WASHINGTON, D.C. - Ways and Means Committee Chairman Sander M. Levin (D-MI) issued the following opening statement at today’s full Committee hearing on China’s Trade and Industrial Policies :
China has experienced dramatic economic growth since Deng Xiaoping first began reforming China’s economy more than 30 years ago. And China’s rise has implications not only for the people of China, but for people all over the world. A strong Chinese economy with a prosperous middle class would enhance the stability of the global economy and give U.S. companies, workers and farmers a huge market for their exports. But to make this promise a reality, China must change its ways.
But as China has become a major player in the global community its trade and other policies do not reflect its responsibilities as a global leader in the world economy. China persists in pursuing discriminatory trade and investment policies that benefit China at the expense of its developed and developing country trading partners. Change is necessary.
A clear example is its exchange rate policy. Several months ago, this Committee held a hearing on China’s exchange rate policy, a prime example of Chinese mercantilism. Unfortunately, China has made no progress on that issue in the months since our hearing. Seven years of patience from the United States and the international community have run out. The Administration constructively set the G-20 meeting as an important juncture for China to change its inflexible currency practices. If China does not act and the Administration does not respond promptly thereafter, the Congress will act.
There are other policies in China that place U.S. companies and workers at a disadvantage, often in clear violation of China’s WTO obligations. They are part and parcel of the overall trend in China’s approach to trade. Today’s hearing is intended to consider and call attention to these policies. We will examine a number of different policies in China: the “indigenous innovation" initiative; the selective use of tax rebates to stimulate certain exports; export restrictions on raw materials; trade-distorting subsidies, discriminatory product standards; the failure to enforce intellectual property rights; weak laws and weak enforcement of labor and environmental laws; state-owned enterprises that discriminate against U.S. companies. All of these policies have a common thread: they have the purpose or the effect of tilting the playing field to favor Chinese companies and against U.S. companies, workers and farmers. That is not a sound or sustainable basis for a mutually beneficial trading relationship.
I must add a word about labor conditions in China, given recent news on this subject. Many of us have sought to strengthen labor standards among our trading partners, reflecting basic international rights. Adopting these standards can help to build a prosperous middle class. In terms of trade, the result is increasing numbers who can afford to purchase U.S. exports. Nowhere is the significance of those standards clearer than in China today, where workers lack their fundamental rights and households make up a small and dwindling share of the Chinese economy. Interestingly, a broad range of commentators, including some who have opposed adoption of labor standards in trade, have noted recently that stronger labor standards in China will help China to rebalance its economy, to become a more consumer-driven and less export-driven economy. I hope very much China will begin moving in that direction - beneficial for U.S. exporters and the global economy and crucially beneficial for the working people of China.
Over the past decade, the United States experienced its largest trade deficits in our history, and trade with China has been the most significant contributor to that deficit. China has experienced trade surpluses unprecedented for an economy of its size. The United States and China can both benefit from trade, but only if trade is a two-way street. Today, for every dollar in U.S. exports to China, China exports three to four dollars to the United States. That relationship, over time, is unsustainable, and we need to figure out how to put it on a healthier, more sustainable, and mutually beneficial footing.
