Monday, September 19, 2011
China is Blocking America's Economic Recovery
Americans of the generation that fought World War II and lived through the next fifty years of the Cold War never lost sight of the fact that the Soviet Union was Communist and therefore lacking anything resembling the moral values of our nation or the West. Why then do a more recent generations ignore the fact that Red China is Communist and operates in the same predatory fashion?
One of the major reasons why there is no new job creation in America is tied directly to its policies toward Red China. Both the Bush and Obama administrations were reluctant to challenge China’s deliberate strategy of not just destroying America’s manufacturing base, but all other nations, making itself the center for manufacturing.
A new book, “Death by China: Confronting the Dragon—A Global Call to Action”, by Peter Navarro and Greg Autry spells out the threat and explains why letting China be America’s biggest lender, while luring more and more corporations to set up shop there is destroying the nation’s ability to recover.
There are, of course, other factors affecting recovery, not the least of which is Big Government with its massive regulatory stranglehold and the need to reform America’s tax policies, but beyond that is the growing threat of a China that is deliberately breaking all the international rules of trade and getting away with it.
China’s “industrial policy (is) aimed at nothing shore of the total domination of world manufacturing, the total penetration of global markets, and the economic subjection of the Western World.” That may sound like hyperbole, but the authors back it up in a book filled with frightening details and data.
One area that remains largely a mystery to most Americans is addressed in its chapter, “Death by Currency Manipulation.” The authors say “If money is the root of all evil, then China’s manipulation of its currency, the yuan, is the tap root of everything wrong with the U.S.-China trade relationship. China has dramatically slowed America’s economic growth rate and spiked our unemployment rate.”
“China manipulates its currency by artificially ‘pegging’ the Chinese yuan to the U.S. dollar at a grossly undervalued fixed exchange rate.”
The U.S. trade deficit with China is appalling. “In terms of absolute size, America imports almost $1 billion a day more than it exports from China every business day of the year. That’s not a typo: it’s billion, not million.”
“America’s trade imbalance,” the authors point out, “could never persist in a world of free trade where China allowed its currency to float freely alongside other floating currencies around the world like the euro, Japanese yen, Swiss France, Brazilian real, Indian rupee, and the U.S. dollar.”
“It is precisely China’s massive accumulation of dollar-denominated foreign reserves that now allows the Chinese Communist Party to credibly threaten to nuke our financial system.” Beyond the U.S. it threatens “the entire global economic fabric and free trade framework.”
American corporations have been lured to China with the illusion of 1.3 billion consumers there, but the vast bulk of China’s population has yet to have achieved a middle class status with the money to spend on our goods. In the meantime, companies like General Electric are transferring entire elements of their assets to China in order to have them manufactured there for less. With those assets, however, go the technological and intellectual property they possess.
This is a violation of World Trade Organization rules, but there is ample evidence that WTO rules are routinely violated by China and only the most desultory efforts are made by WTO member nations to protest.
“Since China joined the World Trade Organization in 2001 and falsely promised to end its mercantilist and protectionist practices, America’s apparel, textile, and wood furniture industries have shrunk to half their size—with textile jobs alone beaten down by 70%. Other critical industries like chemicals, paper, steel, and tires are under similar siege, while employment in our high-tech computer and electronics manufacturing industries has plummeted by more than 40%.”
These days, I look at the packaging of everything I purchase to determine if it is “Made in China” because, if it is, there is a strong likelihood that it poses a real danger. “Chinese entrepreneurs are flooding world markets with a range of bone-crushing, cancer-causing, flammable, poisonous, and otherwise lethal products, foods, and drugs,” the authors warn.
Eating food produced in China poses a very real threat because of the immense levels of pollution in its environment and the fact that there are ample examples of food producers deliberately adulterating their products.
Thus, America’s economic recovery is directly related to its trade practices with China and its financial system is now mortgaged to China. We must disenthrall and disengage ourselves from China if we are to survive, let along remedy our growing legion of unemployed.
© Alan Caruba, 2011
Posted by Alan Caruba at 2:46 PM
Labels: China, trade imbalance, World Trade Organization
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The EPA and state boards, along with foolish government policies is what destroyed our manufacturing base, our mining base and our smelting industry. We done it to ourselves.
Anyone should have been able to see that our manufacturing industry couldn't compete with labor in other nations being paid at less than $5 or less per day.
Prior to about 1964, the balance of international trade was greatly in favor of the US. The powers that be in government then decided that this wasn't "fair", and effectively made our US industries give away for nothing technology which had cost our industries great sums of money to develop.
In about 1972, the economic decision was made that the US could trade our vibrant mining, smelting and manufacturing industries economy up for a service based economy.
In the prior economy, value was being constantly added to our economy, so our economy was very good. With a service economy, no value is added to the economy, only price goes up.
I am not about to accept laying the blame on other nations for our woes, when it is obvious that it was and is our own politicians, federal, state and local, which are causing us our economic grief.
This last scheme, with the Fed trading Dollars for Euros to "bail out" central banks in Europe is absurd, and as far as I am concerned, several high placed officials should be tried and convicted of treason.
China has been taking advantage of our government's absurd economic policies. But China itself is in deep economic problems of its own. The people in nations in Europe and the US, the base market for Chinese manufactured goods, no longer have money to purchase China's manufactured goods, however cheap those goods might be, and China is also going down the drain from an economic standpoint.
The end result, coming very soon, is not going to be pretty to behold.
@Larry: Good points!
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