Q&A: Author Will Hutton on China's Future
So-called fair-trade advocates push for China to raise working standards and let the yuan appreciate in order to end "unfair subsidies" to Chinese industry. Does this make good economic sense?
Very few people assess the overall balance of advantage in the U.S.'s relationship with China. It is true that China's cheap exports do cause problems in some American manufacturing companies; but the direct numbers of American jobs that migrate to China, estimates the Bureau of Labor, is tiny–fewer than 10,000 in any one year. On the other hand, American consumers get more for their money, and with Chinese savings financing American spending, American interest rates are lower–so consumption levels are higher. In short, the whole economic pie is much larger so that gainers vastly outnumber losers–but the gainers are diffuse, while the few losers are obvious–and very effective lobbyers.
As for China's labor standards, it should be allowed to take advantage of cheap labor costs–but there should be obvious limits to rank exploitation of, say, children or of adults in sweatshops. But even if all that were stopped, Chinese labor is still cheaper than American–and both sides benefit from trade.
What can the U.S. do to help facilitate the continued economic connectivity and progress of China?
The U.S.'s best strategy is to stay open. China's current economic model is reaching the end of its capacity to deliver without substantial change. I argue in my book that democracy is good for the economy; accountability and whistle-blowing keep managements up to the mark and help efficient resource allocation. China's astonishingly low productivity, wastefulness, and environmental degradation are self-destructive; it needs institutional change and the panoply of democratic institutions. By staying open, the U.S. brings forward the day that China has to change–and especially by exposing it to best western practice. But that means we have to practice what we preach.
When will the Chinese middle class push for greater political freedom to match growing economic freedom?
The $64,000 question. The extent of the ideological bankruptcy of the Chinese Communist Party is not widely understood in the U.S. It claims single party rule because it is the trustee of the 1949 Communist revolution governing democratically for China's workers and peasants. Its problem is that communism is in reverse worldwide, and under the doctrine of the "Three Represents" invented by Jiang Zemin, the party now accepts that class war is over and that it must represent all Chinese society. In which case: Why no accountability? Change came in the Soviet Union with the fifth generation of leaders; the fifth generation of leaders succeeds Hu Jintao in 2012. I don't expect any change until after then, but my guess is that sometime in the mid-to-late 2010s, the growing Chinese middle class will want to hold the Chinese official and political class to account for how they spend their taxes and for their political choices.
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