumption from other less-powerful, friendlier Asian exporters, FTAAP would solely undermine the ability of governments to tax imports.  Consumers might benefit in terms of lower prices and greater access to goods from around the region, however, the greatest benefits would go to the Chinese government.

Although it seems fairly odd for a Communist government to embrace Free Trade, China is run more like a business than a country.  From its state-owned businesses to its massive subsidies to its military’s corporate espionage to its heavy-handed regulatory infrastructure designed to favor Chinese businesses over foreign competitors, instead of providing for safety, pollution, and labor rights, China is a business like no other.

Supporters of Free Trade believe a lack of tariffs leads to lower prices for consumers and tax revenue for governments due to increased economic growth from increased trade, yet even they would have to agree the most direct, most substantial benefits go to corporations that export their goods and invest in foreign markets.  The Chinese leadership is willing to lose on tariff revenue and open its economy to more foreign goods, because it can make significantly more through overseas investments due to expanded sales and access to cheaper labor for its industries, which is not true for other governments, but this is only a start to the benefits for the Chinese government.
1.  Free trade spreads, because the immediate economic benefits are often more obvious than the broader costs while government officials fear their countries will become “uncompetitive,” if they do not engage in free trade.


Because the US, as the world’s largest economy, engages in free trade, it is far more difficult for poorer countries to say no to lower taxes and less regulation.  Adding China to the list will only it make it that much more difficult to reduce the negative impact of free trade.

Where the US and other countries should recalibrate their trade agreements to better reflect the interests of their countries on constant basis, free trade makes it very hard to impose any boundaries on industries.  This means China’s embrace of FTAAP pressures the United States to compete by disadvantaging its businesses and workers. 

2.  Looking at the United States and most of the West, expanded income inequality driven by growing poverty and ballooning national debt demonstrates what happens when American workers “compete” against low-wage workers and governments “compete” against low tax rates/a lack of regulation.  Since China is poorer than the United States, particularly on a per capita basis, America must lower its standard of living and government expenses to those of China in order to compete in a free trade system. 

3.  Because the Chinese economy offers its workers significant income inequality as well, even though it is supposed to be a communist country, the elites of China, both in government and industries, have a great amount of discretionary funds they can use to invest in other countries.  In buying out other countries, China gains greater leverage over those countries and makes it far more difficult for the governments of those countries to dissent from Chinese policies.  At the same, it helps concentrate the wealth of the global economy into the hands of the Chinese elite.

4.  Increased imports into China is actually a necessity that is only going to grow over the next few decades as national resources struggle to keep up with the demands of 1.3 plus billion people.   By turning to free trade now, the Chinese government can reduce the cost of goods that China cannot readily produce and shift the Chinese economy toward products and services, including financial services, which it can provide in the future.

5.  Just as in the West, increased imports from countries where workers are paid less means Chinese workers can expect greater competition for jobs.  This will, in turn, add downward pressure on wages.  Given the size of the Chinese population and their growing demands for a global “middle class lifestyle,” it would be far easier for the Chinese government to suppress their incomes than to help 1.3 billion people achieve their version of “the American Dream ” by building a stable economy that can fulfill those demands and keep prices in check, so the elites can afford their privilege .

Considering the sentiments of Hong Kong’s Beijing-appointed Chief Executive Leung Chun-ying in response to demands for universal suffrage during the Hong Kong Umbrella Revolution, the idea that democracy must be avoided in order to ensure the poor do not gain a dominant voice in government says it all.  Stable societies are built on balancing the interests of all populations within a nation.

The interests of the poor, especially in capitalist countries, are often neglected, because few have respect for their views due to their lack of financial success.  Although this mentality is likely shared among the Chinese elite, the failure to address the interests of the poor/non-rich will lead to failure for all.

6.  A lack of wealth makes it easier to control people.  Consequently, few jobs and stagnant pay is not necessarily an issue for the oppressive Chinese government.  Only when the Chinese economy can no longer provide enough to satiate the needs of the Chinese People will outsourcing become an issue. 

Forcing people to become increasingly reliant on socialist programs for their basic necessities helps enslave them to the affluent.  Because the top concern of the Chinese government top is ensuring its survival and dominance over the Chinese People, free trade provides another benefit when it stifles growing standards of living.  For the People of China and the Peoples of the world, however, this is a very big negative.

7.  Because the Chinese can derive income from state-owned industries and investments, it does not need tax revenue.  As such, it does not need to concern itself with revenues like income taxes.  Conversely, Western democracies, particularly the US are becoming increasing dependent upon as they cut corporate taxes in the name of competition. 

As the Chinese government is not answerable to its people and its people need jobs, China can also undercut its competition will continued weak regulation.  At the same time, foreign labor can be imported as needed, thus free trade would give China the expert and low-wage human capital it cannot find at home.  Moreover, free trade helps make China more competitive as a country. 

8.  China can also use the international need to combat global climate change, coupled with free trade, to its advantage.  Although the Obama Administration does not have the authority to honor any pledge to cut carbon emissions to this or that target, which means it can only develop a plan to do so or invest in alternate energy sources, policies that might disadvantage the US would be beneficial to China. 
 
Pollution in China encourages social unrest, so China does need to curb its pollution somewhat as it has agreed to do so; however, the government’s leadership on climate change is also a great way of encouraging other polluting nations to disadvantage themselves with few to no environmental benefits.

Moreover, the US and China are both world powers that find themselves in a situation where they must both cooperate and compete at the same time.  For China, this means managing the decline of the United States.  For the United States, this means managing the rise of China.

In order to address these competing interests, both countries can only be expected to pursue strategies that are to their benefit.  Unfettered free trade throughout Asia is more in the interest of Chinese government, but it is not in the broader interests of the US, the rest of Asia, or the Chinese People.

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      • Justice for All: The Case for Legal, Social, Economic, and Personal Justice
      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
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      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
      • Why New Forms of Capitalism and Socialism Will Compliment Each Other
      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
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      • Why Does Terrorism Exist?
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      • Responding to "the Soldier as Sacrficial Victim"
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        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
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        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
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        • It’s Just Sex?
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      • Understanding the Effects of Groupthink in the Workplace
      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
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      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
        • Undercutting Logistics with the Underpaid Independent Contractor
        • Unions: Hindrance or Essential to Free Markets
        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
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        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
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      • Looking at the Future of American Jobs >
        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
      • Embracing a Capitalist Mindset >
        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
      • Consumer and Investor Evolution in the Great Recession of 2008-09
      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
    • Education >
      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
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      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
      • The Second Amendment: Not Outdated >
        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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