Bombs and Dollars – American Foreign Policy Blog – China, Afghanistan, Pakistan

China Hush has some thoughts from Zhang Hongliang on why China’s trade partnership with America is bad for them: The “Disaster” of Chimerica: Are Both Sides Losers?

No, but both sides are behaving like sore losers.

Here’s Zhang Hongliang:

1.) The US enjoys the accomplishments of industrialization while China bears the burden of the negative effects of industrialization. … environmental pollution and the depletion of resources, overproduction, and inflation.

Of course China bears the pollution; THEY CREATE THE PRODUCT!

So that means they get the money and the jobs, and the US is losing jobs to China. China bears the burden and also reaps massive rewards.

2.) The formation of a new pattern of the distribution of wealth: Whatever China has, the US gets to enjoy.

Distribution of wealth=Americans give money to China. The US pays Chinese companies for products, the Chinese enjoy increased prosperity from America, their economy growing faster than any other in the world, and thus there are rising wages and rising standard of living.

Generally speaking, when you pay someone, you get something in return, so yeah, that’s how the US gets to enjoy Chinese products, and the Chinese get to enjoy US wealth.

3.) China has become the international milking cow and the world’s garage. In terms of the economy: foreign trade accounts for two-thirds of China’s GDP and foreign investment accounts for two-thirds of foreign trade.

Well, China could always put a stop to foreign trade policies, but I guess that would hurt their GDP. Hell, if this were a problem, then they should be happy about Obama’s tariffs on tires!

4.) The integration and assimilation of the interests of the wealthy people in the US and China intensifies the burden on the ordinary Chinese people.

Ordinary people in China receive higher wages due to increased demand for their work.

5.) Political influences can be seen in the integration of US and Chinese policies. China’s policies have to account for and be built upon the foundations of American policy, and China’s decisions are all in consideration of the requests of the US.

True, when you want to base your economy on exporting to America, you have to make sure your political policies account for that. By basing American economic policies on importing from China, Obama made a bad decision to put a tire tariff on China. It goes both ways.

But with China owning about 25% of US debt, they have considerable political sway over America.

6.) Cultural influences are noticeable in the increasing Americanization of Chinese ideology and culture. Chinese culture more and more resembling American culture.

That’s a valid point, but culture is a cumulative of what every citizen in a community desires and how they live. I understand the desire to maintain a historic culture–especially a culture as old and illustrious as China’s–and I hope they maintain it–but I guess that’s a decision for the Communist government. Do they want to let individuals express themselves however they see fit, or do they want more totalitarian control over culture?

Now the CC, the blogger at China Hush, which I should say is one of my favorite blogs, writes:

Now, I am not a qualified economist by any means, but it seems like the Chimerica model is failing in many respects. Otherwise, why would both sides be complaining about the relationship?

It’s typical human nature for both sides to be complaining at the first sign of trouble (i.e. the recession). Both sides took advantage of the benefits of their arrangements for many years, but now there’s a problem, so both sides have to blame each other. It’s so easy to forget the past and take everything else for granted.

The one thing that is true is:

China cannot control US spending and the US cannot control China’s currency values.

Yes, yes, it’s all to obvious the US is destroying their currency and China has a huge stake in the dollar.

China is now so thoroughly invested in US dollars that the US’s huge spending and stupid economic policies are hurting their investments. Furthermore, they are devaluing China’s currency, the renminbi, too, because China fixes the renminbi to the dollar, to keep trading easy.

With the dollar devalued, what can I do to make sure my dollar investments are safe?

Again, this is just another example of ignoring the benefits through short term thinking. Devaluing and fixing the renminbi sure helped China trade a lot and greatly increased their GOP, but they should know the unnatural thinks don’t always work forever. Now they have the choice to either float the renminbi and decrease trade opportunities with the US, or continue on the same path of fixing currency. Well, they’re going to get some benefits by fixing their currency, as they have continued to do, but eventually they need to face reality, as does the US.

Both sides are now complaining about these policies that have helped them, yet they must know that the policies helped them, because they are continuing the same policies.

Investment opportunities to protect against the dollar’s decline and take advantage of China’s rise.

America is responding to the recession caused by easy credit and no-risk loans by trying to get the banks to give away even more easy credit and by borrowing trillions more on the federal level. China is responding by keeping their devalued currency still fixed to the devalued dollar.

Read More: Special report on how to safeguard your investments.