The boom in China’s exports in the new century wasn’t the result of a sweetheart deal, but of the extraordinary mobilisation of labour and capital that began in the 1990s. And in that process Western capital played a key role. The question asked by the American left, as well as more hard-nosed right-wingers, is not whether the US negotiators were naive or incompetent, but whose interests they were representing. Were they negotiating on behalf of the average American, or American business? As Davis and Wei show, US economic policymakers were committed to advancing the interests of American business more or less as business articulated those interests to them. USmanufacturers such as Boeing, GE and Pepsi, banks like Goldman Sachs, Morgan Stanley and JP Morgan, and the insurance giant AIG all wanted the new market, and they wanted the cheap labour. From 1994, when the Clinton administration abandoned its hard line on the legacies of Tiananmen, the thrust of policy was to open up new markets and opportunities for investment, even in the face of strong objections from American trade unions. To get approval for the deal in Congress American business mounted the most expensive lobbying effort ever. So eager were American firms to be seen as the chief advocate for China, they had to form a committee to make sure they didn’t fall over each other.
This situation has continued for as long as it has because enough powerful people have an interest in its continuing. But driven to extremes, as it has been lately, it requires some delicate handling. In recent years China has allowed its exchange rate to appreciate. Wages have risen strongly. Xi has added unceasing celebration of the Chinese dream, positive energy and, when those aren’t enough, repression. Germany presided over a near disaster in the Eurozone, but at least at home, the welfare and tax system effects a significant redistribution such that despite rising pre-tax inequality, the disparity in post-tax incomes is substantially moderated. If the jerry-rigged global economic system is in jeopardy, it is because of the spectacular failure of the American political establishment.
Since the Clinton era, the Democratic establishment has held up its side of the bargain, deflecting opposition to globalisation from trade unions. What it did not reckon with was the ruthless cynicism of the Republican Party in opening its doors to xenophobic, know-nothing white nationalism, inciting talk of a nation betrayed and swinging over to protectionism. The Democrats also didn’t take into account the dogged refusal of the Republicans to co-operate in their efforts to patch together America’s welfare state, even, or especially, when it came to fundamentals such as unemployment insurance and health coverage. Link