Chinese Vice President Xi Jinping is meeting U.S. President Barack Obama in the White House on Feb 14, Valentine’s Day. Their talks are likely to turn on Tibet and trade. But China’s veep isn’t expected to deliver a box of chocolates to the American president. China’s enormous trade advantage, now the largest nation-on-nation trade deficit in the history of the world, has put it in the enviable negotiating position of being able to say “bu” — that is, “no” — to most American demands.
The U.S trade deficit with China today is 28 times larger than it was during the Reagan era, according to new figures released by the U.S. Census Bureau. That daunting deficit has grown by 18 percent per year since China first entered the World Trade Organization in 2001.
Census figures now show $103.8 billion in U.S. exports to China during 2011, and $399.3 million in imports, a stunning $295.5 billion difference.
America’s political, policy and business leaders aren’t doing much to address the shocking statistics that suggest a real erosion of America’s once-strong manufacturing and technological advantage. Terrorists tore down the twin towers in lower Manhattan a little over a decade ago, the symbols of American economic dominance of the world. Now the Chinese are providing the glass for the exterior of the new world trade center.
“The Congress and the administration are too afraid to provoke China and do not sufficiently protect the American economy from the negative effects of Chinese economic policies,” Optimal Investing chief investment officer Wojtek Zarzycki told The Daily Caller “They have had several opportunities to officially name China a currency manipulator, but they have not.”
Zarzycki, whose boutique investment firm has offices in the U.S., Canada, and Europe, added that China has no qualms about blasting the Federal Reserve “and blaming them for keeping the U.S. dollar weak – however, U.S. government officials are slow to do the same in an equally forceful manner.”
In a federal budget proposal slated for a Monday unveiling, Obama plans to offer the latest in a series of government programs aimed at jump-starting manufacturing and rising to the Chinese challenge.
Obama will seek tax incentives for firms that relocate their foreign operations back in the United States, and Internal Revenue Service penalties for those that don’t. He’s also looking for more training and educational programs for the 50,000 manufacturing workers who are losing their jobs every month because their employers can’t compete effectively with low-cost Chinese products.
The Republicans running for President, and those who inhabit the halls of Congress, haven’t yet offered an alternative designed to motivate voters.
Former Masachusetts Gov. Mitt Romney is a bit more aggressive than Obama, promising to label the Chinese government “currency manipulators” and start a trade war with Beijing on his first day in the Oval Office.
“China has been able to run roughshod over many industries in this country,” Romney told reporters this week. “Presidents have looked at it, have complained about it, but really haven’t taken action to stop China from taking away our jobs.”
In an op-ed sent to newspapers this week, former Sen. Rick Santorum eschewed the latter-day Smoot-Hawley trade war approach. He called for tax breaks for U.S manufacturers, and slammed Newt Gingrich’s idea of starting a new space-race-type conflict with the Chinese as a way to revitalize the forlorn U.S. economy.
“The pioneers of flight and space exploration are inspiring to millions and the advancements that result are beneficial to our quality of life and also critical to our national security — particularly as China ramps up aggressively in this area,” Santorum wrote. “But I am less concerned about creating a government program to build a colony on the moon more concerned reducing government to build a strong economy here on earth.”