Are we our own Manchurian candidate?

By Robert Bork Jr., March 6, 2024

The two Super Bowl ads run by Chinese retailer Temu got me to thinking: Will future historians one day wonder why Western regulators worked so hard to degrade their most competitive multinational companies just in time to hand global markets to a predatory China?

Consider: The year began with European antitrust regulators raising the bar so high for Amazon’s acquisition of iRobot, the maker of the Roomba robot floor cleaner, that the two companies had to call off the deal. iRobot shares tumbled. The company announced the departure of its CEO and the laying off of one-third of its staff.

Putting Amazon’s capital and marketing power behind iRobot could have supercharged this U.S. company’s reach and innovation, benefiting both American workers and consumers. Instead, the market is now left to Chinese companies such as Ecovacs, which can count on government subsidies, not regulatory lead weights, from Beijing.

Not to be outdone by the European Union, the U.S. Federal Trade Commission is moving ahead with an illogical antitrust case in federal court that, if successful, would break Amazon’s pro-consumer business model. This case is being pressed precisely as China’s Temu and Shein retailers are making deep inroads in the U.S. online retail market. Amazon, famous for its low price-matching, is now being undercut by these two Chinese retail giants that are attracting tens of millions of U.S. monthly visitors.

Unlike Amazon, Temu and Shein have no warehouse networks in the United States, so they are unable to match Amazon’s two-day delivery window. But they do offer “fast fashion” at astonishingly low prices, including dresses for under $11. A market conservative might be tempted to defend these retailers on the basis of free trade and the consumer welfare standard. But in the modern era, lower prices and greater efficiency should be no protection if a company’s strengths are based on inhumane business practices.

A documentary broadcast by the U.K.’s Channel 4 used hidden cameras to show Shein garment workers working 17 hours straight, hunched over sewing machines to make up to 500 garments a day. An investigation by Bloomberg showed that cotton fabrics used by Shein bear the tell-tale signs of cotton from Xinjiang, the provincial home of the Uyghurs, where torture, forced sterilization, religious repression, and concentration camps could make these goods violations of the Uyghur Forced Labor Prevention Act.

These companies are also reckless with their global consumers. A Health Canada test of a Shein jacket shows it contained 20 times the amount of lead safe for children. Google had to suspend the mobile app of Pinduoduo, Temu’s parent company, because it was loaded with sophisticated malware that granted access to users’ private messages. Hundreds of designers, from Ralph Lauren to local artists, have complained that Chinese fast fashion quickly reproduces their designs and sells them for a pittance. And because Temu and Shein’s products are so cheap, they fall beneath tariff thresholds. 

While these companies grow like kudzu in the U.S., Amazon and other American companies have been forced by punitive regulations to abandon China.

So how does our government respond to companies undercutting law-abiding U.S. companies while degrading human rights and possibly endangering Americans’ health? By going all-out to harm America’s leading industries and retailers.

Consider the aforementioned Federal Trade Commission suit now before a federal court in Washington state. The FTC complaint charges that Amazon’s rapid match of competitors’ price cuts somehow ratchets up prices. This makes no sense. Matching the discounts of rivals is not an anti-discounting tactic. It is the very soul of discounting.

The FTC faults Amazon for featuring competitively priced offers and declining to feature uncompetitive ones in its “BuyBox.” Should Amazon feature bad deals? Somehow, with 80 economists at her fingertips, FTC Chairwoman Lina Khan offers no economic analysis to buttress her claim that featured low prices on Amazon somehow raise consumer prices. Stranger still is her effort to break up the billions of dollars Amazon has invested in a nationwide fulfillment network to offer free two-day shipping for Prime members. Is it better to have cheap, knockoff goods delivered straight from China?

The Biden administration is also hobbling other competitive U.S. industries. It delays U.S. export permits for liquified natural gas, harming both national competitiveness and the environment by making goods manufactured on China’s dirty, coal-based electric grid more competitive. And the Biden administration’s accelerated mandate for two-thirds of American-made cars to be electric in seven years hands the world car market to the low-priced vehicles of BYD and other Chinese state-supported champions, with ready access to China’s cornered market on rare-earth minerals for their batteries.

The motivations of Western leaders behind these self-defeating actions are unfathomable. Those of China were spelled out by Sun Tzu centuries ago: “The opportunity of defeating the enemy is provided by the enemy himself.”

Originally published in the Washington Examiner.