(From the weeklystandard.com) We may be entering an era of creeping de-globalization. It is one thing to be generous with the perceived foibles of your trading partners when your economy is growing and jobs are plentiful. It is quite another to decide to be tolerant when your economy is struggling, and domestic political pressure to create jobs and raise wages is increasing.
Which is the case both in China and the United States. America is in the midst of a drawn-out election campaign, with candidates vying for the China-basher-of-the-year award. Eager to shift blame for high unemployment and to appease an electorate that believes the country to be headed in the wrong direction, President Barack Obama is letting it be known, most especially to his trade union allies, that he is going to get tough on China for its currency manipulation, export control on rare minerals, buy-China policy, and theft of intellectual property. To which Republican candidates respond with even tougher statements.
Meanwhile, control of the Communist party apparatus that runs China is about to change, the so-far peaceful version of regime change, and the new boys in charge are as eager to prove they are no pushovers for the tough-talking Americans as the American politicians are to prove they are no pushovers for the wily Chinese. And, in a situation similar to America’s, China’s manufacturing sector is not as robust as the powers-that-be would like. It is suffering its worst quarter in three years, economic growth has slowed for five successive quarters, and layoffs are running at their fastest rate in three years. “Worse may lie ahead,” says Markit’s chief economist Chris Williamson. And because wages are being raised at double-digit rates to appease a restive work force, the nation’s competitiveness is being reduced. Indeed, China has reached a point where its export-led model is under such serious threat that major reforms are being mooted.
Read more here: A World Headed for De-Globalization?