China's significance in the Global Market
Though U.S. President Donald Trump has always maintained an “America First” policy, many economists have questioned its validity, especially when it was announced that the President harbored plans to abandon trade relations with significant economic powers, in particular China.
In a discussion regarding China’s import policies, President Trump commented, “You know, they dump them – government-subsidized, lots of things happening – they dump the panels, then everybody goes out of business.”
While it’s good to question the validity of his claims, it would be wrong to claim that the President’s remarks were completely unsubstantiated. Suniva and SolarWorld Americas filed a complaint with the ITC, claiming they were being negatively impacted by inexpensive, government subsidized imports from China.
The question that remains is: how important is China in the global market? In the words of the founder of the World Economic Forum, Klaus Schwab, “In a world marked by great uncertainty and volatility, the international community is looking to China.”
Many economists, such as Milton Friedman, would never be able to fathom the immense proliferation of China’s influence in the global economy. Friedman was an avid proponent of a deregulated society in which the government would play a rather minimal role. In the 1980s, when the renowned economist visited China, the country then was suffering at the jaws of destitution. Friedman pointed out to China’s condition, which then shared no resemblance to its modern condition, as a testament to his belief that socialism is inferior to capitalism.
Soon after, China's literacy rate and life expectancy for the average citizen increased. Their aversion to laissez-faire economics compelled them to consult with Japan and Singapore whose economies were under tighter government controls in the late 20th century, rather than the US, in order to obtain economic models which would lead to growth without shaking the influence of their Communist regime.
Back to the present moment, one can only hope that trade relations between US and China are not altered for the worse. An import, tariff, or any other mechanism intended to deter trade with the Asian economic superpower may lead to a general increase in commodity prices for American consumers.