Should the US continue to do business with communist China?

What is wrong with this picture? With China being considered an enemy of the United States why is The United States allowing China to engage in business with the the US? The US has a large trade gap with China resulting in significant job loss for US citizens mainly in the textile and manufacturing sectors.

The US recently sent 10 aircraft battle groups off the coast of China as a demonstration to China that it better not think about invading Taiwan. So why are we allowing China to hurt our economy which is the foundation of the security of the US?

Here is an article China Keeps Close Watch on Dissidents that demonstrates China has not changed her communist ways and that if she spies on her own citizens then why should we allow China to invest in the US and help China to be able to spy on American business in order to steal trade secrets and then to eploit them for economic gain. Here is an article on American officials wooing Chinese to invest directly into Ameica.

Isn't there something wrong with this. After Bush gave a speech about planting the flag of democracy and wanting to help people under tryanny isn't allowing China to do business with the US hypocrisy?

Isn't there something wrong with this. After Bush gave a speech about planting the flag of democracy and wanting to help people under tryanny isn't allowing China to do business with the US hypocrisy?

I suppose that American Foreign policy for you! Can't say its a surprise either.

I guess this saying could come in, "Keep your friend close, and your enemies even closer" and I suppose the US needs as much investment as possible to keep it top dog for as long as possible.

China holds a majority of US debt, so maybe the US has no choice but to trade with them. I'll do some more research in to it see what I can find

I wasn't aware they were considered an "enemy" as such. China is vital to the American trade industry, no way will they stop trading.

China buys the debts that keep americans fat and happy. Stiff China and they can destroy the American economy without firing a single shot. They can just stop buying worthless american bonds and watch Americans drown in the sea of red ink that they have accumulated.

Originally posted by Justanotherperson
China buys the debts that keep americans fat and happy. Stiff China and they can destroy the American economy without firing a single shot. They can just stop buying worthless american bonds and watch Americans drown in the sea of red ink that they have accumulated.

Cutting off trade would hurt China too. The US is their biggest and best customer not very smart economics to destroy your best clients economy. We buy alot more stuff from China then they buy from the US.

We can always find people to make the junk we need (Mexico,India,Ect..) could they always find people to buy the junk they make?

It's more like a mutual stranglehold than a romantic tango, but their is too much money riding on it in both countries to step out.

In extreme case China could stop buying bonds, Us could stop buying chinese products, both will suffer and in case of war the Americans would no longer feel obligated to pay back the old bonds

But it seems that while America needs china for consolidating her position as superpower, it seems China gets more out of the deal by being able to expand her position as superpower, naturally this is worrying, especially if they start to buy oil in your backyard and do weapondeals with countries that are not symphatic to the american cause.

Naturally the war on terror is an important galvanizing element to allow this transition. The war on terror is both a real problem as well as new oppertunities.

So, there is a tough balancing act for U.S. foreign policie, calling them "valuable allies in the war on terror" on monday and "repressive communists" on tuesday, well, as any republican can tell , no real communist system has ever lead to a capitalist boom as we see in China, so it's more like they head towards the feudal system where the warlords and samurai are replaced by heads of corporations and a huge supporting policeapparatus.

Interestingly , it seems the american government is alo heading towards a "ownership" soceity with lots of power for the police and corporations and little social / medical / legal security for the common man. As long as they can please the consumer with cheap chinese products, the people will complain, but swallow the gradual destruction of their civil rights. However, expect a big uprise in America should the prices at the gasstations double overnight, no amount of media-control could contain the public anger.

Therefore I don't expect a big China-American war, but rather many small proxywars in Africa, about new oilresources.


[edit on 30-1-2005 by Countermeasures]

Why would it be hostile in nature for a country to stop buying worthless bonds? The only reason why China buys it is to prop up the American economy so they can sell their products.

The bonds are worthless and everyone knows it. The days of the US printing out unlimited money are coming to an end. The Bush administration thinks that a lower dollar will be good in the short term, but tie that in with massive debt and you have an economic collapse on your front doorsteps. China wouldn't be able to HELP america come out of that one.

Confucius says: when out of carrets, try the stick.

That's why there is so much spending on the millitary in tha USA., if you can no longer fix the worldmarkets with the dollar, you could try to "fix" them with millitary muscle, smoke out some bearded hoodlums, doing some liberation (read: recolonialisation) in the process....

The question begs itselve: Does America have any other choice left , other than dictating policies increasingly though millitary might? without losing the spending power of the average american consumer ???

From an average consumer perspective: I believe it can, look at Canada, they are doing fine, without having to stick their noses in other peoples bussinesses all over the world, However, it means that you will have less multi-billionaires as there is less absolute power / carte blanch for corporations.

Since in the american Dream, the sky is still the limit and winner takes all, many Americans hope to rise to Donald trump status someday , so they can marry supermodels even while having a constant bad hairday and foreign policies doing lots of global collateral damage seemed a small price to pay in this sadistic system, until them terrorists presented a bill.




[edit on 30-1-2005 by Countermeasures]

The bottom line is this:

The US holds an advantage over China in that we are her largest consumer, yet have many other sources from which to buy goods. The US also holds the head to head military advantage as well as the edge in political influence.

China holds the advantage of having the US in debt to her.

Now, China really can't use this debt like she would like because using this leverage would cause her own economy to crumble. Don't forget, if you destroy the economy that owes you money, you too will sink. In adition to that, they would also not have their biggest trade partner so much of their economy would crumble as well.

The way to think pf the debt is an insurance policy for China. Now, the US on the other hand can't do anything too serious towards China untill it can pay back it's debt. Once this happens, China will be at a great dissadvantage.

So I think what I am hearing that each country has the other by the balls and their isn't anything that the other can do at the current time.

Here is an article that I found that might be of some interest to you guys about the relationship of China and America called The Dragon and the Eagle.

Here is an excert that seems to describe the situation almost to the letter:

"For a more detached viewpoint, to look at the two economies separately is like looking at the two wheels of a bike without looking at the frame that connects them. Looking at the US-China bi-cycle in motion exacerbates the separate notes of caution that international agencies have sounded against each country. In fact, there is an inherent and additional precariousness in this double bubble act.

Veteran New York money manager Arnold Schmeidler—who did not invest in dot.com IPOs—warns, "We are in a period unlike anything since the 1930s when the world is confronting deflationary forces." The president and founder of A R Schmeidler & Co Inc asks how sustainable it is that "American auto companies are selling their production at zero interest rates, because there is excess capacity. But China is building auto plants to make hundreds of thousands of vehicles, so we have extra capacity being brought into a market where we already have excess capacity. So the trend is towards 40 cents an hour wages and top quality competing against the US."

Schmeidler concludes, "The single greatest force for deflation is when you have open trade between nations that have the ability to import the most efficient manufacturing expertise into a low-wage-base society, and so can produce products of the same quality as the high wage economy. The price pressure on the product allows consumers to get more for their money and they benefit. But it is disinflationary, if not deflationary."

In fact, of course, China currently is lending the US the money to buy Chinese production.

For example, as the "boom" of President George W Bush takes off, puzzled American commentators are asking where are all the extra jobs that the apparently positive indicators should be creating. In fact, they are being created abroad—mostly in China.

China recycles trade surplus into US Treasury bonds

American companies may have forgotten what Henry Ford propounded when he first built his Model T: If you do not pay high enough wages to your workers, they can't afford to buy your product. One simple basis for that Bush boom is that China is recycling its US$100 billion-plus trade surplus with the US back into dollars, and especially into US Treasury bonds. Almost half of the US Treasury bonds are now owned in Asia. So China is financing Bush's bold economic experiment: running two or more wars simultaneously with a huge budget and trade deficit, and equally huge tax handouts for the richest Americans.

One has to question the long-term economic rationale for China of putting its long-term assets into very low-interest bonds in a currency that has already dropped recently by a third—and is going to drop even more. It certainly makes strategic sense: if push came to shove over, for example, the Taiwan Strait, all Beijing has to do is to mention the possibility of a sell order going down the wires. It would devastate the US economy more than any nuclear strike the Chinese could manage at the moment.

But far from wanting to devastate the dollar, China is more concerned to maintain its currency's parity with the dollar, even as it devalues massively against the Euro or the Yen. Indeed, without those Sino-dollars flowing back, the dollar would have tanked even more.

There is a big multiplier effect here. China only accounts for 3 percent of the world's GDP, but for from three to five times as much of the world's growth. And its economy is disproportionately trade-oriented. So its double act with the US—both the seller of consumer goods on a huge scale and the financer for US' purchase makes it even more important.

It does not help that the US, which has the experience, certainly shows no signs of using it to assess longer term dangers, and even if China had that foresight of perils ahead, Beijing lacks the experience to act effectively.

Dangerously, the global economy is faced by an addictive combination of China—a developing country with many problems of social instability—and the US—which the recent IMF report hints is a rapidly undeveloping country—whose fiscal irresponsibility is compounded by a political immaturity that tends to ignore geopolitical and economic reality.

If the US economy sinks and Americans stop buying Chinese goods, then it will compound the US slump as China first stops buying US bonds that have inflated the American bubble and then moves on to selling them. On the other hand, if the Chinese economy falters and it stops recycling dollars into the US economy, then the boom stops anyway. Indeed, it seems that China increasingly will need more of that cash to pay for energy imports anyway.

But New York money manager Schmeidler, and others who remember that economics is the dismal science, realize that it is still better science than politicians drumming up votes and investment bankers drumming up business seem to understand. The West is in the red, and if it crashes, the East may join it."

[edit on 30-1-2005 by The Division Bell]