Manufacture This

The blog of the Alliance for American Manufacturing

President Obama and Chinese President Xi Jinping have a lot to discuss this weekend.

This will be an exceptionally hectic week for our leaders in Washington. The Pope is scheduled to visit Congress on Thursday, dominating conversation around the world.

But another visit will occur just as the Pope heads to Philadelphia.

With less fanfare, China’s President Xi Jinping will arrive in Washington and be treated to an official state dinner at the White House on Friday. While far less interesting to the average American, this state dinner is extremely significant. President Obama must take this opportunity to address a number of growing concerns in our relationship with China.

We’re happy to help, Mr. President. The Alliance for American Manufacturing outlined six essential topics of focus during the visit:

1. China’s government calls the shots when it comes to the economy – not the market.

This sounds too boring to be important, right? Well, if your 401K took a rollercoaster ride over the past few weeks, then this issue should mean a lot to you. China’s state-sponsored economic antics endanger the stability of the global economy.

2. China continues to manipulate its currency.

In times of difficulty, China typically retreats to an area of expertise which has served them well. Using the method of currency manipulation, they underprice their exports and undercut foreign competition. China’s currency devaluations are a blatant sign that the country doesn’t play by the rules.

3. China operates “zombie factories” regardless of demand.

For American companies who play by the rules, business practices and output are dictated by level of demand. For a Chinese firm that receives its revenue from the government, production continues even if there is no one to buy the product (this is only possible in a non-market economy). The result? A massive oversupply of certain goods and materials lowering global prices and putting American companies out of business.

4. The Bilateral Investment Treaty negotiations proceed, despite (already) failed commitments from China.

For years, the United States has hoped that increased trade and investment with China would result in market-driven reforms. The results of this policy are abundantly evident. China is moving further toward unfair protectionist policies than they have in years. The idea of a new bilateral investment treaty between the U.S. and China is a dangerous prospect for America.

5. China hacks U.S. companies for trade secrets.

China is the source of 95 percent of all economic espionage cases. The effects of this activity are hard to quantify as countless U.S. firms have lost revenues totaling billions of dollars due to stolen information.

6. China’s military buildup is supported by its economic policies.

This is perhaps the most alarming issue for two reasons. First, China’s military spending has increased exponentially over just the last five years. Second, the United States now relies on China for a startling portion of its advanced military technologies. This is a serious concern for national security.

Sure, this is a lot to discuss over dinner. But President Obama needs to make progress on these issues as they are critically important to the future of the U.S. economy. Just like their vegetables, these two heads of state should get no dessert until they finish these discussions.