Question

Do you agree or disagree that trade with a low-wage country (e.g. China) can undermine the competitiveness of the Canadian economy and thus should be restricted? Explain

Answer 1

1. Capitalist trade is never “fair.” It has always been about taking unfair advantage of others in order to enrich oneself. China’s worst “offenses” against the U.S. are mainly replications of what countries in the West have done at various points in their own development (trade protectionism, using military presence as leverage, State-sponsored corporate espionage, etc.), as well as what companies in the West have done to gain advantage - from the East India Company to Halliburton. In fact, in most cases what China has perpetrated is a lot less heinous in terms of overt aggression. Of course, because of Trump’s incompetent handling of relations with China, that may change.
2. In the same way, China’s heavy-handed economic practices are really just a variation of the crony capitalism of countries like the U.S. Many Americans mistakenly believe that they live in a democracy run by the common people. This is not true. It is a plutocracy run by large corporations. The main difference between what the Communist Party of of China does to control its industry and trade, and what huge U.S. transnational monopolies do to control U.S. industry and trade (or how the Eurogroup controls European trade, for that matter), is that the State Capitalism of China and its rampant corruption is pretty transparent - at least to those outside of China.
3. Although it isn’t a perfect comparison, many Asian countries resent and disparage China in much the same way that European countries resent and disparage the U.S. - and for many of the same reasons. The Chinese have “borrowed” from many Asian cultures to improve and enrich their own culture, just as the U.S. has done from other cultures around the globe, and with a similarly arrogant attitude. Perhaps you can recall how much resentment there was in the U.S. - at least initially - after Japan became much better at producing automobiles using American technology and methods. And yet, eventually, that forced U.S. auto makers to up their game in order to compete. I think we are seeing a similar event unfolding between China and the U.S.: China is ascendent in applying the traditional tactics of the U.S., and the U.S. will be forced to either up its game or submit to Chinese dominance.
4. The writing is on the wall…everywhere…in terms of the consequences of State capitalism. China is depleting its resources, polluting its environments, and raising the standard of living of huge numbers of its citizens to unsustainable levels. The successes of aggressive trade policies, rapid industrialization and exploding economic growth are that negative externalities and resource exhaustion are catching up with China, just as they are for the rest of the world. And when folks have acclimated to a certain level of affluence and economic mobility, it really pisses them off to lose it. That is what has happened in the U.S. to vast numbers of blue-collar industrial workers…and their resentment is a big part of the reason Donald Trump got elected. So China can learn from all of this as well: they would do well to deliberately hobble GDP and trade expansion until they work out how best to sustain a given level of productivity and wealth. Unfortunately…just as the history of capitalism has demonstrated over and over again, greed usually blinds people to the wiser course.