Q&A: Peter Navarro on America's Death by China

Workers on a production line at a toy factory in China Photograph by AFP/Getty

Bloomberg Businessweek speaks with Peter Navarro, a business professor at the University of California, Irvine, about his new documentary Death By China. The film, based on the eponymous book he co-authored with Greg Autry in 2011, opened in Los Angeles on Aug. 17 and comes to New York on Aug. 24. Reviews have described it as “a lucid wake-up call” and criticized it for being “heavy handed” and containing “xenophobic hysteria.” Navarro reponds, “The film accurately depicts the devastation China’s unfair trade practices are having on Americans. Critics giving bad reviews should get out into the heartland of America more. Viewers are deeply moved by the film if our L.A. opening is any indicator.”

Poster for the movie 'Death By China'
Death By China. That’s a pretty grim prognosis. Is China killing us?
We’re billing this as the feel-good movie of the year. [Laughs.] There’s nothing subtle about what’s happening. It’s an economic death because of China’s unfair trade practices and the loss of the U.S. manufacturing base. Also, literal death because of the loss of consumer safety: toothpaste, baby formula, a dizzying array of products. There are also human rights abuses—China’s forced labor camps. There’s a chilling discovery in the film about how people are being taken out of labor camps and their organs are harvested. Also, the military buildup of China. It’s an evocative title, yes, and it has multiple meanings.

Is it about declining U.S. dominance?
That would be jingoistic. It doesn’t matter to me who’s the most powerful or profitable country in the world. All countries want to be prosperous. What’s happening is a zero-sum game between China and the U.S. where their gain is our loss. It’s about the fact that we don’t make things any more, that we lost our manufacturing base, the 25 million people who can’t find a decent job in this country, the zero wage growth. I want consumers to connect the dots, to go to any store and look at the label and connect the dots between buying cheap China products, which is better for the wallet, and all the other things we lose, like jobs.

Some would argue that the U.S. shifting away from a manufacturing economy to a knowledge- and service-based economy is a good thing.
The best counterfactual argument to that is Germany. Germany is one of the strongest, most stable economies, and 25 percent of their workforce is in manufacturing, compared with 9 percent in the U.S. The service-sector opium they tried to sell us in 1990s and early 2000s hasn’t worked. Manufacturing is the seed corn for other jobs in the U.S.

Would you call yourself a protectionist?
The way that my view on this is often derided is using the P word. It’s a very inflammatory word in my profession. There’s a big difference between self-defense against unfair trade practices and protectionism. The biggest protectionist in the world now is China. If you want to go into China now, you can’t without a joint venture Chinese partner, and you have to give them your tech. The logical result of that is they take your IP and then you’re obsolete. This is not protectionist; it’s self-defense against a very mercantilist trading partner.

Is calling you a Democrat just as inflammatory?
The greatest compliment is I am accused of being a Dem leftie and a Republican righty. I am a pragmatist. I call it as I see it. This country needs more of that. I am a Democrat. I ran for Congress in 1996 as a Democrat. Both parties have failed us in the same way. We’re really careful in the movie to make this a nonpartisan issue. It’s an American problem, not a Democrat or Republican issue.

When was the last time you went to China?
I went back just before the release of the Coming China Wars in 2006. Once I wrote that book … it’s dangerous for me to go back there. My co-author Greg Autry was followed, and they searched his room. Some think this movie is too strong, but it’s not. It’s a serious national security issue. I don’t go back to China. I understand the country at some level. And a lot of my colleagues are wined and dined, but it’s Beijing and Shanghai, and that’s it. You have to get out in the countryside to know what’s going on.

You must speak Mandarin.
No, no. You learn how to communicate.

Why do our politicians let Chinese companies get away with trade, labor, and environmental violations?
I’m very careful not to blame just China. The other big problems are multinational companies from the U.S. or Europe or Japan. They benefit. They like the status quo, and they pay lots of money for that, and lots of lobbying money. Politicians need money at election time and money to get the vote. Well more than half of money in election comes from corporate interests whose interests are in polluting the Chinese environment and making products.

There’s a view that China is merely experiencing “growing pains,” that it is where the U.S. was, say, 50 years ago, and it’s entitled to some missteps as it becomes a developed nation.

Ian Fletcher, from the Coalition for a Prosperous America, said it best: This whole idea of policy of engagement, democratizing China over time—it has become a more sophisticated form of authoritarianism. The way the evolution works is, you’re supposed to become a more democratic state. Yes, Mussolini got the trains to run on time. There are advantages to authoritarianism. China, at its heart, is a corrupt government. Democracy is chaotic in Egypt and places like that. China faces complex and different problems, and you still have half of people on plot farms that live on subsistence. I don’t know how they solve that, but I think there’s a path to prosperity for both the U.S. and China. That’s not the path we’re on.

What are the next steps in creating a healthy U.S.-China relationship?
The next critical step is for both presidential candidates to state that the biggest problem with the American economy now is the trade deficit with China and to promote a policy of balanced trade by 2020. In the short term, we need to crack down on China’s unfair trade practices, especially currency manipulation. We also need to reestablish the link severed by Bill Clinton and again by Hillary Clinton between trade with China and human rights. Consumers need to stop buying made-in-China products or think about their purchases. The biggest single thing China needs to do is build an emergent middle class and domestic consumption, and the best way to do that is through pension and health-care reform, and currency reform to establish purchasing power among its citizens.

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