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February 18, 2012, 7:08 am
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The U.S. imports consumer electronics, clothing and machinery
A lot of the imports are from U.S. based companies that send
raw materials to China for cheap assembly. When they are
shipped back to the U.S., they are called imports even though
they are profiting American-owned companies.
China is able to produce goods that Americans want at a low cost.
Despite the loss in jobs, this is unlikely to change.
That's because most people would rather pay as little as
possible for computers, electronics and clothing
even if it means other Americans lose their jobs.
That's why the situation is unlikely to change, despite
recurrent bills by legislators to impose tariffs or other
forms of trade protectionism with China.
Most economists agree that China's competitive pricing is a
result of two factors:
A lower standard of living, which allows companies in China
to pay lower wages to workers.
An exchange rate that is partially set to be always priced
lower than the dollar.
China's economy is the third largest in the world.
In 2010, its Gross Domestic Product (GDP) was $10.9 trillion
in goods and services.
However, China has more people than any other country.
It has to divide this production up among 1.3 trillion
In other words, its GDP per capita is $7,600.
Imagine trying to live in the United States on only $7,600
No wonder China's leaders are desperately trying to get
the economy to grow faster.
They remember the Chinese Revolution all too well, and
know that the Chinese people won't accept a lower standard
of living forever.
China sets the value of its currency, the yuan, to always
equal a set amount of a basket of currencies which includes
In other words, China pegs its currency to the dollar using
a fixed exchange rate.
When the dollar loses value, China buys dollars through
U.S. Treasuries to support it.
In this way, the yuan's value is always within its targeted
As long as the yuan's value is lower than the dollar,
China's goods are cheaper in comparison.
China must continually buy so many U.S. Treasury notes
that it is now the largest lender to the U.S. Government.
As of November 2011, the U.S. debt to China was $1.13 trillion,
25% of the total public debt.
Many are concerned that this gives China political leverage
over U.S. fiscal policy, since it could theoretically call
in its loan.
By buying Treasuries, China helped keep U.S. interest rates
Until the Subprime Mortgage Crisis, this helped fuel the
U.S. housing boom.
If China were to stop buying Treasuries, interest rates
would rise, delaying any recovery from the recession.
This isn't in China's best interests, as U.S. shoppers
would buy fewer Chinese exports.
However, China is buying fewer Treasuries than in June 2011,
when it owned $1.165 trillion.
China has been diversifying its holdings into other
currencies, such as the euro.
The U.S. trade deficit with China means that U.S. companies
that can't compete with cheap Chinese goods must either
lower their costs or go out of business.
To lower their costs, many companies have started outsourcing
jobs to India and China, adding to U.S. unemployment.
Other industries have simply dried up.
U.S. manufacturing, as measured by the number of jobs,
declined 34% between 1998 and 2010.
As these industries declined, so has U.S. competitiveness
in the global marketplace.
China has allowed the
yuan to rise 16% and opened many Chinese markets to U.S.
GM has moved a lot of jobs to China.
GM has been lowering the standard of living for the ordinary
worker in the US just as many other big US companies.
Re: going chinese
Yep, China makes things people want.
USA makes war no one sane wants.
No war, no USA economy. And the taxes to support a mility like this
hyper inflates the economy.
Yep, while America was massive debt spending, bailing out corrupt banks
and GM, China built the Yangtze dam and high speed mag levs for very
inexpensive electricity and transportation with cash.
Yep, as products for people mater more than big government, war and
corrupt political BS.
All government greed does is mean people will pay more for less.
Tariffs are inflationary and that causes job losses.
Sure, GDP goes up because stuff costs more, no jobs as people buy less
to spend more on necessities, which is less consumption and less jobs to
support it. Jobless recovery always was inflation, not a real recovery.
That is changing fast. Fact is you love the propaganda as you ignore
that NA workers are poorly educated, fat, lazy, drunk or dope and want
In part yes, but it is over stated. You can't do this forever.
The counterpoint is Bernanke and US corrupt government is printing so
much money for debt, the USD is losing value. Yep, USA is doing it to
itself, then blaming the Chinese.
Fact is China makes stuff efficiently that people want and USA makes
M16s, F35s and bombs no one wants.
A world at peace is the last thing USA wants, no war no economy.
USA spends more on military than the other top 25 nations combined,
including Russia, China, UK, Canada, Iran, Syria and others.
Actually, second. They got that almost a year ago now. They are well
on the way to being #1.
If you take all of Asia Pac-rim, they are already #1.
So? That $7600 goes a lot further. Many of their life costs are 1/10th
that of ours. 2 or 3 cents for a KWH of electricity, cell phones nation
wide inclusive plans with Internet for $7 not $70. Homes for $30K not
$300K...get the idea?
USA and Canada are tax inflated economies. Part of why we can't compete
with 90% of the countries in the world.
Going to get worse too, as computers will deliver knowledge to the world
and no longer be an exclusive right of US-Euro dominance.
Can't really be done. But in China, India and 1/2 the countries in the
world that is good money. Gets back to taxation as inflation.
Actually, while our biggest problem is managing implosion of a hyper
inflated economy, they have the opposite problem of growth.
Money, wealth and economic strength will always eventually shift to the
most productive economies.
That is bullsh1t myth. You can manage currency exchange but ultimately
the market wins.
China's biggest problem is the US Fed creating far too much money and
devaluing the USD.
Actually not. Look it up on xe.com.
Fact is more countries are now using Yuan to replace USDs as currency
USD as a world reserve is failing. China and Russia no longer price
trade in USD. Even Chile ships raw materials to China for Yuan as the
USD as a currency is being defrauded by Bernanke and electronically
counterfeited to a point where it will lose value.
Actually, China doesn't buy USA treasuries any more, they have been
reducing their hold of USA fiat fraud currency. Was $2 trillion, now
down to $1.2 trillion.
No one lends money to government at 0% or 1%. Bernanke electronically
creates it for Goldman Sachs and banks to buy worthless treasures that
real individual legitimate lenders don't buy....in the ruse of solvency.
But the fat is the US Treasruyy is on life support and technically
Biggest indirect holder of US Treasury debt is now the US Fed. Using
intermediates is just a ruse.
THis is criminal really, Madoff would be proud. But perceived
legitimate only because government itself does the fraud.
All countries do this. Go to the Bank of Canada web site. They talk of
True, and why you don't lend USA money. If I lent USA money $40 barrel
but lent in USD, now that the USD has fallen in value it now takes $100
of the things for a barrel of oil.
CAD didn't go up to par with the USD, the CAD didn't fall as fast as the
But also means your incomes have been devalued.
Bernanke prints it, China stopped lending a long time ago. Now they get
a hoard of US cash, they go off and buy a mine, company, port or
something. They no longer accumulate USDs, they depreciate too fast
from too much money creation fraud.
Guess they lowered it, was $2T at one time, $1.2 last I looked.
But who wants devaluing USA fiat fraud currency when you can order over
100 tons of gold per quarter and not worry about US Fed corruption.
Hwy, USA isn't going to recover any time soon, in fact I figure another
40% reduction of standard of living is coming fast.
USA has the best military on the planet. But as strong as they are in
military, they are economically bankrupt. US economy is surviving on
money print fraud and a prayer.
China now makes and consumes more autos than does USA, Canada and Mexico
No need for fat expensive governments, corrupt business people or a NA
union lard ass to add to the costs. Chinese made cars under $10K that
get better gas millage than a Volt.
GM NA can't compete there.
Hey, people just got used to living beyond their means and then the
Reality always wins in the end. No amount of political corruption or
liberal-socialism is going to avoid reality when it hits.
Corrupt USA, Euro Bank and Military Regime, funding both sides of
terrorism for profit and debt-tax slavery.