Yellow Peril or Paper Tiger?

By Patrick Lozada on 10/12/2011 @ 01:01 PM

This piece represents only my opinion and not necessarily the opinion of FCNL.

After passing through the Senate on Tuesday, the so called “China Bill” is getting increasingly more and more attention. This bill seeks to press the Treasury Department to more readily label countries as “currency manipulators” thereby empowering the U.S. to raise tariffs against imported goods. In a time of economic hardship, this message is a powerful and popular one. It’s the Chinese who are creating this problem, so the story goes, not us.

It’s a nice narrative, and it’s not true. We have built this crisis ourselves by creating an economy based around war, an economy built on phony financial derivatives and a system that centralizes wealth in the hands of a super-rich oligarchical class of capitalists while most Americans struggle to get by. It’s so convenient to point to other people and blame them, especially when those people aren’t in the Western world. The U.S. has a cultural history, stretching back to the 19th century, of creating the vision of a “Yellow Peril” abroad in which the unnumbered Asian hordes destroy white civilization.

In a rare and bizarre aligning of the planets, Washington think tanks the conservative Heritage Foundation, the libertarian Cato Institute, and the progressive Brookings Institution have all come out against this bill saying that it is a populist measure that will have a negative impact on our economy. And they’re right. Labeling China a currency manipulator and raising protective tariffs would destabilize already unstable markets in the U.S. and abroad, have a negligible impact on the export market, and reverse progress that has already risen organically (the Yuan has risen 25% since 2005) by causing an unnecessary trade spat with Beijing.

Anti-China rhetoric is on the rise from every side of the political spectrum, and as peacemakers and Friends we should work against the new discursive paradigm where it is the U.S. versus China. As much as we have been led to believe it, China does not own all of our debt (they own only 1% of U.S. financial assets and 8% of treasury bonds) and they are not a threat to our national security. We have to move beyond a mindset where one country’s peaceful growth is an existential threat to our own and instead focus on how to create a dialog with Beijing to encourage responsible development.