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China has been at war with the U.S. A nonmilitary war. An economic and technological war.
The
New York Times Editorial Board has long opposed sane trade policies,
quiveringly stating that this "protectionism" will start a trade
war. But today, the Editorial Board reacts against China's recent statement that it
should use its gargantuan foreign exchange reserves, heavily
invested in American Treasury bonds, as a “bargaining chip” in
bilateral negotiations.
I accept criticism that "war" may be an unhelpful metaphor, giving
rise to more emotion than thought. But thought has been
troublingly absent in the China problem. The downside is low
because of this absence. And "war" brings to mind thoughts of
strategy and the national interest. We must think of strategy and
the national interest.
More importantly, the "war" terminology comes from the Chinese, not me.
In
1999, a book was published by the Chinese military publishing house,
the PLA Literature and Arts Publishing House. The title is
"Unrestricted Warfare." Qiao Liang and Wang Xiangsui wrote the
book. They are senior colonels from the Chinese military.
The book advocates strking the United States in nonmilitary ways
in times of conflict,including targeting financial institutions to bring the U.S. to heal.
Essential
principles espoused by the colonels include "omnidirectional" means,
unlimited measures, multidimensional coordination, and adjustment and
control of the entire process.
Consider what has happened. China has:
* devalued its currency by 40% to gain a 40% price advantage in world trade;
*
subsidized exports through 17% value added tax rebates when products
are exported, providing another 17% price advantage in world trade;
* achieved an $232 or so billion trade surplus with the U.S.
in 2006 (rising rapidly in 2007), which is about one-third of our
entire trade deficit;
* bought about $1.5 trillion (yes, trillion) U.S. dollars as a result of the trade deficit;
*
purchased 18 major ports around the world, including six that the U.S.
Department of Defense determined are of high strategic value;
* purchased the rights to massive amounts of energy, food and basic commodities in Africa and Latin America;
* purchased large portions of major U.S. investment companies such Blackstone Group;
* decimated many U.S. industries, including some
agriculture sectors, and major defense industries through currency
manipulation and tax subsidies in international trade;
*
forcing huge amounts of technology transfer from the U.S. to China
through business transactions with U.S. companies, and alliances with
the University of Michigan and others;
* spent heavily on defense, far beyond what we had previously assumed.
The remedy is for the U.S. to wake up. We need
"omnidirectional" means, unlimited measures, multidimensional
coordination, and adjustment and control of the entire process.
This is a "fate of the union" issue. Free trade bromides are
irrelevant and distracting now.
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