It is popular in DC circles and economic circles to say that opening trade with China has caused private capitalism to flourish. But the opposite has happened. Just as our oil addiction props up dictatorships in the middle east, Permanent Normalized Trade Relation (PNTR) status with China funds the Communist government and their massive military buildup.
We have funded the rise of America’s only geo-political rival via our goods trade deficit.
Prime Minister Wen Jiabao just gave a speech containing false, but happy, bromides:
[Wen] said that the slowdown in China’s growth is coupled with the beginning of a structural transformation toward a consumer-based economy, a change long advocated by economic experts.
But the reality continues to be very, very different:
The government’s annual work report is reliably larded with praise for the state’s accomplishments and the superiority of socialism with Chinese characteristics, as leaders call their state-controlled economy.
In other words, don’t be confused by Wen’s words when the actions are so different.
“There is a growing recognition that rebalancing is not really happening,” said Stephen Greem, an economist at Standard Chartered Bank in Shanghai. “Consumption is not really going up, the state sector continues to expand, the private sector continues to suffer, the income gap is growing. …”
U.S. economic and geopolitical interests lie in producing more of what we consume, rather than consuming more than we produce… and importing the balance. America did not grow into a global economic and political power by over-consumption and funding rivals. Instead we built our own economic powerhouse.
Unfortunately, the presidential candidates do not understand this.