Anyone who has ever played a game with a five-year-old knows that there is only one rule. The five-year-old has to win. Any other rule is just a suggestion if it would result in the five-year-old losing the game.
In the case of the five-year-old, no one is surprised by the rule-breaking and no harm is done.
But as five-year-olds become adults, they learn that real competition begins with an equal application of the rules.
For example, imagine that one NFL team decided that their opponents had to play every game with 5-pound weights strapped onto their ankles, raised the opposing field goal uprights by 25%, and insisted that the opposing coach share his offensive playbook with their defensive coordinator. There is not a team in the league that would agree to those terms, and not a football fan in the nation who would expect that agreement. In fact, the outcry would be deafening.
Yet, in the international marketplace, that is exactly what is happening.
China subsidizes costs for Chinese companies that export goods to America, imposes tariffs of up to 25% on American goods coming into their country, and insists that American companies who open plants in China share their technology with Chinese scientists. America does none of these things to China, allowing Chinese products to flow into our markets with no such restrictions. As a result , in 2008, China sold over $337,000,000,000 more than she bought in her trade relationship with America (as reported by the Bureau of Economic Analysis).
When a business sells more than it buys, the business prospers. A prospering business hires, so employment grows. But when a business cannot sell its products, it dies. A dying business releases employees, so employment declines. The Ame rican trade deficit with China means that American businesses are not selling their products. It is therefore no surprise that American businesses, particularly in the manufacturing area, are closing. And the loss of American jobs cited by the Bureau of Labor Statistics now numbers in the millions.
And what is China doing with its surplus cash? In 2008 Chinese monetary authorities purchased more than $400,000,000,000 in United States and other foreign currencies. In fact, China holds about $2,000,000,000,000 in foreign exchange reserves, with most of that in the form of United States securities. That means that in addition to the trade dollars that are flowing from America into China, China is receiving interest payments from the United States government and investors on the trillions of dollars in American debt that she has financed by using the income from that trade. And of course, China pays no taxes on all that income.
This is not free trade.
This is China deciding that sh e can play by a completely different set of rules in the international marketplace. Rules that ignore balance or fairness. Rules whose only result is that China can shout, “I win!” in her competition with America.
One can understand China’s desire for victory in the marketplace. What is impossible to understand is why America’s leaders stand by and allow it to happen.