Economic Outlook: Getting tough on China

By ANTHONY HALL, United Press International  |  Sept. 17, 2012 at 10:49 AM
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The Obama administration has until early November to prove it is tough on China, tough on militants and tough on Republicans.

On Sunday, Obama's team said it would file a trade case against China for subsidizing its automobile industry.

Ohio is where Obama plans to announce that a new case will be filed with the World Trade Organization in Geneva, Switzerland, The New York Times reported.

The case has yet to be announced and newspapers are naming "a senior administration official" as the source of the pre-announcement leak, which implies that the White House did not want the leak handled by a junior staff member, but a full-fledged senior official, who reporters would trust was not wasting their time with a vague possibility of a case. This leak was real; it had some senior clout behind it.

This all means Obama is opening himself up for criticism that the WTO filing is politically motivated, but the White House presumably has this argument well covered.

In the first place, 188 members of Congress wrote to the White House in March requesting that something be done about China subsidizing its automobile and auto parts industries.

Secondly, the United Steelworkers, which includes 300,000 members working in the automobile industry, has asked that China be held accountable for subsidizing its automobile companies.

China will likely point to the U.S. bailout of Chrysler and General Motors Corp. as proof that the industry is subsidized here more than there.

Republicans who say the filing is appropriate can still blame the timing of the filing as a cheap trick meant to win voters and everyone can point to Ohio as the quintessential battleground state with thousands of workers that could be affected by a WTO victory in the case.

Lost in the political shuffling, however, is likely to be an accurate assessment of how many jobs are really at stake, especially given Obama's statement in the recent State of the Union address claiming that "over a thousand," U.S. workers could thank the administration's tough stance on China's tire industry for their jobs.

A second look by Forbes Magazine found that the long-term bleed of U.S. tire industry jobs was, indeed, arrested in a time frame that could suggest the U.S. tariff on Chinese tires had something to do with it.

On the other hand, analysts concluded that the biggest winner with the tougher U.S. policy on Chinese tires exporters was really tire exporters from Canada, Mexico, Indonesia and elsewhere.

The loss of cheaper tires from China drove up prices for U.S. consumers, but benefited workers from other countries, not U.S. workers, the naysayers said.

The question at play here is how many GM, Chrysler and Ford Motor Co. parts are made in the United States and how many are made overseas.

That all depends on the car, apparently. In 2011, the National Highway Traffic Safety Administration issued a report that said 83 percent of the Dodge Avenger was, indeed, made in the U.S.A.

The Avenger was at the top of a list that said 81 percent of the Chrysler 200 sedan was made in the United States and then, oops, 80 percent of the Toyota Camry, the Toyota Avalon and the Honda Accord were made in the United States.

Sixth on the list was the Chevrolet Impala (77 percent) followed by the Cadillac DTS (76 percent), the Buick Lucerne (76 percent) and the Chevrolet Malibu (75 percent).

That shows a serious percentage of automobiles are home-made with U.S. jobs behind them. With three Japanese brands in the top five, however, it also shows that the global economy is not so easily understood.

Solutions to trade issues tend to be as complicated as their problems, not less so.

In international markets the Shanghai composite index in China lost 2.14 percent. The Hang Seng index in Hong Kong gained 0.14 percent, while the Sensex in India climbed 0.42 percent.

The S&P/ASX 200 in Australia rose 0.28 percent.

In midday trading in Europe, the FTSE 100 index in Britain shed 0.27 percent, while the DAX 30 in Germany gave up 0.23 percent. The CAC 40 in France dropped 0.54 percent, while the Stoxx Europe 600 lost 0.21 percent.

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