KGOldWolf wrote:
Steven, perhaps I'm being a bit simple here but I do see a major transfer of money due to the trade imbalance. While there is an asset equation, our payments are liquid assets going to them in exchange for hard assets which US companies sell to regain their money.
I take it you mean we buy hard assets from the Chinese (toys, gadgets, machine parts etc...) and they buy soft assets from us (savings bonds and stocks).
KGOldWolf wrote:
That net outflow of US of cash is in turn used by the Chinese to: 1) buy US debt, 2) fund expansion of their military, and 3) create binding agreements with developing nations creating debt on their part which is again an economic weapon to compel favorable terms. For instance they are developing a port on the east coast of Africa that will be military strength.
That sounds about right to me. Any items they can trade with us or any other country will increase their wealth and standard of living and may be used for increasing their military as well. We could slow them down by not trading with them, but it will slow us down by the same amount.
KGOldWolf wrote:
I believe the greatest influx of funds for China is from the US, far more than other countries. The effect is that the greed for greater US corporate profits is a weapon we are giving our enemy.
If I'm not mistaken, Europe as a whole, or the European Union, trades about the same volume with China as we do. I'm too lazy to look it up right now. You are right that trade is an enhancement that could easily be turned into a weapon, but like I said in the last paragraph, it goes both ways. Either we trade and both grow, or we don't trade and we both stagnate. I'll take slight issue on your pinning this on corporate profits and greed. First,
everyone in our country profits from trading with China, not just corporations. I happen to shop at an inner-city Wal-Mart in Cleveland. The sheer amount of stuff that lower income people are able to afford nowadays is staggering. When I was growing up you couldn't afford to buy 1/4 the appliances that you can today. Poor people can live in relative luxury in the U.S. compared to the rest of the World. All because other countries are able to make the stuff for way less money. The American workers who used to make this stuff are out of a job, but many more jobs have opened up to sell different stuff that other countries are willing to pay for. For instance we provide much of the World's food, crude oil, civilian aircraft, industrial machines, almost all the computers and almost all the pharmaceuticals.