President Barack Obama should lay off of China. The only thing keeping U.S. capitalism afloat is Chinese communism.
During his recent Asian adventure, Obama discussed China with journalists in Seoul. He said that, “It’s very important that (China) act in a responsible fashion internationally.” Obama added that the question of China’s currency “is an irritant not just to the United States, but is an irritant to a lot of China’s trading partners and those who are competing with China to sell goods around the world.”
To Chinese ears, this must sound like a temperance lecture delivered by a man wielding a pitcher of martinis.
Obama and other American officials accuse China of undervaluing its currency, thus making Chinese exports globally cost-competitive. This fine whine is pretty damn rich, given Washington’s appropriately excoriated policy of “quantitative easing” (QE) This elegant phrase sugarcoats the massive printing of dollars by Federal Reserve chairman Ben “Kinko’s” Bernanke.
The Fed quantitatively eased $1.7 trillion after the economy slumped in 2008. Seeing how beautifully that worked, Bernanke embarked on a brand-new, $600 billion print run of dollars (nicknamed QE2), in exchange for U.S. Treasury bonds.
Between Nov. 3, when Bernanke announced this policy, and Nov. 17, the dollar skidded 1.4 percent against the British pound, 2.8 percent versus the Japanese yen, and 3.8 percent compared to the euro.
Thus, in an act of eye-popping hypocrisy, Washington practices precisely the same behavior for which it loudly denounces Beijing. Besides, America should compete on quality, not price.
With China still in his crosshairs, Obama also said in Seoul, “Countries with large surpluses must shift away from unhealthy dependence on exports and take steps to boost domestic demand.” He added: “No nation should assume that their path to prosperity is paved simply with exports to the United States.”
Now, do these godforsaken exports tumble from bombers piloted by the People’s Liberation Army Air Force? No. Do Chinese secret agents strap these products to donkeys and deploy them northward across America’s porous southern frontier? Negative. Nor do Chinese exports land on our beaches after being whisked here aboard Chinese Navy submarines.
Beijing’s exports should be no more surprising than a home delivery of wonton soup ordered from a local Chinese restaurant. Chinese-made goods are here because Americans demand them. These “dirty Chinese exports” that protectionists like Obama condemn are ordered by U.S.-based managers and purchasing agents who market them to their American customers.
At the request of their U.S. clients and business partners, China is filling America’s homes and offices with increasingly high-quality goods at steadily falling prices.
And for this, Obama complains?
Obama should ask himself: “Why do US companies leave America to manufacture in China?” Perhaps lowering America’s 35 percent corporate tax (the developed world’s highest), easing Big Labor’s kung fu grip on U.S. factories, and making this country less sue-happy might entice domestic companies to build their goods in Sheboygan rather than Shenzhen.
Meanwhile, it is foolish to use the word “irritant” to refer to the country that pays America’s monthly allowance. China regularly purchases U.S. bonds, which helps keep interests rates low and lets Washington push its fiscal day of reckoning ever deeper into a receding horizon. In fact, China bought $15.1 billion in Treasurys in September, boosting its portfolio of US government debt to $883.5 billion.
So long as China keeps bringing its checkbook to U.S. Treasury bond auctions, it is beyond idiotic for Obama and other US politicians to keep giving China the finger. This is no way to treat America’s lead international banker.
Rather than scream like hungry infants about Chinese exports, Obama and like-minded American officials should stare in the mirror and ask themselves this: How has big government made the US so uncompetitive that it is more economical for American companies to abandon domestic factories and, instead, manufacture in a nominally communist country on the opposite side of the planet?
Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University.