China Trade: Myths vs. Reality

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Republicans and Democrats, liberals as well as conservatives, have bought into anti-Chinese trade demagoguery. Former House Speaker Nancy Pelosi suggested that tariffs against China are a “key part of our ‘Make It in America’ agenda.” During his 2010 campaign, Senate Majority Leader Harry Reid, D-Nev., called his tea party-backed Republican challenger, Sharron Angle, “a foreign worker’s best friend.” In a recent news conference, President Barack Obama gave his support to the anti-China campaign, declaring that China “has been very aggressive in gaming the trading system to its advantage,” adding that “we can and should take action against countries that are keeping their currencies undervalued … (and) that, above all, means China.”

Republican 2012 presidential candidates have jumped on the anti-China bandwagon. Mitt Romney wrote: “If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. … I will begin on Day One by designating China as the currency manipulator it is.” Former Sen. Rick Santorum, R-Pa., was even more challenging, saying, “I want to go to war with China.”

Let’s look at the magnitude of our trade with China. An excellent place to start is a recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled “The U.S. Content of ‘Made in China.'” One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department’s Bureau of Economic Analysis.

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  • FriendofGaryCooper

    What would happen if the U.S. put a 20% tariff on all goods coming into America from China? Of course, fewer Chinese goods would reach U.S. markets; but the demand for
    the corresponding American-made goods would go up, and this would create jobs in the U.S. The next U.S. President ought to do this.(Obama surely won't) And what would happen if the U.S. Navy was restored to the 600 ships it had under George W. Bush?
    (Up from the anemic 238 odd ships it has now, under Obama) China would be put on notice, that the U.S. is a serious country again. Very good for world peace. Interesting article.

  • Alexander Gofen

    1) Even from the most general considerations, it is bordering with treason that America does not impose tariffs on foreign goods and services – while other nations do just that. Our Founding Father considered tariffs as the main source of State revenue.

    2) Yet it is worse: China is not just any foreign nation: it is a communist enemy nation! It is an enemy nation holding a lot of our debt. So it is even more treasonous to export our jobs there and to sell their goods here – because both empower the enemy and transfer an immense wealth to the enemy together with high and military technology.

    3) It also de-industrializes America and makes us dependant on the hostile foreign powers – especially in a case of military conflict when our own heavy industry becomes of paramount importance.

    This article is a demagogic apologetic for the treasonous policies conducted by the treasonous one party system and treasonous Congress for decades.

    • Bob of Aussie

      Being an enthusiastic free marketeer, I nevertheless agree 100% with Alexander. Thade with China, an evi and increasingly hostile power, is neither free nor fair. By its very description a "free trade"is between free people. How can an exchange between free people and a half slaves whose salaries are being kept artificially low by the brutal force, be called a free trade?
      America has transfered some ten trillion dollars of the wealth and close to fourty milion jobs to China for ABSOLUTELY no benefit to herself.
      Not only that. America is tolerating an unimaginable theft of American technology that must have reached at least trilion dollars in value.
      All those surplusses are being used by Chinese regime to prop up its military machine specifically to challenge America in the incoming future.
      Reagardless of all other equally important factors, burdened by 15 trilion dollar debt, America cannot aford herself to waste even a single dime, the American people cannot then aford themselves to maintain a 250 bilion trade deficit with the enemy that is plotting America demise.
      This nonsense must be stopped as soon as possible.