Robert Samuelson pegs the problems with our China trade policy:
Just how many American jobs have been lost to subsidized Chinese exports is unclear. Economist Robert Scott of the Economic Policy Institute, a liberal think tank, estimates the number at 2.8 million from 2001 to 2010. A study by three academic economists concludes that imports from China account for about a quarter of lost U.S. manufacturing jobs from 1990 to 2007; that's almost 1 million jobs. These are both large declines, but they are only a modest fraction of America's present jobs shortfall. The recession cost 8.8 million payroll jobs.
These numbers should frame our thinking about China's economic policies. On the one hand, making the Chinese scapegoats for most of our economic problems is delusional. Their role in the financial crisis was modest. On the other hand, China's predatory trade practices erode America's industrial base and stymie the economic recovery. The Chinese do not believe in free trade or fair trade. They practice fixed trade - fixed to benefit them at others' expense. What, if anything, can we do about that?
What's at stake is not just the U.S. trade balance with China but the nature of the global trading system, as economist Arvind Subramanian of the Peterson Institute shows in his book "Eclipse: Living in the Shadow of China's Economic Dominance." Since World War II, the United States has presided over an open, non-discriminatory global trading system. It's been a big success: From 1950 to 2009, world exports increased by a factor of 26.
But, writes Subramanian, China might supplant this system with one focused on its needs. It might pursue preferential access to needed raw materials (oil, grains, minerals); it might discriminate in favor of its friends and against adversaries; it might subsidize its exports and seek protected markets for them. It already does all these things - and as its power grows, it may do more.
And that power will grow. By Subramanian's calculations, the U.S. economy is now 50 percent larger than China's; in 20 years, that will roughly reverse. From 1990 to 2010, China's share of global trade rose from 1.6 percent to 9.8 percent. By 2030, that will reach 15 percent, twice the American share.
Tarriffs aren't the answer, but may be necessary to save the global trading system if China continues its assault on our industries. As Samueleson writes, "The policy's only recommendation is that it might be slightly better than the alternative," which is to continue as before. Samuelson concludes, "There's already a trade war between them and us; but only one side is fighting."