海角大神

Outsourcing isn't free trade with China. It's a free ride for China.

Outsourcing by multinationals to China allows Americans to buy cheap goods. But outsourcing is not creating a boom in US exports or jobs.

Here鈥檚 how proud the Obama administration is of its own China policy: Its latest major policy pronouncement 鈥� declaring that Beijing is not, as widely charged, deliberately undervaluing its currency to rig trade flows 鈥� was made the Friday afternoon before Memorial Day weekend, once Congress and most of the media were safely starting their vacations.

If only sheepishness portended rethinking. Although the current mold for the United States鈥� approach to the People鈥檚 Republic was set long before President Obama鈥檚 inauguration, Beijing鈥檚 behavior along the length and breadth of the Sino-American agenda has unquestionably worsened on the president鈥檚 watch.

Crackdowns on Chinese dissidents have intensified. Chinese saber-rattling throughout East Asia continues, along with a sweeping military modernization program. Even the US companies that have massively outsourced production, jobs, and technology to China are grousing that Beijing is becoming a less cooperative, less scrupulous business partner.

The rapid rise and sheer size of China鈥檚 economy, moreover, make such bad behavior the world鈥檚 problem. The most pressing challenge: Its continuing obsessions with exporting and amassing huge financial surpluses are again expanding the global imbalances that have already made the 21^st century world economy so fragile and prone to disaster. We need to move beyond the old free-trade/fair-trade debate and explain to Main Street Americans why China鈥檚 unbridled economic rise threatens their future more than its cheap consumer goods help their pocketbooks

One promising possibility: the idea that the status quo that multinational businesses have created and defend as free trading is really free-riding. The key to making this point stick is explaining how the companies鈥� actual operations and strategies in China differ from the story they鈥檝e peddled.

If, as these companies insist, their main aim is opening China鈥檚 immense and burgeoning market to US exports, then current policies are easy to depict as win-win propositions. Pushing production offshore can be portrayed as complementing the companies鈥� American operations, not replacing them. On an economywide basis, even the sting of import-induced American job loss can be soothed by the promise of export bonanzas and those rock-bottom consumer prices.

But a radically different picture is painted by China鈥檚 own continuing export orientation, its constantly surging trade surpluses with the US, and the multinationals鈥� own mounting global trade deficits. These facts strongly indicate that the multinationals are focused mainly on supplying the US market from China, not the other way around. And in this light, the benefits of trade expansion look much less mutual from America鈥檚 perspective.

In fact, it鈥檚 easy to conclude that the companies have finagled from Washington a veritable business bonanza that depends on leaving the rest of the US economy in the lurch. That is, they keep reaping all the rewards of selling to an enormous, high-price market like America鈥檚. But their China supply bases enable them to avoid many of the costs of this market鈥檚 upkeep. Principally, they don鈥檛 need to bear the financial burdens of employing relatively expensive American workers. And they can dodge the taxes that pay for the regulatory apparatus, schools, and other public services essential for maintaining the nation鈥檚 prosperity and quality of life.

This free-rider argument, therefore, solidifies heated but amorphous complaints about footloose global firms that no longer feel connected to their home country. This new lens reveals the companies鈥� investment and sourcing policies as far worse than simple acts of disloyalty. Instead, they鈥檙e exposed as decisions with specific, destructive consequences 鈥� first and foremost, leaving Americans with little choice but to finance even their most reasonable ambitions by borrowing, rather than earning.

Even worse, free-riding is indefensible philosophically or practically. Unlike the rest of economic globalization, it鈥檚 incapable even in theory of producing long-term or worldwide benefits that might justify short-term national costs. And unlike many ethically dubious business practices, free-riding can鈥檛 be rationalized as a way to enhance shareholder value over any significant time frame. As even they should have learned from the financial crisis and lingering recession, not even multinationals themselves can ultimately escape the consequences of the unsustainable course free-riding has helped to create.

Finally, this new characterization of America鈥檚 China trade policy 鈥� and much of its overall trade and globalization policy 鈥� should be easy for voters to grasp and, more important, actively oppose. Experience teaches so far that 鈥渢rade鈥� and 鈥淐hina鈥� as such are both too complicated to demonize in American politics, and both in fact require nuanced approaches. Free-riding, by contrast, has no saving graces and entails no difficult trade-offs. Pinning this label on America鈥檚 China policy could finally produce the change this failed strategy urgently needs.

鈥� Alan Tonelson, research fellow at the U.S. Business and Industry Council, is author of 鈥淭he Race to the Bottom.鈥� He will be speaking on China policy at a June 7, 2011, forum in Darien, Conn., sponsored by the .