Why does the US need China?

Discussion in 'Economics' started by faure, Feb 10, 2006.

  1. faure


    I just don't get it. China exports cheap products and to a large extent the US is the recepient of these goods. Yet China doesn't have a free floating currency and it essentially manipulates it to ensure a weaker yuan and more money from exports.

    Meanwhile the US soaks up the "artificially cheap" products to the detriment of it's local producers and local jobs. If the US were to say no thank you to Chinese imports, at some degree, I see it hurting the Chinese a lot and might end up being benifical to the US economy and eventually the deficit.

    My question is, given all of this, why doesn't the US have China under it's thumb?
  2. US doesn't buy these Chinese made goods because Chinese is pushing them on us, it is becase we want to buy those goods. We here in the US have demand for large-quantities of cheap goods (take a walk through your neighborhood Walmart).

    I was in Vegas a while ago, and want to pick up a snow globe in the airport, it was made in China, but why should I care if it is made in China, Malaysia, Japan, Iowa, or Wisconsin? I only care if it is decently made, heck, it is $9 (you can't go wrong with $9).

    It is that simple, the cheap goods of China has increased profits for many American businesses (i.e., the gift shop in Vegas airport). So while US is losing snow globe maker jobs, we are gaining in the net-profit on the $9 snow globe.

    Remember all those people taking a sledge hammer to Japanese import cars in the mid-80s? What is the best selling *10* cars now in the good ol'USA? None of them are American made. At the end of the day, it is not where the goods are made, it is whether it is decently made, and at the right price.
  3. Why does China need the US? The neocon-led PNAC following thingie. :D
  4. faure


    My point is that the US Goverment could still make a lot more difficult for Chinese good to enter the US (tarrifs, quotas etc...) and in effect have some leverage over China.
  5. Why do you feel or want the US to have China or for that matter any other country under its thumb?

    What of free trades and free markets? or is it only lip service?
  6. thn5625


    Just to let you know that when steel tariffs were imposed on China the US steel industry benefited with increased profits b/c they were able to charge the higher tariff rate. However if you speak with US mfg firms that needed steel they reported that they were hurting b/c of the higher steel prices/higher costs.

    One industry benefits while the dependent industry suffers. No matter how you look at it higher prices mean higher costs which is a win for one firm but a loss for another.

    Higher costs will hurt any firm no matter if the costs.

    Ford for example is hurting badly b/c of the costs of pensions from years ago. Not to mention steel costs. During the steel tariffs 3 or so years ago, auto mfgs were hurting b/c of the higher steel costs.

    Well, if tariffs do not result in higher cost for a user or mfg. then I say go for using tariffs/trade barriers. See it this way. Would we need tariffs if some of our goods were cheaper? No, b/c most people would buy from us and not china. In other words, tariffs, are a form of protectionism that protects a specific industry only. It does not protect the US as is popularly believed - unless we have a one dimensional economy such as a tourism supported economy such as the Cayman Islands.

    How do we maintain leverage? Encourage entrepeneurship. Encourage and reward innovation. Drive out inefficient firms or redesign them. If we adapt then we will be competitive. Trust me China needs a prosperous US just as much as we need them. Also China's currency policies will come back to haunt them b/c of the arificial prices they are paying will catch up to them. Econ 101
  7. We are a consumer society so our trade is set up to favor the consumer. The government cannot make it harder for Chinese products to come into this country because that will raise their prices, hurt a lot of businesses that import Chinese goods for re-sale and make the consumer unhappy. I remember years ago when the US slapped tariffs on Japense auto imports and everyone was complaining because Lexus's and Honda's were more expensive and all the U.S. OWNED dealers who sold those cars were suffering.

    We are too deep in this consumer society to ever shut the spigot off. Since the U.S. does not make all the little shit we buy there nor can they make it as cheaply, we will always want to buy made in China. The few U.S. industries helped by such protectionist measures is greatly outweighed by the consumer and retail benefit of importing Made in China goods. Imagine what would happen to Wal-Mart and Target if Chinese products were now 30% higher due to tariffs (direct and implied).
  8. Yes, but the market is imbalanced. The administration is not pressing for a two-way street wrt, currency manipulation, piracy, human labor abuses.

    Not to mention that China, for instance, is not improving the living standard for their citizens as much as their military complex.

    Here these words... This is gonna come back to bite us in the ass. Quite painfully I might add.
  9. The U.S. cares about human rights and all that stuff..... until enforcing it interferes with us buying cheap shit. Then we overlook it to get them into the WTO.

  10. Not true. Go to China and see for yourself.

    Chinese defense budget is 1.4% of its GDP (compared to 3.7% of GDP for the US, that's an official figure, i.e., not counting military spendings in Iraq and Afghanistan). That's a tiny amount especially considering its GDP is a small fraction of the US.
    #10     Feb 10, 2006