This opinion piece by Dan DiMicco, CEO of Nucor, appeared in the Charlotte Observer.
Stand Up To China On Unfair Trade
September 9, 2012
Charlotte Observer (opinion)
By Daniel R. DiMicco
Economic freedom has created more wealth and prosperity than any force in history. China knows that well. The country saw it first hand as Beijing eased economic restrictions on its people, unleashing the Chinese dragon on the world stage. But while China has come far, it still has a long way to go.
Given its population and resources, China has immense economic and trade advantages, but for decades it has augmented those advantages by engaging in unfair practices that break the rules governing international trade. These efforts are thorough and they are systematic. China manipulates its currency, artificially suppressing the price of its goods and services. They prevent our companies from competing in their market. They enable the theft of our intellectual property and patents. They have actively sought to hack into both commercial and governmental computer systems.
These efforts are well known. Through its actions, the Chinese government has made clear that no tool – legitimate or otherwise – is off the table when it comes to dominating the international market. The effects are not a mystery either. The Chinese are able to flood markets with cheaply manufactured goods, driving out of business those firms that play by the rules and incur the associated costs. Americans lose their jobs, and our country loses more and more of its manufacturing sector.
U.S. has failed to act
It’s a process that has been at work for decades, and yet we have done little to stop it. In part, we have been lulled into a sense of ease by the fact that we are able to purchase the products we want at lower and lower prices. That short-term benefit is immediately obvious and tangible. Less obvious is the long-term effect. As China’s ascendance proceeds at our expense, America’s ability to compete in global markets is declining. We should welcome a prosperous and growing China that competes on a level playing field and offers a market for our goods and services as well. But we cannot tolerate one whose idea of win-win, to quote the U.S. Chamber of Commerce, “means China wins twice.”
As with so many problems we face, we are at a crossroads with China. Now that we are saddled with seemingly permanent unemployment over 8 percent, the collapse of our manufacturing sector has become intolerable. Mitt Romney has proposed a full-spectrum response that will bring our trade position back into balance. He will take aggressive action against foreign companies and industries that steal our intellectual property. He will designate China a currency manipulator – which President Obama has refused to do at least eight times – and impose countervailing duties if they fail to correct their policy. And he will join with our allies in multilateral actions such as creating a trading partnership open only to nations committed to free trade.
Weak posture doesn’t work
Not everyone supports these actions, and much of the opposition is driven by fear. Many are afraid that standing up to China will lead to a trade war that would have negative effects on our economy. Even many who usually stand ready to project American power abroad seem reticent to challenge the unfair trade practices of the Chinese.
They forget that weakness rarely results in positive results on the world stage. China is utterly dependent on the United States as a trading partner. Every year it sells hundreds of billions of dollars in goods to the United States. In fact – in part because of its willingness to cheat on the world stage – China sells $273 billion more per year to us than we sell to them. A trade war would hurt the United States. It would devastate China.
The simple fact of the matter is this: If we hesitate to act against China for fear of what we might lose in a trade war, then we are consigning ourselves to the same fate via a trade surrender.
Make no mistake – taking actions against China is not about protectionism. Economic freedom and free trade create wealth for all involved, and such trade has no greater friend than the United States. But just as our domestic economy could not function if our laws were broken with impunity and contracts were not honored, free trade will not work if the rules that govern it are not enforced.
It’s time to stand up to China. In the long run, both nations will be better off for it.