Was The American Auto Parts Industry "Given" To China?

Jack Baruth
by Jack Baruth

And every nation but one signed on. A hundred and fifty-five nations agreed to a kind of form of blackmail, which is that you want to sell cars to the U.S., you want to sell, you know, orange juice to the U.S., you’re going to have to go along with deregulating your banking system, accepting our derivatives junk, our junk bonds and our junk derivatives, and opening up your sectors to Goldman Sachs and JPMorgan, so that Morgan, Citibank, and others are allowed to operate internationally. The effects, of course, have been disastrous.

It’s a stunning allegation, but it’s one that increasingly appears to be backed by solid evidence: the United States “exported” bad banking practice in exchange for importing everything from bananas to Bentleys. But there’s more.


Speaking to Truthout’s Jaisal Noor, muckraker/author/progressive Greg Palast made an interesting claim: that the United States allowed China to send us junk parts in exchange for junk bonds, inadvertently crippling the Detroit economy in the process.

By the way, even when we look at the destruction of Detroit, China signed the agreement, agreed, okay, we’ll open up our banking sector to derivatives and your toxic junk, but we want your auto parts industry in return. So we basically handed over the auto-parts industry to China. That was their deal. Two million manufacturing jobs shifted to China from the U.S., and auto-parts was a big part of it, which led to the–. One of the reasons why the city of Detroit went bankrupt despite the auto bailout is that auto parts did leave for China. So, you see, there’s direct repercussions of this type of secret connivance between our officials and banks. It’s a very dangerous business. And for Summers to have been in the middle of organizing this and coordinating this and not revealing this–they’re allowed to have these meetings, but they can’t do it in secret–it raises questions about whether this guy should be the central banker of the United States.

This is the sort of allegation which offers a very simple answer to a very complicated question, and perhaps for that reason it should taken with anything from a grain to a lick of salt. This isn’t a centrally planned economy and the government can’t just “shift” two million jobs. Still, it’s worth discussing, particularly as the not-quite-totally-open Chinese auto market continues to require a couple pounds of flesh with each imported American product.

Jack Baruth
Jack Baruth

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  • Volt 230 Volt 230 on Sep 09, 2013

    Did anyone see the 60 ins report last night about US workers now have new competition: robots are replacing thousands of workers, that is why unemployment remains high despite a better economy, BTW my mechanic would use rebuilt, CV axles and rack and pinion units but now he gets them from China, almost the same price, with a better warranty, cause he said the locally rebuilt units were poorly re-manufactured.

  • Jeff S Jeff S on Sep 11, 2013

    @Big Al--The major productivity gains in the US are mainly due to robotics. If you get a chance google the CBS 60 Minutes segment on robots. It is amazing what robots can do from filling orders in a warehouse with a preciseness of a Swiss watch to the repetitive tasks on assembly lines 24/7 with the only downtime for routine maintenance and repairs. The gains in quality on fit and finish on cars and trucks is mainly due to robotics. In the 60 Minutes segment for $22k a robot can be purchased that does the same amount of work as 2 assembly line workers and if you include $3 an hour wages in China the robot still comes out a head cost wise even in a US plant. Many of the lower skilled jobs that can be automated will eventually leave China and be replaced by robots in North America. The cost savings are even before you add the shipping cost from China and the time it takes to ship goods from China. Much easier to change production to meet increases and decreases in demand if products are produced locally. That would be just as true for foreign owned plants in the US as well as domestically owned manufacturing.

    • Inside Looking Out Inside Looking Out on Sep 11, 2013

      The irony is that industrial robots are made either in Germany or Japan. Talk about German engineering. I am no expert in robots but it does not look like US is even a player in this area in any shape or form. China has a serious social and structural problems. They may go into depression in near future. Chinese history is the sequence of the one popular revolt followed by another. As recent as in 20 century - several times. So I would not rely on China taking over US any time soon or even ever. Socialist countries always have serious social problems and are inherently unstable. May be that is why they are labeled "socialist". But replacing people with robots means there are no jobs available for humans and then you need high taxes and welfare system to help people to survive and it a moral hazard too.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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