How to Fix the China Trade Deficit
Since Communist China entered the World Trade Organization in 2001, America has run up a bigger and bigger trade deficit with them. Real wages in America have grown at the slowest rate in American history; 2.8 million jobs in America have gone to Communist China; and our Trade deficit with them is roughly one half of our entire trade deficit of almost $500 billion per year.
There are simple but bold ways to end this trade deficit:
1) We could simply set tariffs on Chinese goods to the same extent that they put on our products coming into China from America. That alone would give American manufacturers about a 22% cost advantage versus today, as China taxes American goods at about 25% and America taxes Communist China's goods at about 3%.
2) America could announce that we are not trading with communist countries. We don't trade with Cuba, so why are we trading with a country that has a Nobel Peace Prize recipient in jail? I mean a reason besides the obvious---that giant American companies represent China's interest instead of America's. America allows a country that abuses its people and forces Christians underground - or to jail or worse - to have the advantage in trade? If you want to promote freedom, trade with free countries.
3) Announce that any country that does not allow our government or our people to buy their government bonds cannot buy U.S. Treasuries. China does not allow the U.S.A. to buy its government bonds. China buys U.S. Treasuries as a loss leader for a few reasons. It helps keep their currency (which is fixed to the U.S. dollar) massively undervalued. Some think as much as 40% undervalued. They also buy U.S. Treasuries to have influence on American monetary and foreign policy, as leverage. But if they can't buy U.S. Treasuries, then their whole game falls apart.
4) America should not have free trade with countries that will not allow their currency to trade freely with us. Their manipulation of their currency keeps their country going. This must be stopped.
In conclusion, America's trade relationship with Communist China can be summed up like this: the mercantilist Chinese trade policy toward America that American politicians have encouraged and allowed (because they are bought and paid for by the large corporations doing Chinas' bidding) may have produced cheaper goods for America and benefited giant American corporations. However, this trade disaster is 1) hurting American's wages, 2) allowing China to build up its military as it tries to supplant America as the world's superpower, 3) has cost America 2.8 million jobs over the last ten years, 4) has not led to anything but more oppression in China, 5) hurt our budget deficit as less Americans are employed, and more are underemployed, and 6) will end badly for both countries as most unequal relationships eventually do.