The US-Sino Trade Imbalance Is a False Proposition

Published in Huanqiu
(China) on
by Yang Fan (link to originallink to original)
Translated from by Fiona McAllister. Edited by Aaron Drews.
This past year, particularly since Trump took office, a few American scholars and politicians have liked to hype the so-called U.S.-Sino trade imbalance issue. Some have been creating false formulas, theories, and “facts.” Nevertheless, the substance behind this false proposition cannot be concealed.
  
In order to make sense of this issue, we could first play a bookkeeping game. Suppose that the premise is this: the exchange rate of the Chinese renminbi to the U.S. dollar is 1:1, and we are just counting wages and discounting all other costs and taxes. An American furniture company employs three people to chop down some timber, and each is paid $100, totaling $300; eight people make the furniture, and each is paid $100, totaling $800. If the furniture is only sold in the American domestic market, the value is $1100.
  
If this company decided to trade internationally and moved the timber to China first, the price of chopping the timber in America stays the same, but when employing eight people in China to make the furniture, each earning $50, the total becomes $400. The furniture value back in America is $700, which is a $400 difference compared to the product being manufactured in America.

During the process, the American gross domestic product has sunk by $800, available jobs have decreased by eight, and the value of American exports to China has increased in value by $300. China increases its total GDP by $400, creates eight more jobs, and earns $400 in wages. In returning the timber priced at $700 to America, China’s exports to America have increased by $700, achieving a surplus of $400; the total value of international trade created by this one transaction has increased by $1000. Meanwhile, in America, the furniture company’s unit price has been reduced from $1100 to $700, the consumer has spent $400 less, and China’s trade surplus and foreign exchange reserves have increased by $400.
  
Is there anything “unfair” about this? If the timber is not sold in China, then it could be said almost nothing is unfair here, and it just goes to show that the foundation of mutually profitable business transactions is free trade. If both sides’ comparative advantages are developed simultaneously, resource application can be optimized and production efficiency raised.
  
In China, there is a great number of people who need work in rural areas, therefore, increasing the number of jobs in the production trade does not have an impact on jobs in agriculture. This maintains low wages in the long term and is the foundation for a “win-win” situation. Previously, it was the “international new left,” yet now America is extremely right wing, and Americans believe that this is unfair trade; it is very clear that they are mistaken. Their mistake lies in the fact that Western economists frequently assume full employment, emphasizing fair market dominance and not realizing the even more basic fundamental question of what “surplus” is. The reason that there is bilateral “structural economic friction” is because despite the increased material benefit to the American consumer, the available jobs, wages and gross national product have decreased, whereas China’s corresponding quotas and foreign exchange reserves have increased.

Those economists are further mistaken by not considering the comparative advantages from a development-oriented point of view. In the 1980s, the American workforce lacked people to fill positions, but there was a surplus of timber. China had a surplus of 400 million workers, and wages for migrant workers were extremely low. The difference with American wages was tenfold; it lacked timber, the means of exporting and foreign currency exchanges. It was clear at that time how both sides benefited each other economically.
  
Forty years later, China no longer has a workforce surplus, wages have risen, the production trade is concentrated on manufacturing products and its advantage is waning as production sites are shifting to Southeast Asia and Latin America, in contrast with foreign exchange reserves surplus. Now, American consumers view the material benefit to themselves, brought about by low production costs, etc., as if this is how it should be by right, and they are not at all grateful, and yet part of this long-term unemployment is strongly demonstrated by political interest groups. Finding work for these people is the American government’s social responsibility, but outward distractions and messy protectionism means that the ultimate loser is America itself.
  
Considering the pressure of American politics and public opinion, China could reach a bilateral agreement with the U.S. and reduce the trade surplus with the U.S. at a certain point. It could increase American imports, especially imports involving the service trade, and correspondingly, the U.S. could decrease restrictions on Chinese exports. China could invest in labor-intensive products in the American domestic market, and American entrepreneurs could recall parts of the manufacturing process from China. America could enter the “One Belt, One Road” initiative, and China could participate in American infrastructure construction via investments or loans and launch a production cooperative of steel, cement and glass, etc. China could continue to improve the domestic investment environment and continue to decrease unreasonable subsidies to domestic companies.

Since the establishment of U.S.-Sino cooperation, there has been a history of mutually profitable situations. America should fully recognize that unilateral trade wars and making threats of extortion will mean that both sides lose out.


杨帆:中美贸易不平衡是个伪命题

这些年来——尤其是特朗普上台后,美国一些学者和政客喜欢炒作所谓中美贸易不平衡的问题。有人还假模假式地拿出公式、理论和“事实”,掩盖不了的却是伪命题实质。
  要弄懂这个问题,可先做个记账游戏。前提假设:人民币和美元的汇率为1:1,只计算工资,不计其他成本和国内税收。美国一家具企业有3人砍木头,每人工资100元,共300元;8人做家具,每人工资100元,共800元。若只在美国国内销售,产值为1100元。
  若该公司搞跨国加工贸易,把木头先运到中国,在美国砍木头的价格不变,但在中国雇8人做家具,每人工资50元,共400元,家具以700元的价格返销美国,较在美国生产多赚400元。
  在这一过程中,美国GDP降低800元,减少8个就业岗位;美国对华出口增加300元。中国增加400元总产值GDP,8个就业,400元工资收入;木头以700元价格返销美国,中国对美出口增加700元,实现顺差400元;国际贸易总额因这笔交易增加1000元。同时在美国,该家具的单位价格从1100元降低到700元,消费者得到400元好处,中国贸易顺差和外汇储备增加400元。
  这里有什么“不公平”吗?若木材未在中国销售,可说几乎没有,足见双赢的基础是自由贸易。双方比较优势若同时得到发挥,可优化资源配置,提高生产效率。
  在中国有大量剩余农村劳动力的情况下,加工贸易的增加不影响农业生产,可以长期保持低工资,这是“双赢”的基础。以前是“国际新左派”,现在是美国极右派,都认为这是“不公平贸易”,很明显他们错了。他们的错误在于,西方经济学往往假定“充分就业”,只讲垄断干扰公平,不知道更根本的东西——什么是“过剩”。双方产生“结构性经济摩擦”的原因在于:尽管美国的消费者福利提高,但其就业、工资、国民生产总值下降,中国的相应指标和外汇储备却上升。
  那些经济学者还错在:未以发展的眼光看比较优势。20世纪80年代,美国劳动力不足,但木材过剩;中国有4亿过剩劳动力,农民工工资极低,与美国相差数十倍,缺乏木材、出口渠道和外汇,那时双方经济互补性明显。
  40年后,中国劳动力不再过剩,工资提高,劳动密集型产品的加工贸易已没有优势,正向东南亚、拉美转移,反而外汇过剩。此时美国全体消费者早已把福利提高视为理所当然,并不感激,倒是部分工人长期失业的问题,通过利益集团政治,强烈表现出来。安抚安置失业工人本是美国政府的社会责任,但它却向外转移矛盾,乱搞保护主义,最终吃亏的是自己。
  考虑到美国的政治和舆论压力,中国可与美国探讨双边协定,在一定时期内减少对美贸易顺差:扩大对美进口,尤其是服务贸易进口,美国则相应减少对中国的出口技术限制;中国把一部分劳动密集型产品向美国国内投资,美国企业家则把部分在中国的加工企业撤回;美国加入“一带一路”建设,中国以投资或贷款形式参与美国基建,就钢铁、水泥、玻璃等展开产能合作;中国继续改善国内投资环境,继续减少对国内企业的不合理补贴。
  建交以来的中美经济合作是一部双赢的历史。 美方应充分认识到,单边打贸易战,搞威胁敲诈,都是行不通的,最终结果会比双输还要糟糕。(作者是中国政法大学教授)
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