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America has a $295 billion trade deficit with Communist China, but that is only part of the story.
The majority of our exports to China are raw products like petroleum and soybeans, the two largest categories being exported, while the majority of China’s exports to the United States are manufactured products like computers and other technical equipment.
We send corn and sorghum to China, they ship us back batteries and toys. We sell them coal and ores, they sell us circuit boards and car parts. We ship them tanned hides and meat, and then receive back optical fibers and medical equipment.
Advanced societies buy raw resources from backward societies and sell them back the manufactured goods. We export scrap metal to China, they send us back steel. We send them scrap copper, they ship us back the equipment of which that copper is a component. We export polymers and import the finished ‘Made in China’ plastic products that fill up our stores.
The $295 billion trade deficit between America and China reflects the fact that much of what we ship to China is crude and therefore cheap while what China sells us is more finished and therefore also more expensive. And so our exports to China in 2023 amounted to $154 billion while theirs amounted to $436 billion.
But that’s what happens when nearly 9% of China’s exports are computers while 9% of our exports are soybeans. What’s the value of a bushel of soybeans against a Lenovo laptop?
When it comes to China, we function like a third world economy selling raw resources and then buying them back at a hundred or thousand times the price. And a third world economy is bound to have a massive trade deficit with a third world economy because it’s higher end.
There are names for the trade relationship that we have with China. One of them is ‘colony’.
England set up its American colonies to obtain raw resources to turn into finished products. One of the causes of the American Revolution was our refusal to be satisfied with the dirty work of harvesting cotton and tobacco by the crudest means possible and then shipping them on to England. America used tariffs to build up its own manufacturing and became independent.
Now we have been set back to the era of colonial dependency. We have become the cheap labor that China uses to extract resources from American territory for its manufacturing.
Unlike the United States, China’s disproportionate dominance of trade balances around the world is not a byproduct of a booming domestic product sector. America’s GDP far outstrips China’s. Average salaries in China are barely a fifth of those in the United States.
And, most damningly, private consumption as a percentage of the GDP is a minority in China, and a majority in America, nearly double what it is in Communist China.
China isn’t a consumer economy with exports, it’s a parasitic export economy that suppresses domestic consumption with high consumer taxes. During the pandemic, America focused on stimulating consumer spending while China ignored individual citizens to boost manufacturing.
In America, consumer spending drives growth whereas in China’s Communist system, consumer spending is an inconvenience that siphons off products meant for foreign exports.
The Trump administration is being accused of setting off a trade war with China, but China’s entire economy is one big trade war against America and the entire world. Unlike Japan or South Korea, China is not trying to build up a middle class and views domestic consumption of its own products as a necessary evil at best and as capitalistic excess at worst.
China did not become a capitalistic system. Instead it demonstrated a thorough commitment to Communism’s obsession with industrial development. The lesson its leaders learned from the fall of the Soviet Union was that its industrial production had to be funneled into consumer goods to pacify the population and, more importantly, to win a trade war with the West.
Like the USSR, China is equally obsessed with building for the sake of building. It constructs ghost cities, massive bridges, roadways to nowhere and rapid trains, not because they are genuinely needed, but because the manic state of Communism requires constant building.
China’s anthill cities rise with no real purpose except to bring the entire population into collective megalopolises where they can be thoroughly controlled and monitored at all times. Its real estate crisis is not a private sector failure but the conjoining of the oligarchy and the regime which are both obsessed with land and dynasties for reasons that are largely traditional.
These mad empires are sustained with an equally mad export industrial complex that illegally ships everything from knockoff handbags to fentanyl and ‘legally’ copies and buries us in cheaper and worse versions of our own products whether physical or digital to win at any cost.
And not just us.
Given time, China can figure out how to copy anything, from vacuum cleaners to cars to apps like TikTok and AI like DeepSeek and make it more cheaply. The advantage of depressing your own domestic consumer economy is that wages are lower and while many Chinese workers may not be able to afford the products they make for export, the regime likes it that way.
TikTok is meant to poison America, but it’s forbidden in China. Even as Chinese companies invest in gaming, the regime domestically restricts it. It has no more interest in corrupting its own citizens than in peddling the fentanyl that it sells to Americans on the streets of its own cities.
This isn’t a trade war. It’s a war carried on using trade as the ultimate weapon.
How can America win a trade war with China? Sometimes the only way to win a game is not to play. As long as China’s economy is geared toward buying our resources and selling us their manufacturing, we not only lose, but we become a third world country in the process.
President Trump’s tariffs on China are being bitterly opposed by a range of special interest groups, but they harken back to Alexander Hamilton’s original proposal to use tariffs to restrict foreign products and boost domestic manufacturing. Trump is following in the footsteps of George Washington by refusing to let America’s economy remain subservient to China.
America was built on tariffs and trade wars. Without them, we would have been a third world country. With them, we can start rebuilding our economy and our nation.
This is an incredibly interesting and informative article.. this is an article that needs to be forwarded to everyone I know. Mr Greenfield always has much incisive analysis.
Yes. Everything you said is true.
There is so much more to say, however. Not to mention the difficulty of finding sufficient personnel to pick up the slack.
Americans are understandably disgruntled. I spent all of my career training others to make more money, and – if I did not train them – to come in and fix what they snafu’ed.
But there is a problem.
I’m not going to pick up the slack. Hell, I cannot remember what I taught the Chinese engineers I trained. That was 30 freaking years ago. There’s not that many folks in between.
Do you think there are .30 yos to do the work? The last ones I hired were Russians. They came from the Dombass. They’ve probably been killed there.
I don’t want to pull a Vivek and blame Americans for the situation.
The situation is not our fault. But it’s a bad situation.
None of this is to black pill anyone or nay say where we should go.
We should push ahead with Trump as hard as we can. But we do have a ‘microwave’ mentality, and all too many of us think we can turn the Titanic around on a dime,
when we need to bite the bullet and fight, fight, fight, through this trade war for years.
It took Dems 60 yrs to do this damage, we should expect to take 4-8 years to see real gains from ending their anti-American agenda.
I blame all this shit on Dick Nixon and his globalist scumbag buddy, Henry Kissinger.
It was back in 1972, wasn’t it, that they dropped official recognition of Taiwan as China and pulled that “rapprochement’ bullshit with Chairman Mao, the worst genocidal murderer in human history and the fat, syphilitic scumbag responsible for the Great Stumble Backward and cannibalism in his streets, yes? Mao even forced Nixon to meet with his flunky, Premier Zhou Enlai, right off the plane instead of greeting him personally. Dick obsequiously offered his hand and pumped the murderous little flunky’s hand with a big smile, unlike former Secretary of Defense John Foster Dulles, who rightfully spurned Enlai’s outstretched hand and refused to even acknowledge him in back in 1954. He said he would only meet Zhou in a car crash, ha haw!
How did that “rapprochement'” work out? The People’s “Republic” of China is the most destabilizing force on Earth and is fucking America up the ass economically, Every President from Nixon the Dick to Beijing Biden said “thank you Sir may I have another” with every thrust, except for Trump, of course. The UN is a pee wee league disruptor compared to China, which is actively trying to dominate the world. One look at Beijing and the rest of that shitty country is enough to know what a disaster that would be. There’s no need to even visit and experience filthy China first hand as I have. “Never going back again.” that shithole makes Tijuana seem clean and pleasant.
Thank God President Trump has broken the 53 year streak of America kissing China’s ass.
And I notice men’s wages have been stagnant for those 53 years since 1972. A “parting gift” from Tricky Dick’s first term in office. (The rodent didn’t know he would be reelected that year.) It was just a coincidence that was the year of his “rapprochement” with mass murderer Mao, I’m sure.
Dulles had balls that we haven’t seen since, except until now with President Trump and his cabinet members and VP. Dulles knew how to kick ass, for example, in 1954 in N. Viet Nam Dulles offered the French two atomic bombs to finish off the communists in the first Viet Nam war at the war ending battle of Dien Bien Phu (an 8 year war with about 40,000 French POWs). Viet Nam was a French colony back then. The French refused to use the bomb and then retreated from N. Viet Nam in defeat – thus paving the way for the second Viet Nam war with the U.S, – where Ho Chi Minh was victorious again when he took S. Viet Nam, even though Ho died before this war ended. This history fascinates me because back in 1954 my Dad was offered a job to fly surveillance over Ho’s troops in Viet Nam.
Kissinger wrote several 1000+ page books about his time in the White House. I read at least one of them, maybe several, carefully. I can’t fathom now how I got through it all 🙂
I must have been a voracious reader back then 🙂
We saw a Chinese martial arts troupe in San Francisco during the rapprochement years. They had fantastic gymnastic and martial arts skills, but they smiled all the time. One could tell the smiles were phony.
Yeah, free trade is great, but what China is doing is Mercantilism, I think, unless someone can come up with a better word. Tariffs are the standard remedy for Mercantilism, I think.
Funny, that reminded me, of how many naval wars there were during the Age of Sail, due to Mercantilism. The War of Jenkin’s Ear having the catchiest name 🙂
I had to look that one up! I guess I shouldn’t laugh about Jenkins’s severed ear but it is a pretty funny excuse to go to war.
If the British had been more aggressive in the Spanish parts of the New World, they would’ve ended up with a lot more territory than tiny Guyana. Going after America two times were two dumb mistakes. Imagine how much better Latin America would be if it were British America?
You are treading on thin ice Daniel. The Holy Orders of Free Trade are unimpeachable! The mantras will have to be repeated for days thanks to your blasphemy.
Just ignore Chinas’ tariffs and the US tariffs of the nineteenth century you simpleton. Just because they created the greatest expansion in history is no reason to pay attention. Ha!
About 25 years ago I worked for a semiconductor manufacturer. We closed part of the plant and sent all the tools to China to be installed in a new factory there. One of our senior technicians travelled there to help with the installation. They had guys wearing no gloves or PPE of any kind scrubbing chemicals out of these tools to get them ready. Our guy said to his translator “Hey, these chemicals are really bad they need to wear protection!” The manager replied and said nonchalantly “Oh, don’t worry we have plenty of workers.”
From the wisdom of our founding fathers, a quote from George Washington on tariffs: (paraphrased)
“It is immoral for the U.S. NOT to have tariffs because without tariffs, 100% of the tax burden will be placed on the shoulders of the American people.”
So, besides protecting our manufacturing base, tariffs also make the foreigners “pay their fair share” – to use a phrase that the dems love when it comes to raising taxes on U.S. citizens.
President Trump understands this very well, as shown from his statement that he could get rid of the IRS and replace them with the ERS (external revenue service). Finally, a President who wants to stick it to the foreigners who have been gouging us rather than stick it to us.