The politics of trade with China is producing some pretty strange bedfellows. Consider this scene from a recent congressional hearing: Several business people, including an executive from injection molder Mack Molding Co., are sitting at a table with the No. 3 official of the AFL-CIO, and all of them are making essentially the same case.
They want Washington to be much more aggressive in challenging China on trade and jobs issues.
The issue certainly has been attracting more attention in Congress during the past few months, both from those who listen to labor and those who listen to business.
You can bet the White House also is taking notice, particularly since many of the 2.8 million U.S. manufacturing jobs lost since 2000 have been in industrial Midwestern states that have the crucial swing votes in presidential elections.
But after listening to the back and forth at Washington's latest hearing — a two-day, eight-hour marathon in late October — I won't hold my breath waiting for dramatic action. For starters, the business community is split between larger companies, mainly multinationals, that see China as a huge opportunity, and U.S.-based firms that see their business moving offshore, often to China.
There's widespread agreement about making China live up to its World Trade Organization commitments, in areas like intellectual property and opening up its markets to U.S. exports. Administration officials said they'd push China vigorously on those areas.
But the U.S.-oriented businesses, including Mack, want more. Mack, which has lost half its jobs and half its $400 million in annual sales since 2000, wants to push China to get its currency to float on the market. Others advocate trade protection.
Because China pegs its currency to the dollar, many U.S. economists say it is undervalued by 15-40 percent.
But the U.S. government doesn't seem inclined to press the point too forcefully. The Treasury Department's annual report on exchange-rate policies, which came out Oct. 30, did not designate China or any other country as officially manipulating its currency. U.S. officials said they're negotiating with China to move to a market-based currency, but cautioned that it will take time.
Others at the hearing said that if China were to float its currency, its shaky banking system would suffer, exports would drop and the country's economy would shrink in ways that aren't good for world stability. Another speaker, an economist with Bear, Stearns & Co. Inc. in New York, noted that China has lost 16 million manufacturing jobs.
And there are real disagreements over just what the real problem is for U.S. companies. A top Bush economic adviser, for example, said the domestic economic slowdown is a bigger deal for manufacturers than international trade.
It's a complicated, fluid situation that is producing some strange alliances. But seeing the splits within the business community and within the government itself, I don't expect timely changes.
Toloken is a Washington-based reporter for Plastics News.