It's a good thing China's WTO membership made them a free market country!

September 10, 2015


by Michael Stumo: China's heavy handed tactics to prevent stock market trading that Communist Party leaders don't like are a reminder that it's is really great that China is a member of the WTO since 2000. So they can be the free market country they are today, spurring American exports and preserving American jobs!

Here is an example of that WTO-created free market-ish behavior that Bill Clinton promised us.

BEIJING — The police have been dropping in on investment firms and downloading their transaction records. Senior executives at China’s biggest investment bank have been arrested on suspicion of illegal trading. A business journalist has been detained and shown apologizing on national television for writing an article that could have hurt the market.

The Communist Party’s response to China’s monthslong stock market crisis has been swift and forceful. In addition to spending as much as $235 billion to buy shares and bolster prices, the authorities have imposed a range of extraordinary restrictions on the sale of stocks — and backed them with the full weight of a security apparatus usually more focused on political dissent than equity trades.

So apparently the involvement of the Chinese Communist Party's internal security apparatus and police force to require stock traders to comply with government trading restrictions is the free market we've all been waiting for.

Bill Clinton also promised that helping China join the WTO would "increase U.S. jobs and reduce our trade deficit."

Bill also said "We'll be able to export products [to China] without exporting jobs."

You can laugh before you cry. Hillary should address whether Bill made a mistake as she seeks the Democratic nomination.

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  • No doubt opening our markets to Chinese goods has been a disaster for American manufacturing and American workers. But of course that damage comes not just from China but from every low-wage lax-regulation country. China is a “special” threat mostly due to its size, the vast labor force and state apparatus with an effective industrial policy, the Asian model that has been beating us in Japan and Taiwan and Korea, now writ large in Chinese.

    Regarding Chinese prosecution of investment houses accused of “illegal trading” and whatever other offenses they blame for market turmoil there, that is a country with such ambiguous and pervasive prohibitions that virtually every citizen (subject) and even every government official is always vulnerable to charges, which effectively gives the authorities arbitrary power to selectively enforce a whole menu of laws as they see fit for the situation they are trying to control.

    But at least superficially one can wish there was here in America more prosecution and regulation of “our own” investment houses, considering the risky and exotic “securities” they created and permeated into our financial system, only to result in the huge crisis of 2008. And now I know I’m going into sketchy territory I don’t much understand and even less can verify, but if one has the patience to listen to a recent interview of Paul Craig Roberts, he sketches out how western central banks (using the example of Switzerland) have moved into taking huge portfolios of corporate stock and through both QE and more shadowy machinations inflate (prop up) stock prices and manipulates downward gold prices, using giant Wall Street banks and lesser-known market players. The gold manipulation is to prop up the value of the dollar and the stock/asset inflation is in some ways a side effect of the QE ultimately aimed, says PCR, at keeping bond prices high and real interest rates negative, in order to finance the federal budget deficits.

    Perhaps I’ve wandered beyond your focus here on how China is not a “free market” economy and how their WTO membership gives them damaging access to our markets, all of which I agree with. Its just that I think the American “free market” is also its own kind of myth, more of an ideology than a historical reality -now, in the past, or in the future. Unregulated markets tend to spiral out of control and turn into their opposite (monopoly), and unregulated markets leave the national interest undefended and local stability —so necessary to the security and quality of life of the citizens- subject to continuous and destructive instabilities as capital flies around the world in search of maximum monetary return, which is not the same thing as real wealth production and prosperity for the people.