The China Questions

The China Questions, by the Z-Man.

U.S. imports from China totaled $539.5 billion in 2018. U.S. exports were $179.3 billion. That export total is about 7% of all U.S. exports for 2018. Put another way, the U.S. market is about 5% of the Chinese economy, assuming the fake Chinese economic numbers are even close to reality, which is surely not the case. The Chinese market is less than one percent of the U.S. economy in 2018. Imports are about 3% of the U.S. economy.

Right away, the relationship between China is the U.S. is not an equal one, in terms of dollars, but also in terms of impact. Then there is the nature of trade between the two countries. Almost all of the U.S. exports to China in 2018 were aircraft parts, electronic components and car parts. In many cases, these are either high precision items the Chinese cannot produce or they have intellectual property that the Chinese will try to steal, so they are made in the U. S. and sent to China.

This is why Trump is playing hardball. He believes he has far less to lose than the Chinese in a trade war. Even if all trade with China comes to an end, the cost to the U.S. economy is not going to be devastating. In fact, it will be hardly noticed.

Much of that trade will be replaced with other cheap labor countries, as it is not really trade in the conventional sense. America’s economic relationship with China is about off-shoring manufacturing to dodge labor, tax and environmental laws.

This is a point that cannot be made enough. When American producers sell good to Canada, and Canadian producers sell good to America, that’s trade. When American producers move manufacturing to Mexico, then bring those goods back home under a tariff free regime, that’s not trade. China is not selling the world anything the world does not have or cannot make. What China is selling is a safe haven to avoid the labor, tax and environmental laws that exist in the West.