Talking up a Trade War

It seems the media are so obsessed with romanticizing the 1930s that a good trade war is all we need to complete the effect. Today’s Washington Post contains yet another trade scare story, the contents of which don’t even come close to supporting the bold headline or the lead.

"U.S.-China Trade Ties Erode Amid Accusations" is the attention grabbing headline, presumably chosen by someone other than the story’s writer, Ariana Eunjung Cha. But Ms. Cha is also guilty of promising her readers more than she delivers. "The global financial crisis is bringing out the worst in the trade relationship between the United States and China" is the story’s lead.

Here’s her supporting point number 1:

U.S. Treasury Secretary Timothy F. Geithner accused China of "manipulating" its currency, vowing in written testimony submitted for his confirmation hearing that the United States would act "aggressively" to remedy the situation.

Excuse me for not gasping, but I find that example rather bland. Legislation to compel China to allow the yuan to rise has been considered in every Congress since 2003. It’s nothing particularly new. Geithner was testifying before Senators who has sponsored some of those currency bills, and his uncertain confirmation prospects probably meant that he new what the committee wanted to hear.

Besides, later in her article, Cha concedes about Geithner’s testimony that:

The comments were later tempered by the Obama administration saying it hadn't made any formal decision on the issue and Obama discussed the remarks with Chinese President Hu Jintao in a telephone call shortly after taking office.

Supporting point number 2:

The U.S. Trade Representative's office, in a harshly worded and wide-ranging complaint to the World Trade Organization in December, alleged that China uses cash grants, cheap loans and other subsidies to illegally aid its exporters.

So a Bush Administration action from December is her second most compelling piece of evidence that the ‘financial crisis is bringing out the worst in the trade relationship"? Bringing cases to the WTO, instead of passing into law provocative unilateral trade sanctions (which scaremongering like Cha’s article is likely to encourage), is the ultimate sign of respect for the system. It is the proper way to resolve trade disputes, and I am positive that the Chinese are not affronted by that approach.

Supporting point number 3:

China, for its part, has bashed the "Buy America" program embedded in the just-passed stimulus package, calling it "poison to the solution" of the global economic crisis.

Well who hasn’t? The Canadians said the same thing and President Obama was in Ottawa yesterday assuring Prime Minister Harper that our countries remain best buds.

Supporting point number 4:

At the World Economic Forum meeting in Davos three weeks ago, Chinese Premier Wen Jiabao, without naming the United States explicitly, blamed the financial crisis on "unsupervised capitalism."

Now them’s fightin’ words. Time to shut the borders to Chinese imports and close down all those American-owned factories in Shenzhen.

But the most compelling piece of analysis supporting the assertion that "U.S.-China Trade Ties Erode Amid Allegations" is supporting point number 5:

The crisis has pushed the China-U.S. relationship to a flash point. From now on, it will either become more stable or more confrontational," said Mei Xinyu, a trade expert with the Chinese Commerce Ministry's research arm.

Yes, and in 25 years I’ll be either alive or dead.

The remainder of the article goes on to cite old parochial grievances, clichés really, like U.S. textile industry complaints about a surge in Chinese imports or steel industry complaints about dumping and subsidization. Whining for protection by the textile and steel industries is nothing new. It has nothing to do with the financial crisis or global demand contraction per se.

But what is more troubling than these perennially parasitic industries demanding wealth transfers from unsuspecting Americans is the willingness of mainstream media to accept their adversarial narrative as an objective worldview.