Is Trump Right on China?

“It’s time to rethink our trade relationship with China, and so far, President Trump has taken the appropriate measures to set it right.”

Editor’s Note: Merion West is pleased to feature, from time to time, the perspectives of students and younger people in our articles and dialogue.

One of President Trump’s fundamental campaign promises was to fix our broken trade relationship with China. There is some speculation that a trade deal could be signed as soon as the end of May; however, pundits have criticized the tactics being used to bring China to the trading table, namely the billions of dollars worth of tariffs placed on Chinese goods. Free trade champions frown on tariffs, subsidies, and import/export quotas as market distortions that raise the cost for both consumers and producers. Free trade advocates correctly point out that globalization and the lowering of trade barriers has reduced people living under the global poverty line from 35% to 10.7%, as well as raising the income of the bottom 40% of the global population nearly 50%. On an aggregate scale, there is no doubt free trade has bettered humanity and lifted countless people out of misery and starvation.

The idea behind free trade is that the countries engaging in trade are relatively free-market economies that don’t have massive government interference in the economy. Free-markets allow capital to flow freely, innovative products and services to be produced, and lower prices for consumers through competition and market efficiency.

However, China is still far from a free market economy. According to the Heritage Foundation’s annual economic freedom index, China ranks 100 out of 193 countries with noticeably low marks for property rights and business freedom. Since 2001, when China joined the World Trade Organization (WTO), government subsidies have financed over 20% of the expansion of manufacturing capacity within the country. The massive subsidization of particular industries has led to excess capacity of certain goods, like steel and aluminum, on the global market. American companies aren’t competing in free trade conditions anymore; they are competing with companies bankrolled by the Chinese government.