Chapters 4 and 5 reveal China's economic threat to America and the rest of the world. After joining WTO in 2001, China started to follow its mercantilist policies (Paul Krugman), instead of keeping its promise to eliminate all export illegal subsidies (pp. 55-56). What's worse, China has violated free trade rules with its eight unfair trade practices ever since. By using the eight weapons, China subverts the free trade framework (p. 66). These practices include: 1.illegal export subsidies, 2.manipulated and undervalued currency, 3.theft of intellectual properties, 4.short-sighted willingness to trade environmental damage to production cost advantage, 5.lax health and safety standards for China's workforce in order to gain lots of profits, 6.unlawful tariffs, quotas and export restrictions on key raw materials to control the world's metallurgy and heavy industry, 7.monopolizing prices, driving down world prices below production costs while raising prices of rare earths, 8. using the weapons of job destruction. (pp.49-65, Chapter 4)
While China's economy has grown 10% annually, the US's has expanded only 2.4%. Manufacturing used to account for 25% of the American gross domestic product, now that share has shrunk to 10% (p. 52).
Chapter 5 shows how China manipulates its currency, the yuan. By "pegging" the yuan to the US dollar at an undervalued fixed exchange rate (about six yuan to the dollar p. 69). Among the four factors which drives the economy of any nation (1.consumption, 2. business investment, 3.government spending, 4. net exports p. 67), it is the last driving force, net exports, that is critical to China's manipulation of the yuan, and its effects on the US economy. America now runs a chronic trade deficit to China, and suffers from slow growth rate and high rate of unemployment. (p. 68). In order to overhaul this trade deficit, the US needs to start with currency reform, and to stop China's currency manipulation. America also needs to bring manufacturing jobs back home by strengthening its heavy industries (such as Boeing,Ford, GM, Caterpillar) with their manufacturing bases and all big and small factories and companies that depend on them.
This "Death by Chinese Currency Manipulation" could also threaten the "Death of American Political Sovereignty." China's "financial nuclear option" involves using its vast foreign reserves to destabilize American banks, stock and bond markets (p. 70).
Chapter 6 points out three off shoring waves that have seriously damaged America: the first off shoring wave (1978)-industrial plantations, second wave after 2001 - China's beginning using weapons of job destruction, and the third wave, now in progress and also the most dangerous, -the grand illusion of 1.3 billion consumers (pp. 78-89).
(To be continued)
Sources:
Death by China
Online Book:
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B23GcuCxvQVBNjhjNGE4NjctZGZmNy00YTNmLWFlYmUtZjY3OTc3OThhNjU4&hl=en_US&authkey=CIuC07sC
Video with Author Greg Autry
http://deathbychina.com/introvideo.html
URL of Intro
http://deathbychina.com/
Baiqiao Tang’s Blog
http://www.deathbychina.com/blog/?p=92
Poorly Made in China by Paul Midler
