The US Moves Away from Free Trade with China

The Economist has as its lead story an article on the US moving politically and diplomatically against the Chinese over trade:

"America's Congress is taking a harsher line on trade, particularly with China. The Bush administration is also getting into the act, with the treasury secretary and even the newly nominated trade representative talking tough. Is America turning protectionist?"

America may be, and while economics on the surface may be driving it, the strategic dimensions play a potentially subtle, yet larger role. 

"The current bout of China-bashing is not a replay of the 1980s. Back then, large American firms, particularly the Detroit car giants, led the clamour for protection. Now big business, which relies heavily on Chinese inputs, is quieter. The shouting comes from smaller American suppliers. And even the noisier business groups, such as the National Association of Manufacturers, are relatively nuanced. Though the NAM wants Beijing to revalue the yuan, it does not support the Schumer bill.

Less encouragingly, the political and economic risks are bigger this time round. In the 1980s Japan, for all its faults, was always viewed as a democratic ally in Asia. By contrast, China is now seen as a nasty communist regime and a dangerous rival. In the mid-1980s, America's current-account deficit was smaller, 3.5% of GDP in 1985 compared with 6.3% today, and its debt stock lower. Today, America is the world's biggest debtor, with China as an important creditor. A sharp reversal in China's appetite for American Treasury bonds could send interest rates soaring."

I believe these events are coming together outside of the Bush Administration's strategic plans for India, but the timing is helpful.  If India plays its cards right, it can take advantage of an increasingly difficult relationship between the US and China.

Comments

[armando]

what free trade the PRC sends all the junk over to the US, that comes fromt their junk factories, in return the PRC gets hard currency to use in their race to develop weapons tech to upgrade their backwards armed forces. There is nothing that comes from China that the US needs. a cheap stapler that works only half the time, those cheap plastic toys whose color fades over a period of weeks.

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