Trade expert challenges notions of China dominance
Jeremy Haft '88 (Georgetown University)
Trade expert Jeremy Haft '88 disputed the popular notion – one put forth by presidential candidates Donald Trump and Bernie Sanders – that China has surpassed the United States as the world's No. 1 economic power, contending that outdated measures, flawed trade counts and fabricated export numbers have led to an inaccurate picture of an economically declining America.
Haft, author of All the Tea in China and an adjunct professor at Georgetown’s School of Foreign Service and McDonough School of Business, addressed the Upper School student body during an Oct. 18 assembly in the Lewis Family Auditorium. Later that day, he spoke to RE government and history classes.
Haft claimed the flawed idea of China as the world's economic powerhouse has grown out of an overreliance on the Gross Domestic Product as a metric, and a constant miscalculation of the trade imbalance between the two nations. He noted that gross trade volumes are used to calculate trade imbalances, not value-added trade volumes. That means that iPhones made in China with 90 percent of U.S. produced materials still count 100 percent as Chinese products.
"The dirty little secret of imports is that what we import often contains a high-degree of U.S. value add," Haft said. "If our firms and farms make the stuff that goes into imports, we're enriching the firms and farms by importing the stuff."
Claimed Haft: "A total opposite dynamic is going on to what Trump and others are saying."
He also said a better measure of economic growth is comparing balance sheets of various nations: what they own, compared to what they owe. In that analysis, the United States has a huge advantage over China, Haft contended. He noted that China struggles so substantially with food, water and product safety issues that it remains reliant on importing such products.
"The United States is $35 trillion wealthier than China, and that includes our debt," he told students. "That gap is widening; it's not shrinking."
He also told students that China is now the third-largest importer of American goods, and fastest-growing market. He said that 42 states have doubled exports to China since 2005, with California, with $15.7 billion in exports annually, at the top of the list. Washington ($11.4 billion); Texas ($10.4 billion); and Illinois ($6.4) follow.
"We are $35 trillion richer [than China], and positioned competively to continue on a similar trajectory this century," Haft said.
Founded in 1903, Ransom Everglades School is a coeducational, college preparatory day school for grades 6 - 12 located on two campuses in Coconut Grove, Florida. Ransom Everglades School produces graduates who "believe that they are in the world not so much for what they can get out of it as for what they can put into it." The mission of Ransom Everglades School is to provide an educational environment in which the pursuit of honor, academic excellence and intellectual growth is complemented by concern for the physical, cultural and character development of each student. The school provides rigorous college preparation that promotes the student's sense of identity, community, personal integrity and values for a productive and satisfying life, and prepares the student to lead and to contribute to society.