Japan got away with playing trade games because
1) they are smaller than China
2) We needed Japan to be prosperous to stop communism in Asia.
By the way, China post-Deng has done as much to discredit and reverse the old "left communism" as Margret Thatcher and Ronald Reagan. Ron and Maggie showed the Soviets as morally and economically bankrupt, Deng showed that capitalism (even if it is state capitalism) open markets, FDI and trade could led to prosperity, not neo-colonialism, for an undeveloped nation.
3) Eventually, there was significant US stock ownership of some Japanese companies, like Sony
Same applied to Korea, even smaller, and right on the front line.
But the trade conflict with Japan became very strong, a small political change and things would have worked out differently.
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The China situation is different in many ways from what Japan did -
1) Extensive FDI of US firms in China, also Taiwan, Japan, European. from close to the start of Deng's programs.
Japan was closed, and much of India is closed today.
>>>This means much of the profits have gone to Western firms.
2) More open ownership of stock in Chinese companies, like Buffet in PetroChina. This is occurring maybe a little earlier than in Japan.
3) The RMB was recently tied to the USD - contrast with Japan sending the Yen all over the place 140, 160, now down to 80.
4) The insane level of competition among many China suppliers, that keeps wages and profits low for China and makes WALMART and other importers rich. Japan managed to avoid much of this competition.
5) Much more aggressive efforts to get technology than Japan
did, and Japan was pretty bad.
6) China effectively financed both the Iraq and Afghan wars by buying US debt. The amounts are roughly the same. Japan was not in a position to finance Viet Nam, but did benefit from US spending on logistics in Asia.
My net assessment is that China has been a better economic partner than Japan. They are also far better than India, which has extensive restrictions on what foreign companies can own.
However, due to technology it is much easier to outsource jobs. China got many of the jobs that were supposed to go to Mexico with NAFTA.
The second problem is China is larger, so the outsourcing doesn't end.
China made the decision to economically tie itself to the US, and lately tried to balance that with better ties to Europe and Asia. So far, this has worked out well for China (not perfect) and pretty well for the US too. (one less war would have made it even better)
>>>> Trying to assign some blame to China for the mortgage mess is....an interesting exercise. <<<<
**** Hey, if I was on Wall Street, or a mortgage broker who committed FRAUD, blaming China would sound like a real good idea to me... ****
>>Remember the savings and loan crisis of the late 1970s ? The US was able to do that without any help from China.<<
The biggest demand for securitized mortgage products came from Europe, where the products were going to be used to met the pension obligations of their aging societies.
Very little of these toxic mortgages were bought by China or Japan - they only bought Treasuries, GinnyMae, Fannie, and Freddie debt.
*******
On a long term basis, China may or may not be a rival.
I expect they will want to be in a situation where the US has less leverage over China, and we (the US) like to have leverage over everybody, and no one having any leverage over us.
"God bless the United States of America and no one else !"
- Chris Rock, stand up comic and member of the National Security Council.
But unlike the Soviet Union, and to some degree Russia today, they are not an enemy, and not a threat to the existence of the United States (China 35-38 missiles vs Russia several 100s + aircraft + some submarines) |
