Former correspondent in China and current global economics correspondent at The New York Times, Peter Goodman, discusses U.S.-China trade dynamics. He highlights China's rise as a top exporter, the hidden costs of outsourcing to China, and the need for resilience in the U.S. economy. The conversation explores the risks of just-in-time supply chains, China's policies post WTO, challenges in China's economy and society, and the future of US-China trade relations.
Overreliance on China's supply chain widened the wealth gap in the US.
Just-in-time production model harmed American workers amidst shocks like the pandemic.
US-China trade imbalance benefited companies at the expense of American workers.
Deep dives
Impact of Global Supply Chain on American Workers
The global supply chain heavily reliant on China has led to a growing wealth gap, political polarization, and resentment among American workers. Decisions to prioritize low costs and lean production have left the US vulnerable to shocks, such as the COVID-19 pandemic, causing shortages and disrupting production. The financial incentives favoring profit over resilience have exposed the drawbacks of overreliance on China, affecting American workers negatively.
Effects of Just-In-Time Supply Chain on Workers and Economy
The just-in-time supply chain model, previously seen as efficient and cost-effective, has impacted American workers negatively. This approach, focusing on minimal inventory and cost savings for corporate and investor benefits, led to a decline in living standards for workers amidst significant shocks like the pandemic. The emphasis on low wages and lack of job security in industries heavily dependent on global supply chains has contributed to growing wealth disparity and discontentment among workers.
Link Between Global Trade Policies and Economic Disparity
The US-China trade relationship, marked by offshoring and reliance on China's low-cost labor, resulted in economic benefits for American companies but at the expense of American workers. Decisions made at the policy level, including the neglect to cushion workers affected by trade shocks, led to a decline in living standards and job opportunities for many Americans. The trade imbalances and lack of adequate support mechanisms further exacerbated economic disparity and fueled political unrest.
Implications of China's Industrial Policies on Global Supply Chain
China's industrial policies, favoring state-owned companies and promoting self-sufficiency, have raised concerns about unfair competition and trade practices. The shift towards indigenous innovation and protectionist measures, especially under Xi Jinping's leadership, have intensified global trade tensions. China's focus on subsidizing state-owned enterprises and resisting reform commitments has fueled criticisms of its trade practices and raised challenges for mutually beneficial trading relationships.
Future Prospects of US-China Trade Relations and Supply Chain Dynamics
The complex landscape of US-China trade relations and global supply chains presents challenges and opportunities for both countries. As businesses seek to diversify supply chains away from China, there is potential for reshaping trade dynamics and enhancing supply chain resilience. The evolving trade dynamics, combined with political uncertainties and socio-economic factors, underscore the need for constructive dialogue and policy measures to address economic disparities and foster mutually beneficial trade relationships.
Who are the winners and losers in U.S.-China trade over recent decades, and what's a better way forward? Laying out a compelling argument in this episode is Peter Goodman, a former correspondent in China, current global economics correspondent at The New York Times, and author of How the World Ran Out of Everything: Inside the Global Supply Chain. He takes the supply chain snarls at the peak of the COVID pandemic as a jumping-off point to explore how China became the world's top exporter and top trading partner of most countries, why "just in time" outsourcing to China long made irresistible sense to U.S. companies and investors but came with steep hidden costs to workers and a dangerously widening wealth gap, and how the answer is not a wholesale U.S. 'decoupling' from China's efficient supply chains, but making better choices at home to build resilience and restore faith among disillusioned Americans in the U.S. economy and democracy.
Peter Goodman, the global economics correspondent atThe New York Times, has also been the Times' London-based Europe economics correspondent, and U.S. national economics correspondent. He was earlier the Washington Post's China-based Asia economics correspondent (2001-06), and its telecommunications reporter. His other books are Davos Man: How the Billionaires Devoured the World (2022) and Past Due: The End of Easy money and the Renewal of the American Economy (2009).
The China Books Podcast is a companion of China Books Review, a project of Asia Society’s Center on U.S.-China Relations and The Wire, a digital business platform that also publishes The Wire China. For any queries or comments, please write to editor[at]chinabooksreview.com.
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