USA : Trade deficit with China grow by nearly 12% in 2007

According to figures released by the U.S. government this morning, the U.S. trade deficit with China grew to $19.4 billion for the month of April 2007.

For the year, the U.S. trade deficit with China is up 11.9 percent. At this pace, the U.S. trade deficit with China will climb from last year's record of $232 billion in 2006 to a projected new record of $260 billion in 2007.

"The U.S. trade deficit with China is out of control. It is a key reason why the United States has lost more than three million manufacturing jobs since 2001," said American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo.

"The years of Bush Administration talks with China have produced negligible results. Congress now must forcefully act," Tantillo continued.

To address the China problem, two actions Congress immediately should take are passing: • H.R. 2600, the Border Tax Equity Act sponsored by Congressmen Bill Pascrell, Duncan Hunter, Mike Michaud, and Walter Jones.

This legislation would negate the nearly $400 disadvantage to U.S. goods producers and service providers caused by foreign border-adjusted taxes.

Conservatively, U.S. goods producers alone were disadvantaged by an estimated $46 billion because of China's VAT rebates on exports and VAT impositions on imports in 2006.

• H.R. 782, the Fair Currency Act of 2007, sponsored by Congressmen Tim Ryan and Duncan Hunter in the House and its companion, S. 796, sponsored by Senators Jim Bunning and Debbie Stabenow.

This legislation would make fundamental currency misalignment an actionable subsidy under U.S. countervailing duty law. The legislation also would codify the application of U.S. CVD law to non-market economies such as China.

Experts estimate that China's currency is undervalued by as much as 15 to 40 percent.

I don’t quite understand the criticism towards high trade deficits with China. Its a good thing that this continues. Are you guys capitalists or not? I guess you guys are more nationalists than you guys are capitalists, and are more willling to embrass socialists policies if it advances the nation in your mind

Are you aware that when the communist Chinese came to power that they killed about 30 to 70 million of their own people? Are you aware that these people are our enemies? Are you aware that if they gain power over us, they will laugh at your lectures about capitalism just before they confiscate your stock portfolio at the point of a gun? The communists don't hate economists. In their mind, economists can be "useful fools" that keep a free society from taking the necessary steps to defend itself.

Are you aware that our Founding Fathers were not free traders? Are you aware that the primary tax that they allowed the federal government was an import tariff that would do a couple of things? First, it would keep the tax man confined to the end of the dock. He could take his cut from what came into the country, but there would be no taxing of trade between Americans and no direct tax on the income of Americans. Secondly, the import tariff would protect American manufacturing from predatory pricing by the British and French who understood that strong manufacturing would help United States remain independent of European powers. Are you saying that our Founding Fathers were not capitalists? If that's what you are saying, then I'm happy to be considered a non-capitalist.

Do you know the definition of socialism? If not, here are two examples.

so·cial·ism –noun
1. a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
2. procedure or practice in accordance with this theory.
3. (in Marxist theory) the stage following capitalism in the transition of a society to communism, characterized by the imperfect implementation of collectivist principles.
socialism. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/socialism (accessed: June 09, 2007).

so·cial·ism n.
Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.
socialism. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/socialism (accessed: June 09, 2007).

Where have any of us advocated government ownership of anything in this thread? We haven't advocated government ownership of anything, so the constant "socialist" references show that free traders are good at name calling but not so good at depicting people's positions accurately.

Finally, why is a high trade deficit a good thing? A trade deficit means that we are consuming more than we are producing. Why is that good? You call yourself a capitalist, but I'm having doubts about whether you even understand that term. Most capitalists that I've known want to enrich themselves by being productive and by investing the proceeds of their productivity in order to receive a return. They don't want to have a net outflow of their productivity to someone else.

Bill

To be honest, I’m quite clear on that yet. I don’t want to give you bad answer on this.

To some level, I’m sure he sees many of the problems. I do think he’s against form of protectionism; which I am as well. I think (as I said in my former post) that it will take a comphresive set of events to keep us competitive. And to be truthful, I really would love to see both Thompson and Hunter in office. I think their dynamic and views are very important and could work together quite well.

Like Jefferson and Adams. Neither were absolutely right but they made conservative and libertarian views a friend.

I do currently support Fred, because of what I do know about him; although I highly respect those whom support Hunter (whom is good man), and I do wish him the best of luck in his run...and hopefully he’s up there somewhere.

“It keeps the emergence of the middle class from happening, as well, which I’m sure they want because I keep hearing that the more middle-income earners China has, the less dangerous the government becomes, or some happy horseshit like that.”

There’s nothing particular ideal about our relationship with China, although it must be one that is fostered and equal. War with them is just not an option, and personally I think in the long-run that may not at all be a thought.

Granted Taiwan and energy sources doesn’t become a huge issue. Then anything could happen.

We just need an admistration that will be forthright and consistantly bring things forward to them. Although it’s not just a one-sided thing....it’s not all their fault on why we’re at where we are at.

Hunter: I offered my first bill in 1982, it was HR-5050, the Two-Way Street bill. It put the same taxes on foreign vehicles coming into our country that foreigners put on our vehicles going into their country. It was very simple. It was a mirror.
Q: As President, is there anything you could do about this acquiescence to cheating?

Hunter: Right now, China rebates their taxes to their manufacturers. They give a 17-percent subsidy to their products and a 17-percent penalty to our products. Before you even compare labor, component prices and commodity prices, they have a 34-percent advantage before the game even starts. Then they devalue their currency by 40 percent to make sure the American manufacturer doesn’t win. That is cheating. We need to have a government that says that is cheating. [Fed Chairman Ben] Bernanke had that in so many words written in his speech that he was going to give in China [in December], but it was changed before he gave it to the Chinese leadership. That is not acceptable.

(Excerpt) http://www.manufacturingnews.com/subscribers/users_orig.cgi?mfgnews_username=jocknash&flag=show_entire_issue&id_issue=214&id_title=1&id_sub=127&id_sl=

MORE economics for ya, cowtowney.

Two things:

1. The late Professor Milton Friedman said, “Underlying most arguments against the free market is a lack of belief in freedom itself.” Some people justify their calls for protectionism by claiming that they’re for free trade but fair trade. That’s nonsense. Think about it: When I purchased my Lexus from a Japanese producer, through an intermediary, I received what I wanted. The Japanese producer received what he wanted. In my book, that’s a fair trade.

Of course, an American auto producer, from whom I didn’t purchase my car, might whine that it was unfair. He would like Congress to impose import tariffs and quotas to make Japanese-produced cars less attractive and available in the hopes that I’d buy an American-produced car. In my book, that would be unfair.

2. Professor Don Boudreaux, chairman of George Mason University’s Economics Department, wrote “If Trade Surpluses Are So Great, the 1930s Should Have Been a Booming Decade” (www.cafehayek.com). According to data he found at the National Bureau of Economic Research’s “Macrohistory Database”, it turns out that the U.S. ran a trade surplus in nine of the 10 years of the Great Depression, with 1936 being the lone exception.

During those 10 years, we had a significant trade surplus, with exports totaling $26.05 billion and imports totaling only $21.13 billion. So what do trade surpluses during a depression and trade deficits during an economic boom prove, considering we’ve had trade deficits for most of our history? Professor Boudreaux says they prove absolutely nothing. Economies are far too complex to draw simplistic causal connections between trade deficits and surpluses and economic welfare and growth.

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