If someone proposed that the United States adopt a policy that massively reduced the wages of every worker in America as a strategy to increase the profitability of US-based firms, everyone would recognize the policy for what it is. But when China holds its currency artificially low—which has the same impact—many people tend to see it as a cunning example of economic policy in action, rather than as special interests capturing the Chinese policy process and running it in a destructive way. Part of the issue is that people often don’t see that interest group politics exists in foreign countries, especially ones that aren’t democratic. But look at the latest reports out of China on Prime Minister Wen Jiabao’s efforts to deliver on his promise to use an “iron hand” to increase energy efficiency:
The Ministry of Industry and Information Technology quietly published a list late Sunday of 2,087 steel mills, cement works and other energy-intensive factories required to close by Sept. 30. [...] Over the years, provincial and municipal officials have sometimes tried to block Beijing’s attempts to close aging factories in their jurisdictions. These officials have particularly sought to protect older steel mills and other heavy industrial operations that frequently have thousands of employees and have sometimes provided workers with housing, athletic facilities and other benefits since the 1950s or 1960s.
To prevent such local obstruction this time, the ministry said in a statement on its Web site that the factories on its list would be barred from obtaining bank loans, export credits, business licenses and land. The ministry even warned that their electricity would be shut off, if necessary.
Chinese political institutions aren’t the same as American ones, but what you can see here is that they’re not totally different either. This is not at all dissimilar to the debate playing out over the EPA’s Clean Air Act mandate to regulate greenhouse gas emissions. Public officials, whether in China or West Virginia or Ohio, often see it as their job to defend the interests of local employers and businessmen.
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