by Donald Trump
As the world’s leading economy, we get hurt most by China’s abusive trading practices—and anyone who knows anything about economics knows I’m right. As CNN Money reported, “Most economists would agree with Trump’s logic that China is holding down the value of its currency to give its manufacturers an advantage when selling goods to the U.S.”17
Of course, back in 2008 during the presidential campaign, Barack Obama was more than happy to sound off on the negative effects of currency manipulation. As a candidate, he even endorsed a bill that would have changed the current law to “define currency manipulation as a subsidy subject to the imposition of countervailing duties.”18 Fast forward to 2011. Today, Obama is all nicey-nice on the subject and engaged in his usual “pretty please” diplomacy with the Chinese. Just listen to what the president is saying now about the Chinese undervaluing their currency to rip us off: “So we’ll continue to look for the value of China’s currency to be increasingly driven by the market, which will help ensure that no nation has an undue economic advantage.”
That statement is drenched in weakness. “We’ll continue to look” for the Chinese to magically turn from their wicked ways? Is this is a joke? As if by some miracle the Communist regime that’s making $300 billion off us each year is going to wake up tomorrow and decide, “You know what, we really ought to play more fairly with the Americans and stop poaching all their jobs and companies and billions of dollars.” It’s ludicrous.
And by the way, shouldn’t our president be looking out for our economic interests instead of protecting other nations’ economic standing so that “no nation has an undue economic advantage”? Let’s get real. China’s economy is on track this year to enjoy 10.5 percent growth. The rest of the world is on pace for an average 4.8 percent growth. America? In September 2011, the U.S. GDP was an embarrassing 1.3 percent.19 Our president should stop trying to be an economist to the world and start fighting for our economy. Instead he’s putting us farther behind. He even has the audacity to brag about our one-sided trading relationship with China.
“We’re now exporting more than $100 billion a year to China in goods and services,” Obama said. “And as a result of deals we completed this week, we’ll be increasing U.S. exports to China by more than $45 billion and China’s investment in America by several billion dollars. Most important, these deals will support some 235,000 American jobs, and that includes a lot of manufacturing jobs.”20
How can the president even say this with a straight face? Yes, we’re exporting $100 billion in products to China, but the point is that they are exporting four times as much and banking $300 billion off us because they lie about their currency! But does he mention that? No. And notice how he says his negotiated $45 billion in exports to Communist China will “support” 235,000 American jobs. That means, we’re not creating new jobs, we’re just “supporting” jobs not yet destroyed by Obamanomics. So if you’re lucky enough to have a manufacturing job in aviation you might get to keep it—you’ll just be building planes for Hu Jintao.
The president needs to get serious with the Chinese and threaten serious sanctions if they won’t play by market rules. He shouldn’t be bragging about pitiful “deals” to “support” American jobs, he should be negotiating hard for real reform that would give American manufacturers a level playing field with their Chinese opponents. Then we’ll see who can really clean whose clocks and create real, new private sector jobs.
Made in the U.S.A.
I’m sick of always reading about outsourcing. Why aren’t we talking about “onshoring”? We need to bring manufacturing jobs back home where they belong. Onshoring, or “repatriation,” is a way for us to take back the jobs China is stealing. We know that China’s wages are increasing. Also, China lacks certain natural resources that we have in abundance. If we exploit those two key facts, we can begin making the case to companies that they should bring their manufacturing facilities home to America.
Some smart people are already working on this. Harry Moser, a former CEO of a U.S. manufacturing technology supplier, has started something called the Reshoring Initiative, a group that shows businesses and the government how they can make more money and build a better business through onshoring. “This trend is real,” says Moser, “and it’s more than a trickle, it’s a steady stream.”21 Moser is right. I recently read an article in NewsMax magazine about a chopstick company in Americus, Georgia, called Georgia Chopsticks. The company’s owners, David Hughes and Jae Lee, realized that there’s tons of the special kind of wood you have to use to make chopsticks in southern Georgia. They realized they could make their chopsticks in America for cheaper than they could in China. Better still, they knew they could create more American jobs that way. So they make the chopsticks in Georgia and ship them to China! How great is that? Right now they make 4 million chopsticks a day—and they’re about to up production to 10 million a day, which will create 150 new American jobs. “I’m proud to be a part of this,” said Susan White, a Georgia Chopsticks employee. “It seems like everything you see in the United States these days is made in China, from clothes to even American flags. We’re giving back. It’s awesome.”22
Onshoring has huge potential. But Harry Moser says the Obama administration isn’t interested. “It’s been a challenge getting [Obama] to embrace this. All his chips are on exporting.”23 That’s why Congress needs to pass Virginia Congressman Frank Wolf’s bill called the “Bring Jobs Back to America Act” (H.R. 516) to help expand the onshoring movement and get American jobs back where they belong—here in America. Look, if we can make chopsticks in America and sell them to the Chinese, we can compete on hundreds of other fronts as well. We just have to get tough, get smart, and get a president willing to stand up for America and stick it to the Chinese.
Right now we’re simply getting hustled by the Chinese—and most Chinese people I deal with on a business level know it and are amazed at what Obama lets the Chinese government get away with. A tough negotiator can make the Chinese back off. We’ve done it before. A great example was when the Bush administration spent two years pressuring China to increase the value of the yuan relative to the dollar.24 It worked. Between 2005 and 2008, the yuan’s value rose 21 percent.25 Since then, however, China has stopped allowing its money to appreciate, and we’re in terrible shape because of it. The point is: the Chinese are smart—they respond to economic pressure, and they know they’re not going to get any from Obama.
Getting China to stop playing its currency charades can begin whenever we elect a president ready to take decisive action. He could start by signing into law a bill the U.S. House of Representatives approved on a 348 to 79 vote in September 2010. It would allow our government to calculate taxes on imports based on how much the manufacturing country’s currency is undervalued. Sounds like a great idea, right? But no sooner did the bill pass the House than Obama’s Treasury Secretary Tim Geithner warned us that we had to be nice to China. “It’s important to recognize that we’re not going to have a trade war,” Geithner said. “We’re not going to have a currency war. I would say that a substantial fraction of the Chinese leadership understands it is very important to them economically to let this exchange rate move.” Then why don’t we make them do something about it, Secretary Geithner? It’s the utter weakness and failure to fight for American interests from Geithner and Obama that have left us underwriting China’s economic rise and our own economic collapse.
Open markets are the ideal, but if one guy is cheating the whole time, how is that free trade? Just look at the classical laws of economics, derived from that great Scotsman Adam Smith. People who know very little about capitalism summarize Adam Smith’s epic book, The Wealth of Nations, as saying, in essence, that “greed is good,” as the old line from the movie Wall Street put it. Like most people, I think that line is witty and made for Hollywood, but that’s not what Adam Smith said in that book, nor is it what he really meant. That’s why most people who bash capitalism and Adam Smith never took the
time to read the book he wrote before The Wealth of Nations, which laid out the moral ground rules for markets, business, and life. It was a book called The Theory of Moral Sentiments, and it’s definitely worth picking up. As Smith writes, “The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbors, has surely very little positive merit.”26
No More Currency Manipulation
It’s a plain fact: free trade requires having fair rules that apply to everyone. And if we had a president who pressed the Chinese to abide by the rules, the benefits to our economy would be enormous. The Peterson Institute for International Economics has studied the Chinese currency issue extensively and concluded that a revaluation of just 20 percent (less than half the presumed fair market rate) would create 300,000 to 700,000 American jobs over the next two to three years.27 Think about that. Right now we have a president and a Treasury secretary who shrug while China tears away hundreds of thousands of manufacturing jobs from the United States. That’s leadership? The problem is so bad and the solution so obvious that even New York Times columnist (and radical lefty “economist”) Paul Krugman has had to concede the point: “In normal times, I’d be among the first people to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” writes Krugman. “Something must be done about China’s currency.” When an Obama worshipper like Paul Krugman is forced to admit there’s a problem, you know America’s in deep trouble.28
Some take the Obama approach and simply shrug at China’s systematic destruction of American manufacturing. They think there’s no way to revitalize that sector of our economy—and the millions of jobs that go with it. They think we can do just fine as a service-based economy. But that’s just wrong. There’s no reason to sacrifice millions of jobs and the future of important American industries to China just because our leaders won’t get tough and defend our interests.
Here’s the solution: get tough. Slap a 25 percent tax on China’s products if they don’t set a real market value on their currency. End of story. You think the Chinese wouldn’t respond constructively? No businessman I know would want to turn his back on the U.S. market—and the Chinese wouldn’t either. But it would help close the outrageous trade deficit driven by China’s cheating. CNBC analyst and UC Irvine business professor Peter Navarro points out that our trade deficit is costing us roughly 1 percent of GDP growth each year, which is a loss of almost 1 million jobs annually. “That’s millions of jobs we have failed to create over the last decade,” writes Navarro. “And if we had those jobs now, we wouldn’t see continuing high unemployment numbers, padlocked houses under foreclosure and empty factories pushing up weeds.... When a mercantilist China uses unfair trade practices to wage war on our manufacturing base, the American economy is the big loser.”29
It’s hardly any wonder that our country’s manufacturing dominance has evaporated. We have a president who has a vendetta against businesspeople and considers them the enemy. He’s also clueless about manufacturing. And he seems to have no regard for how China is conducting massive industrial espionage against the United States.
Stop Stealing Our Technology
American corporations and entrepreneurs are masters of technological and business innovation, but the Chinese are equally expert at stealing our trade secrets and technology. American investors and companies can pour millions of dollars into creating and developing a new product, only to have the Chinese, through industrial espionage, steal all that information for nothing. The Chinese laugh at how weak and pathetic our government is in combating intellectual property theft. That would be bad enough, but our government also stands by and does nothing while China demands that any American company that wants to enter the Chinese market has to transfer its technology to China. Such forced technology transfers are actually banned by the World Trade Organization as an unfair trade practice, but Obama lets China get away with it.30
Josh Kraushaar of the National Journal has noted that Obama’s economic cluelessness has hurt him with blue collar workers. While Obama is obsessed with “green collar jobs,” blue collar workers aren’t buying it. “Clean-energy jobs may be the future, but they’re not seen by displaced workers as a panacea.”31 The reason why blue collar workers dismiss Obama’s happy-talk rhetoric is because they’re smart. They know that anytime you hear this guy talk about how innovations in green technology are going to spark huge job opportunities, it’s all meaningless, because Obama lacks the spine and the guts to take on China’s wholesale thievery of U.S. technology and trade secrets.
And it could easily get worse, threatening not only our economy but our national security. China is a major aggressor in the field of cyber espionage and cyber warfare. It has the capacity not only to steal highly classified U.S. military technology, but to unleash crippling computer viruses on our networks. About twelve years ago, I wrote a book called The America We Deserve. As somebody who has written many bestsellers, including many #1 bestsellers, it was probably my least successful book. The fact is, people didn’t want to hear from Donald Trump about politics but about business. That’s why when I wrote The Art of the Deal and many of my other books, they were huge successes. In fact, The Art of the Deal is said to be the biggest-selling business book of all time. Nevertheless, I was proud of The America We Deserve for a number of reasons. First, I strongly predicted terrorism in this country, something which happened, unfortunately, and which could have been avoided or minimized. I even included Osama bin Laden by name. Second, I predicted the crash of the economy. There were too many signs, too many signals, too many factors that I thought made the coming crash obvious. So while it was probably my least successful because it didn’t discuss business, I have been given great credit for the book’s powerful and accurate predictions. In this book, I’m not looking to make predictions, I’m looking to make a difference and warn about other potential threats.
I fear that a similar but different type of long-term threat exists with China’s rapidly expanding military technology developments. According to the Pentagon, China’s military has also made “steady progress” in developing online warfare tactics.32
For a country like China, being able to steal our military designs represents hundreds of billions in savings on research and development costs. After all, why spend trillions building and testing complex weapons systems when you can just poach the blueprints for free with a click of a mouse?
Just look at what’s already happening right now. In 2009, the Wall Street Journal reported that cyber-intruders successfully copied several terabytes of highly classified data on our $300 billion Joint Strike Fighter project, which would make it far easier to defeat the new fighter, the F-35 Lightning II.33 Not surprisingly, U.S. officials have concluded with a “high level of certainty” that the attack came from—you guessed it—China.34
We also now know that the People’s Liberation Army (PLA) has adopted a new doctrine known as the Integrated Network Electronic Warfare (INEW). The Communist government’s new plan involves “training and equipping its force to use a variety of IW [Information Warfare] tools for intelligence gathering and to establish information dominance over its adversaries during a conflict.”35 In a congressional commission, General James Cartwright testified that China is actively engaging in “cyber reconnaissance” and is penetrating the computer networks of American government agencies as well as private companies.36 For those China apologists who might claim that these cyber attacks may have been carried out by Chinese hackers and are operating independent from the Communist government, RAND’s extensive study proved exactly the opposite:A review of the scale, focus, and complexity of the overall campaign directed against the United States and, increasingly, a host of other countries around the world strongly suggest that these operations are state-sponsored or supported. The operators appear to have access to financial, personnel, and analytic resources that exceed what organized cybercriminal operations or multiple hacker groups
operating independently could likely access consistently over several years. Furthermore, the categories of data stolen do not have inherent monetary value like credit card numbers or bank account information that is often the focus of cybercriminal organizations. Highly technical defense engineering information, military related information, or government policy analysis documents are not easily monetized by cybercriminals unless they have a nation-state customer.37
The military threat from China is gigantic—and it’s no surprise that the Communist Chinese government lies about how big its military budget is. The Chinese claim that it’s $553 billion a year, which is about one-fifth the size of our own. But regional security experts believe that China’s real military budget is much higher. One way the Chinese hide their military spending is by assigning it to other departments of government. That way their rapid military expansion can be kept secret from other nations, which, if they knew China’s true military budget, might feel alarmed enough to ramp up their own spending.38 As leaked 2009 cables revealed, Beijing’s tactic of deception follows the grandfather of modern China Deng Xiaoping’s admonition that China hide its capabilities while biding its time.39
Look, when it comes to China, America better stop messing around. China sees us as a naïve, gullible, foolish enemy. And every day Obama remains in office, they take huge strides to overtake us economically. They manipulate their currency in a way that steals a million American jobs and inflates an utterly unfair trade imbalance by $300 billion. They rip off our business’s trade secrets so they can save billions in research and development costs and shave years off the time it takes to get a new product to market. And to top it all off, China is leading the way in developing advanced new cyber warfare techniques to serve as a force multiplier of their already massive military, which currently stands at 2,285,000 active troops with another 800,000 reserves. But remember one thing when we go to the negotiating table with China: Japan, a much smaller country with far fewer people and soldiers, kicked China’s ass in war—not a good sign for China’s warrior-like future.