After all the tooth-gnashing and political lobbying over America’s newest trade pact with China is over, the pundits, labor activists and corporate executives battling over the deal are likely to come to a startling conclusion: Nothing will change very quickly. But in the end, normalized trade relations with China will have more positives than negatives for Americans and particularly for Angelenos.
The fight over permanent normalized trade relations with China is reminiscent of the battle over the North American Free Trade Agreement in the early 1990s, when labor interests screamed that the deal would send thousands of American jobs south of the border. Given that U.S. unemployment is now at its lowest level in decades, that argument is looking more than a little silly.
Certainly, jobs did flee south as factories were opened in lower-wage Mexico, but ultimately more than enough jobs were created in the U.S. to take up the slack.
Assuming the China trade pact gets final approval, it will likely be years before it has any real impact on the U.S. or local economy. China’s markets are as dense and hard to penetrate as a bamboo forest, and many of the American corporations now slavering for a piece of its enormous consumer population will find out that the current trade pact won’t prevent Chinese officials from imposing sudden, arbitrary restrictions and even outright bans on their products. Slowly, however, an enormous new market is about to crack open, and that crack will only get bigger over time.
Locally, that means a huge boost for the ports of Los Angeles and Long Beach, where import and export traffic are expected to soar. Boeing Co. is expecting to sell $120 billion worth of jets to China over the next 10 years mostly its 717 short-hop aircraft, which are manufactured in Long Beach. And Hollywood is expected to benefit as China allows more movies into the country, although it will be a very long time before the entertainment industry really sees much impact from the deal.
But perhaps the biggest beneficiary is a lesser-known, but economically mighty group in Los Angeles: the region’s hundreds of Chinese-American-owned businesses, clustered mainly in the San Gabriel Valley. These companies already tend to have relationships in China, and the lowered trade barriers connected with China’s impending entry to the World Trade Organization will be all the impetus they need to explode out of the starting gate. Little-known but very large companies like Gus.com and Hartcourt Cos. are likely to play a much bigger role in the L.A. economy in the near future.
Labor interests have claimed the China trade pact will result in the loss of 872,000 American jobs over the next 10 years as manufacturers shift production to Asia. Numbers like this call to mind Mark Twain’s famous comment about lies, damn lies and statistics; anybody who claims he can come up with a reliable job forecast going out 10 years is kidding himself. Jobs will be lost, just as they were with NAFTA, but other jobs will be created to serve China’s enormous market. It’s no accident that the International Longshore and Warehouse Union broke ranks with the AFL-CIO by refusing to endorse its opposition to the pact, which will undoubtedly be a giant boon for highly paid dockworkers.
The argument that America has given up its power to influence China’s human rights policies by acquiescing to permanent normalized trade relations is another red herring. There is little evidence that the yearly review of China’s trade status ever did have a big impact on its human rights policies to begin with, and the U.S. is more likely to be able to spur change from the inside than from the outside.
