Friday, January 21, 2011

A few thoughts of U.S. trade with China


The U.S. probably cannot escape trade with China. These days, the process of making anything requiring more than on step to manufacture almost invariably crosses at least one nation's border, and usually more than one. Given the sheer cheapness of Chinese labor and currency then, some manufacturer somewhere will, at any given time, be buying parts or services from China, and Americans will be buying the end results.

Any law attempting to prevent such trans-national transactions will be a fiction. Foreign manufacturers supplying American ones with parts or services will, after all, have a legitimate right to use Chinese suppliers, and even in the face of such a law against trade with China, they would only have to purchase such things through a third party to grant themselves plausible deniability on location of supply. In light of this problem then we might as well grant ourselves access to that reserve of cheap resources and at least one non-military means to threaten the Chinese in times of conflict: embargo in its many, many forms.

Admittedly, Trade with China will be a little scary. As the world's largest economy under one decision-making body and a communist state with at least an ideological desire to hinder the U.S. and capitalism, China just might have at least some desire to harm the American economy. To do that in any greater way than currently, however, China would have to supply a controlling percentage of U.S. imports at prices too low for other suppliers to compete, and to deal with such a threat, we simply have to keep other trade partners such as Japan and The European Union in our economic little black book for use in the event of being monetarily "stood up." Without such a problem though, the added competition may ultimately give us better and cheaper goods from both the Chinese and our current trade partners.

Just a few thoughts....

2 comments:

Kevin Comerford said...

Interesting post John. I think I understand where you are coming from however the mix of present and future tense within a paragraph get's distracting though I understand how writing late at night can sometime turn out. I look forward to reading more of your work. I would also suggest reading the Wall Street Journal if you don't already, there are a lot of good articles that might be of interest on this and other subjects.

Have a great weekend.

John Comerford said...

Thanks for the suggestion. I myself tend to stick to The Economist, but I do catch The Journal through my My Yahoo news page. And yes, especially after a long day of writing, and putting out text without an outline, some of my stuff does end up with that "late night" style.