by Derek M. Scissors
American Enterprise Institute
December 12, 2013
The challenges facing the U.S. economy, and manufacturing in particular, can and should be addressed primarily by American policy. As a secondary matter, manufacturing is now a global activity and foreign actions play a role. Among the many global factors, the single most important is Chinese subsidies. The People’s Republic of China’s (PRC) manufacturing sector is the only one of comparable size to the U.S. It is driven by government intervention, rather than genuine commercial competition, and this intervention harms American manufacturing companies and workers. The main problems are barriers to American exports to the PRC and, perhaps soon, a growing battle in third markets. The best American policy does not, and indeed is unable to, imitate the PRC’s anti-competitive actions. Instead, the U.S. should document Chinese regulatory and financial subsidies, then take a sequence of steps – multilateral, bilateral and, if ultimately necessary, unilateral – to reduce them.

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