Editor’s note: Frank Dowd IV, the Chairman of CPA member Charlotte Pipe & Foundry, makes a compelling case for decoupling from China.
The coronavirus has upended our world. In addition to the suffering and death, the U.S. will be left with millions of unemployed, billions in health-care costs and trillions in lost economic activity and new government debt.
[Frank Dowd IV | April 22, 2020 | North State Journal]
There should also be far-reaching consequences for Communist China after it knowingly unleashed COVID-19 on the world. Understanding in early December that they were dealing with a new and deadly infectious disease, Beijing recklessly suppressed news of the nature and origins of the contagion.
The result of this Chinese malfeasance should be to get American companies to do something the Trump administration has long wanted: return manufacturing to the United States. Recent reports show American companies are leaving China at an accelerating rate, spurred first by Trump’s trade war and hastened by China’s incessant lying, broken promises and theft of intellectual property. The Chinese government’s latest actions should leave no doubt among American businesses that their continued presence in China will not be beneficial to them, their home country or their fellow U.S. citizens.
For decades, the U.S. foreign-policy establishment, academia and politicians in both parties bet our prosperity on the idea that the Communist government in Beijing could be a reliable trade partner and a responsible actor on the world stage. Corporate America embraced bipartisan policies that encouraged outsourcing U.S. manufacturing jobs to China in return for potential access to the huge Chinese market, all the while enduring various bureaucratic barriers, lax environmental regulations, subsidies to state-owned enterprises, widespread currency manipulation by China to boost their exports, forced technology transfers to Chinese competitors and state-sponsored industrial espionage.
At Charlotte Pipe and Foundry, we have long understood the dangerous and mercantilist nature of the Communist Chinese. All of our manufacturing is domestic and we have battled unfairly-traded Chinese imports of cast iron soil pipe and fittings for decades, until finally winning an anti-dumping trade case a few years ago at the U.S. International Trade Commission. A Chinese company even stole our brand and logo to sell its goods in China — crossing a line in business ethics that no legitimate competitor would ever consider.
Other examples of where China has cheated to win global market share include the steel industry, textiles, furniture, rare earth elements, and recently, the 5G telecom infrastructure around the world. China is now scheming to dominate the pork and meat supply industry in the U.S., most importantly through its purchase of Smithfield Foods and other meat companies. Through these purchases China has become the largest pork producer in the world and one of the largest owners of U.S. farm land. How can this be good for our country long-term?
One of the scariest revelations from the Wuhan Virus has been to highlight the growing U.S. dependence on China for pharmaceuticals and active drug ingredients. From 2010 to 2018, U.S. imports of pharmaceuticals from China increased 75 percent. China is the second-largest exporter of drugs to the United States behind Canada, and our real dependence is even greater, given that China is the source of the active ingredients of many drugs produced elsewhere. We rely on China for 90% of our antibiotics and almost all of America’s penicillin, ibuprofen, and aspirin. Fully aware of its leverage, China notoriously threatened via its state-run media to cut off our supply of drugs to plunge the U.S. into “the mighty sea of coronavirus.”
Here in America we must prioritize the repatriation of manufacturing essential to our national and economic security. The Trump administration has already begun to identify U.S. production shortfalls in defense, aerospace, automotives, telecommunications and other strategic industries, while enhancing efforts to exclude Chinese investment in advanced technologies, such as microchips, artificial intelligence and biotechnology. We should manufacture at least 50% of America’s key products here in the U.S. Perhaps the federal government should offer tax credits to U.S multinationals who will bring at least half of their production back to America. This will be hard but we indeed accomplished this milestone in the energy arena, becoming energy-independent in 2018 after 75 years of dependence upon foreign oil.
The time has come for all nations to re-evaluate their relationship with China. With COVID-19, the world may be finally waking up to the fact that we cannot continue to maintain such a high level of dependence on an outlaw world power.
This is our chance to restore vital domestic manufacturing, shift supply chains out of China and rebalance world trade. Doing so is no longer merely an academic debate. It has become a matter of life and death.
Frank Dowd IV, Chairman of Charlotte Pipe and Foundry Company, is a registered Independent. Charlotte Pipe and Foundry is a 118-year old U.S. manufacturer of cast iron and plastic pipe and fittings, with seven plants around the country.
Read the original article here.