Freting China

I don’t understand China completely and to what exactly that country means to the future global economy. I do know that I almost immediately roll my eyes and zone off when someone starts going off on a seemingly endless rant about China and all the horrible things that they mean to us (think Laura Ingraham or Donald trump) and at the same time I cringe a little when some disregard China as nothing much (like a professor of mine).

To me I think China represents, to the United States, almost a perfect US type gossip rag definition of ‘frenemy’. We need them and the proliferation of affordable products I think is an overall good for the country. Certainly it’s not ideal that some things are no longer manufactured here because they are not competitive price-wise but as prices lower citizens benefit because they have more purchasing power. Additionally it is better for the US work force to diversify and to specialize in skills that apply to a broader range of work so that workers are not forced to rely on a single type of labor in a single type of industry.

That doesn’t mean China should be taken lightly. They are an authoritative communist government that holds roughly 1 trillion dollars in US debt by bond meaning they literally own a decent share of the US. Some argue that because more debt is held by US citizens than China it doesn’t matter. Not really. China is a global competitor and our economies are dependent on one another. Holding that much debt allows China even more influence on our economy in addition to trade policy and forces our government to consider Chinese interests when making policy, not good.

On the other hand, China is a rapidly modernizing country that is weighed down by a growing disparity in the relative prosperity of its more than 1.5 trillion residents. Their median income is less than a tenth of ours and the communist government loses credibility as its economy liberalizes. Their citizens are demanding a say and as prosperity spreads their government may lose its totalitarian grip and if not, by becoming more repressive, its economy will likely regress like that of the Soviet Union.

Calling China a ‘trade cheater’ is nothing more than an opinion. China is a sovereign nation and as such establishes trade policies in its own best interests. Those policies may be negative to the US. The answer though is not tariffs because they will only force us to pay more for things and it’s not as if American manufacturing can fill the demand for those products overnight, it’s even possible that a move involving sanctions could lead to a trade war where China could raise necessity prices even further on exports before another source could be found which could sink our economy. And theirs will grow as a result.

Blaming China is an easy crutch for those unwilling to consider the high corporate tax rate and punitive regulatory environment (unless you make solar panels that there is no demand for) afflicting businesses in this country. China isn’t a paper tiger, and it is not exactly an ally but it is also not a boogie man. The United States should reduce corporate taxes and eliminate counterproductive regulation in order to encourage business here. That’s more useful than throwing darts at the other side of the world, although it’s a good idea to keep an eye over there.