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China’s export strategy prompts a U.S. trade complaint

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Kai Ryssdal: The great state of Ohio has a two-fer going for it this election season. One: it’s a swing state, so voters there will get more than the usual amount of attention from the presidential candidates this fall. And two: one of its key industries has been — for want of a better word — walloped by overseas competition.

I’m talking here about cars, and the manufacturing thereof. During a campaign stop in Cincinnati, President Obama announced a new trade complaint against China, targeting what the White House calls illegal Chinese subsidies for its auto and auto parts exports. Marketplace’s Sarah Gardner gets us going today.

Sarah Gardner: Brake systems, power trains, steering wheels. This stuff  is big business for the U.S. But U.S. trade officials complain in the last few years the Chinese have been “flooding the world” with cheap auto parts.

Scott Paul is executive director of the Alliance for American Manufacturing.

Scott Paul: Each of the last two years, they’ve come in at about 25 percent greater than the last year.

U.S. trade officials says China is methodically setting up “export bases,” regions where companies get special cash grants, tax breaks and other subsidies designed specifically for exports.  That’s a violation of WTO rules, they say. American manufacturers blame the subsidies for job losses in the Midwest.

But analyst Daniel Rosen of the Rhodium Group says don’t forget about that little thing called the Great Recession.

Daniel Rosen: It would be very dangerous to assume that China’s policies, no matter how inappropriate under WTO rules, were the only explanation for job concerns in Ohio.

Job-killing automation and rising health care costs contributed too, says Rosen. Trade expert Gary Hufbauer says this is the 15th time the U.S. has lodged a WTO challenge against China.

Gary Hufauer: And China’s lost a fair number of those.

And when China loses, says Hufbauer, it’s made a serious effort to comply. At least, enough to satisfy the world’s trade police.  Until the next time.

I’m Sarah Gardner for Marketplace.

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