It doesn’t seem that long ago that the U.S. and Canadian governments were assuring us that free trade would be the answer to everything from economic prosperity to world peace. This wand of neoliberal magic would bring a new world order of wealth and liberal values enjoyed by all.
Lefties didn’t believe it, insisting heretically that it would make corporations richer but for most of us bring a race to the bottom fed by lower wages and environmental sacrifice. They proved to be right, and our governments have finally been forced to agree. Neoliberal economic policies were a route to our de-industrialization—bad for us, good for China.
As a result, the conversation is now more about tariffs than trade. For example, the Americans are raising their tariffs on Chinese green technologies to as high as 100 percent, and some policy makers are even calling for their electric vehicles to be banned entirely. China is, of course, the major source of concern.
Free trade brought what was called in the U.S. the “China shock,” when American corporations shifted production en masse to Asia, decimating their workforces at home. The country is now busy rebuilding its middle class.
Canada will likely follow the Americans, as we are wont to do. We are enjoying heavy investment in electric vehicles in this country and as Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said, “There’s no logic for Canada to force our market to electrify and then turn the market over to the Chinese.”
China’s cheap labour is more than keeping workers in line by precluding independent labour unions. Products including batteries and other electrical vehicle components are produced in China’s Xinjiang region by Uyghur forced labor. There are ethical as well as economic issues to consider.
And there are more reasons to limit trade with China than not sacrificing our middle class to cheap labour. China largely controls the supply of key minerals for renewable energy. They have cut off exports in the past, and one can easily imagine reasons why they might do so in the future.
In 2022, China accounted for 85 percent of the world’s clean-energy manufacturing investment. Relying excessively on one source is unwise from the standpoint of energy security, to say nothing of national security and price manipulation. And much of China’s manufacturing domination has also relied on intellectual property theft.
China, of course, sees things differently. President Xi Jinping insists that his country’s manufacturing prowess is a very good thing for everybody. It has increased the global supply of goods, eased international inflation pressures, and helped the world fight climate change.
There is merit in what he says. Buying lots of cheap electric vehicles would reduce greenhouse gasses and more competition, certainly of the Chinese variety, would reduce inflation. And, of course, China is a huge market for our exports. Mutually beneficial trade can bring countries together—the more we depend on each other the less likely we are to start bombing each other.
However, as I have pointed out above, with nations such as China, there are also costs. As one American economist put it, cheap Chinese vehicles would be great for decarbonizing the country, but they might also kill the auto industry.
The trick is to be clear what our goals are. I suggest they are to achieve a sustainable economy with good jobs. We need a strategy that simultaneously greens the planet, avoids excessive dependency and maintains a strong middle class. Where China fits the strategy, we should enthusiastically trade, and where it doesn’t, we should cleave closely to those who share our values. And we might also discard neoliberal or any other ideological distractions.