The key turning point in China’s economic development came only weeks after the 9-11 attacks, when it became a member of the World Trade Organization. The bargain that China made in return for unfettered access to overseas markets was that it would abandon mercantilist policies such as export subsidies and currency manipulation that distorted trade flows. We now know that China took full advantage of its new-found market access without eliminating discriminatory trade practices. By the end of the Bush years, the United States had accumulated a trillion-dollar deficit in its merchandise trade balance with China and Beijing was holding vast currency reserves America needed to borrow to cover federal debts.
But as that latter point implies, the economic chronicle of the new era wasn’t just about China’s rise, it was also about America’s decline. Policymakers in Washington failed to foster conditions in which the U.S. economy could keep up with the rest of the world, and thus the U.S. share of global output slid from 32 percent the year President Bush took office to 24 percent today. After increasing jobs by 20 percent in each of the two preceding decades, the economy produced no net additional jobs at all during the first ten years of the new millennium. An average of over 40,000 manufacturing jobs disappeared every month for ten straight years, due in no small part to the flood of cheap Chinese goods inundating the market.
Did 9/11 mark the start of America’s real decline? It marks a major turning point in its trade with China. China got to eat America’s lunch, and the rest of America too.
9/11 marks the rise of Islam, and some suggest a sign from God about impending disaster.