Why are so many of the things that are made in China delivered to American shores? Because China subsidizes its industries that make products for delivery in the United States, and because China devalues its currency to its own benefit.
Even when I was a kid, I noticed that a lot of stuff had the label "Made in China." As I got a little older, I discovered that a lot of what is made in China was not of very high quality. I've probably indoctrinated my kids a bit too much, because they can be heard to say, if a toy or electronic device breaks, "Oops! Must be made in China!"
The truth is, the quality of most Chinese products is improving dramatically. This probably has a lot to do with the fact that Chinese workers can demand much higher wages than in the past. This is a good thing. Higher wages bring higher standards of living, which brings parity among the workers of the world. In other words, higher quality products produced by workers in other countries means Americans will be better off.
What I'm concerned about, though, is how the Chinese government is subsidizing Chinese trade at the expense of the United States. They do it in two ways:
- By devaluing their currency against other currencies.
- By subsidizing products and services originating in China
[Hunter] gave an example of what that would mean for an American product versus a Chinese product.
"They're both $100, the Chinese government, in a practical way, walks by and says we just marked down our product to $60," he explained. "It's now cheaper than the American product. Why don't you buy it instead of the American product? That is sweeping the American product off the shelves around the world."
The implication is ripe that the extra revenues generated by this fraudulent scheme are being used to by military equipment to use against the United States.
On a segment of The Right Balance with Greg Allen this morning, Rep. Hunter stated that China provides a 17% subsidy for its manufacturers, a 17% tax on U.S. imports. On top of the 40% currency devaluation, this makes Chinese goods 74% cheaper than U.S. goods. No wonder it seems everything is made in China!
Meanwhile, the US is filing a complaint with the World Trade Organization.
I don't generally believe in tariffs. But in the case of competing with industries whose government subsidizes their efforts, I think the United States would be well off to impose a tariff to offset the subsidy. I think the Fair Currency Act will do this.