Coming Trade War: Part 6

August 19th, 2005 at 20:49 Björn Hallberg

Trade wars can lead to shooting wars.

The rapid rise of China as a major economic force has provoked US policymakers to wonder whether free trade is still in the US national interest; after all, “free” trade always favors the strong. Now that the US has gotten its way and China has unpegged the yuan, its ill-considered policies will come home to roost, making for desperate times - for everyone. This is the final article in this series.

Within US policy circles, the rapid rise of China as a major force in the global economy is provoking a reconsideration of whether free trade is still in the US national interest.

The prospect that China can be a major economic power is feeding widespread paranoia in the United States. The fear is that developing nations, led by China and India, may out-compete the advanced nations for high-tech jobs while keeping the low-skill, labor-intensive manufacturing jobs they already own. China already is the world’s biggest producer and exporter of consumer electronics and it is a matter of time before it becomes a major player in auto exports. Shipbuilding is now dominated by China and aircraft manufacturing will follow. The US Navy is now dependent on Asia, and eventually China, to build its new ships, and eventually the economics of trade will force the US Air Force to procure planes made in Asia and assembled in China.

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