The United States and China are presently in the midst of an undeclared Trade War.
Communist China turned its nose up to entrepreneurial capitalism for decades. They fought hard to implement the communal paradigm of group farming and factory production, to no avail. Though not abandoning the essential Red Party structure--with the familiar rigid controls of all business and labor activity--the Chinese finally capitulated and adopted investment and capital-driven manufacturing and trade policies, which, given the enormous population of cheap workers (abandoning the dying agrarian economy of the countryside), and preferential loans etc., have become splendidly successful. It's unprecedented. China has become the economic engine of the globe, and is no longer a so-called Third World Nation.
The opening of China to the West, may have begun with Nixon's visit in 1972, but the twists and turns of our relationship could hardly have been predicted. As recently as the Tiananmen Square protests, and the storm of indignation in the West, it was still possible to imagine that our connections with them were tenuous enough to consider severing ties over diplomatic disagreements.
But today all that has changed. Take our trade imbalance for 2010 with China:
Total exports - 91.9 billion
Total imports - 364.9 billion
That's an annual trade imbalance of 273 billion dollars, or the largest discrepancy, by percentage, we have with any other country. In case you don't understand the meaning of trade, that translates into 273 billions of dollars of income to the Chinese, companies selling good to Americans. 273 billions of dollars flowing OUT of our country, and INTO China. Profits of that caliber will rapidly impoverish the debtor economy in such a relationship. Which is exactly what is happening. The U.S. government, rapidly losing ground in the tax sweepstakes, has had to go deeply into debt in order to pay our operating expenses. China, realizing the whip hand it now holds, has bought deeply into our bond paper.
In their own, mostly closed, economy the Chinese permit a number of unethical practices. Product and technological piracy is widely permitted. The Chinese labor force is pinned down by their military. Environmentally, China will soon surpass America as the primary polluter on the planet. They've proven that they don't need a parliamentary democracy to challenge the West economically. Beijing has shown no inclination to liberalize, keeping a tight lid on the media, and suppressing the merest hint of dissent or demonstration. It's that new hybrid, a centrally planned capitalist dictatorship.
On July 21st, the Wall Street Journal reported the discovery of a "fake" Apple Computer store in Kunming, China. This probably wouldn't have gotten so much press, except for the fact that Apple has no stores in China! Outside of America, China is probably the largest market for computers and computer paraphernalia. But China won't let Apple Macintosh sell its products there. No one has so far reported on how a Chinese retailer was able to acquire new Apple products, let alone market them openly in a major metropolitan centre. Nor have there been any reports about why the Chinese government officials--who could hardly be more cognizant of the issue of industrial/technical theft and piracy--stood by while this was happening.
The implication, which is impossible to miss, is that China not only is aware of the enormous inequality of our trading relationship, but actively promotes piracy and fraud in their country, victimizing American companies in the full light of day.
When China was our nominal "enemy" on the world stage, no one would have trusted their motives. Now that we're great "friends"--China is now "most favored trading partner"--China can use its reputation as the gruffest negotiator in trade disputes, to fend off complaints and charges of unfair practices.
The clearest instances of conflict among nations are usually the result of power confrontations. China wants more power. It's become very ambitious. It approaches its relations with the rest of the world from a purely selfish priority. What's good for China is good for China. The hell with the rest of the world.
Does anyone now believe that China will deal fairly with us in our trade relations?
It's high time that the U.S. institute some tough trade policies with China. For starters, we slap a 15% tariff on every product imported here from China. That might get their attention. If he hollers, pinch his toe.