America’s Socialists Bully China’s
Why is now the time to push China on trade and monetary policy? Easy: Because the Dems need money. And because they can.
In the past two years, China’s currency has appreciated 17% against the dollar and its trade deficit with the U.S. has fallen 15%. Yet despite the positive numbers, we are suddenly on the brink of a trade war.
Senator Charles Schumer (D-NY) now leads a pack of 130 lawmakers determined to punish China for manipulating its currency, taking American jobs, and — hold your hats — causing the global financial crisis.
Paul Krugman, Nobel Prize-winning poodle, chimed in on cue with a long-winded justification for a 25% tariff on the country’s imports. He also dismissed concerns about China’s massive stockpile of Treasury holdings.
All say the time to confront China is now — but why?
Simple. Because China’s making money and the Democrats want some. Since Obama’s election, the Democrats have taken over the health care industry and the financial services industry, and have designs on the energy industry. Why not grab a piece of import/export too?
Labeling China a currency manipulator allows the U.S. to bypass the World Trade Organization and put a 20-40% tariff on $250 billion of Chinese imports. This is $50 billion to $100 billion extra in new tax revenue a year. And it’s easy to spin this as a “good tax” — like those on smokers, gamblers, bankers, and the wealthy. How many companies are going to publicly complain that their factories in China are now less profitable?
And it’s not just the money — it’s the power. Being able to set Chinese tariffs by industry would give the government unprecedented negotiating strength against the private sector and its unions. Are you sure you want to oppose cap and trade?
Obama’s base is swooning, predictably. They have been clamoring for a vague “Fair Trade” for decades, and they’re only a few years removed from mob violence at G8 meetings, spouting yet more vague gibberish about American “exploitation.” Free-traders aren’t exactly popular in either party now, after more than a decade of failed promises on Mexico and China. They’d be smart to find cover.
Wouldn’t these new trade policies provoke China? Maybe, but the assessment is that China is vulnerable right now. Welcome to our new socialist foreign policy.
Page 1 of 2 Next -> View as Single Page
Tristan Yates is a management and investment analyst and the author of Enhanced Indexing Strategies. His articles and research have appeared in the Wall Street Journal, Yahoo! Finance, and many other publications.
 |
 |
Podcasts |  PJM Home |
Pajamas Media appreciates your comments that abide by the following guidelines:
1. Avoid profanities or foul language unless it is contained in a necessary quote or is relevant to the comment.
2. Stay on topic.
3. Disagree, but avoid ad hominem attacks.
4. Threats are treated seriously and reported to law enforcement.
5. Spam and advertising are not permitted in the comments area.
These guidelines are very general and cannot cover every possible situation. Please don't assume that Pajamas Media management agrees with or otherwise endorses any particular comment. We reserve the right to filter or delete comments or to deny posting privileges entirely at our discretion. Please note that comments are reviewed by the editorial staff and may not be posted immediately. If you feel your comment was filtered inappropriately, please email us at story@pajamasmedia.com.
The answer to this is actually kind of simple. If we want to have free and fair trade, and stop exporting American jobs, then we have to decide to pay more for everything. We need to stop shopping at stores that carry almost all Chinese products, and put our money where our mouths are. Of course that won’t happen because everyone likes cheap stuff. And frankly, the only reasonable “Fair Trade” would be the one that Tom Clancy describes in “Debt of Honor”, where unless a country agrees to drop their tariffs, we put together a committee of economic and legal experts, and baring any constitutional problems, we match their tariffs exactly, until they decide true free trade is in both of our best interests.
Any tarrif or trade restriction hurts America more than it hurts the other country. As to exporting jobs, why shouldn’t a company try to maximize it’s ability to compete against all other companies, including foreign ones.
Perspective;
The USA is not China’s largest export market, Europe is. Secondly domestic consumption is driving China’s economy, not Exports. In the Next 5 years over 300 Million Chinese will enter the Middle Class, that is what scares the pants off every US politician, China will be self sufficient in less than 5 years and could care less what the USA whines about. Grow a Spine for heaven’s sake.
The 2 Trillion in US Dollars comprise less than 5% of Chinas hard assets. It will be a flesh wound to see it drop or even collapse, but it wont damage the Chinese economy the manner most economists believe it would. However reverse the numbers and the US is reliant on China to fuel its out of control debt servicing. Don’t blame China for wild spending, look in the mirrors.
Chinese people in general are notoriously self reliant. If the power goes out, if water shuts off, if the bridge gets washed out, there is a default back to living how it was done 25 years ago. The same will not occur in the USA when the economy crashes, if it cannot maintain its spending habits.
Last, who in their right mind thinks the way out of any mess is to make another weak, instead of making yourself stronger..? The USA cannot develop a strategy to make the US dollar stronger..?? are we that stupid now, or that ignorant, that attempting to make another country weaker is the way to solve ridiculously simple problems..?
These politicians are pandering to the ignorant and self righteous…when the time comes to pay the piper, and it is rapidly approaching, blaming another country that made the right decisions and invested in itself will not save the Nation.
More Perspective:
China is certainly not responsible for our economic problems but that is no
reason not to slap them around a little. The Chinese do manipulate their
currency. Why shouldn’t we reply in kind?
I’m as big a free trader as you will find but China is a special case. I
believe the Chinese our the biggest national security threat the U.S. faces.
China uses the lopsided trade relationship they enjoy with America to fund
their massive military build-up. China is also supporting and helping to
build Iran’s nuclear weapons program. There is no reason to give the
Chinese the rope to hang us with in the future.
I live in China. There are few signs here that Chinese domestic consumption comes anywhere even close to the value of the export economy. You may want to check your sources on that.
You said on page two that an import tax “won’t fundamentally change China”. But on page one you said it would destroy their country.
And about this business of who “has a right” to do business in America. Is it really too much to ask for me to decide for myself who I buy products from. I guess you think it is.
You do have a right to decide who you will buy from. You have no right to make that decision for your neighbors.
Alex, there is no way you can know that 5% of the Chinese “hard assets” are about 2 trillion dollars. Also, it is the corrupt party that has that money…NOT THE CHINESE PEOPLE!!!! If those old commies get played for a trillion or two they will start a war somewhere in their neighborhood. Obama is a narcissist and he is a naive waif when it comes to world affairs. His whole administration is a collegiate ACORN street crowd. Pray for the whole world until this egotistical guy is voted out in 2012.
Wrong. The Democrats did not take over health care in America. There is no government option. The major things they they did were to pass legislation that bars health care providers/insurance companies from denying anyone coverage. Now, the insurance compaines cannot deny anyone coverage due to a pre existing condition. The bill also closes what is called the drug donut hole for Medicare along with limits on how much insurance compaines charge people who are older. To make sure everyone will have coverage, there will be subsidies for people and families that do not earn enough money to pay the insurance premiums. That subsidy goes to the insurance company. I have no idea where you get your information, but you should check what the AARP Bulletin says about this issue.
http://bulletin.aarp.org/yourhealth/
If you get your information from political sources like the Tea Baggers or the GOP, the chances are it is wrong and missleading.
And AARP is politically unbiased, Lloyd?
Lofty:
The AARP bulletin is one of the reasons I left the AARP. A senile citizen’s version of the ever-reliable NYTimes…
Remember Lefty (sorry, Lofty), the AARP is in the insurance biz too…and they target the above “scared-to-death” senile (whoops again) senior citizens. Their motives and hands are not entirely clean…
This guy gets his info from AARP, yet complains about others passing out misleading info.
There is no fool like a liberal fool.
How are insurance companies supposed to stay in business if people can wait until they get sick before buying insurance. And despite the lies that the AARP spreads, that is the core of the whole “pre-existing condition” nonsense.
The bill is designed to drive all private insurance out of business. Most of it’s authors have admitted as much.
You had better hope you live without major medical issues and die peacefully in your sleep. Have AARP types gotten so stupid that they think that the government can mandate cadillac universal coverage and at the same time dictate low prices without totally disabling the health care companies? They will dissappear or become government regulated utilities. Then the providers themselves will shrink because of the stress of constantly having to deliver more for less and due to downward pressure on their earnings. When scarcity and runaway costs become the government’s problem, their only answer will be rationing. Then as Obama suggests you can just take a pain pill instead of getting that broken hip replaced. Have fun. And thanks to the AARP for clarifying what we mean by the term “useful idiots”.
Hello Alansoulo,
Those corrupt commies turned a country without infrastructure or future into an incredible nation of opportunity and wealth in less than 30 years, starting with Deng xioaping. Something people in America should learn before assuming anything about China.
Chinese wealth is not maintained in dollar based assets, they are hard asset. China is the worlds largest producer of Gold. China owns more nickel and copper contracts than most of the rest of the world combined. China is Buying hard assets with its US dollars, so while ridding itself of a collapsing currency it is leveraging its wealth at the same time. Most people here ( i live in China) do not see the USD as a store of wealth or safety, they maintain hedges in Gold, Silver, real estate ( Owned outright, no mortgages) and other historical and inflation resistant assets.
The US dollar comprises about 4% of Chinas hard asset base.
Thanks for the intelligent comments – its why I enjoy writing for Pajamas. This article has a couple of points which the media (both leftist and traditional) doesn’t cover for whatever reason which you guys clearly picked up on, so thanks again. Some responses:
1) The most extreme potential policy response from the US/Obama administration, a very high tariff on Chinese goods, would certainly hurt China for more than it hurts the US, and would definitely affect foreign investment in China. This is the “nuclear” scenario that, although it will probably never be used, just the threat would extract concessions from them (or just about any trading partner). It’s realpolitik at its finest.
2) Is every country automatically entitled to free trade with the USA? Or are there standards countries must meet to get that privilege? I think that any reasonable person would argue the latter, or else you’re advocating trading with North Korea, Saddam, Angola rebels, etc. To me rights without responsibilities goes against both conservative and libertarian principles.
If there are standards that must be met, then is China meeting those standards? That, especially in the wake of the poisoned food scandals in 2007, their support of dangerous regimes, persecution of religion, rampant intellectual piracy, Bblligerence towards neighbors etc, is a policy discussion that should be taking place constantly.
Remember that Most Favored Nation, WTO membership, 2008 Olympics were all supposed to make China a kinder and gentler treading partner but never set any specific standards that China must adhere too, just weak requests for “progress” on issues. Maybe its about time that, instead of making vague threats about currency manipulation, we just made a specific list of what China has to do in the next 12 months if it wants to continue to have any access at all to the US markets. If you want to play what would Reagan do, well, I think that’s what he would do.
Barry Goldwater once said of the Soviet Union, we should sell them anything they can’t throw back at us.
So should we trade non-military items with N. Korea? Yes.
Of course we shouldn’t loan them money so that they can buy our stuff. So their ability to buy anything is quite limited.
Regarding the poisoned food scandal. Should we stop trading with California? They had a poisoned food scandal two years ago that killed more people than the Chinese scandal did.