No doubt the recent Wikileaks leaks revealed too much. It will remain to be seen whether or how severely Julian Assange will be prosecuted.
However, one of the revelations pivoted around what is most likely the primary—and heretofore publicly unspoken—reason why the U.S. has not been more forceful with China regarding its currency manipulation, intellectual property theft, and tariffs which have weakened the U.S. manufacturing segment's ability to compete against cheapened Chinese imports.
Secretary of State Hillary Clinton, concerned about China's transgressions, was revealed in an exposed cable to have asked, "How do you deal toughly with your banker?"
Indeed.
In September 2008, China surpassed Japan as the largest holder of Treasury Securities. As of October, 2010, China owns $906.8 billion of U.S. Treasury Securities; Japan follows closely behind, with $877.4 billion.
Being the U.S.'s biggest banker has given China a lot of leverage on U.S. trade policy. The U.S. has become too beholden to China to pressure it on unfair trade practices.
So how does the U.S. get its economy back on its feet when it must continue to allow China its trade transgressions? Got thoughts? I'd love to hear from you.
About the Author: Kate Bachman
This is a very serious issue for the Untied States. On one hand you have the ‘banker’ who you need to pay the bills with, from the ‘banker’ who helps to create them. China has long subsidized its manufacturing sector in order to entice developing nations (like the USA) in to buying more and more “cheaper” goods. This vicious circle has fed right in to China’s goal, to be the ONLY super power! They don’t need to invade the country with its army of soldiers they are simply doing it by undermining the financial stability of the US economy. Think about that next time you purchase goods from the big box store that were once built in America and are now made in China. It’s not the automotive industry that is killing the USA it’s everything else that moved off-shore.
For the USA to get out of this mess they will have to walk a very careful line. If global markets start to turn away from the US and seek new opportunities, such as India and Brazil, American manufactures and the economy will continue to spiral downward. The debt will increase and the ‘banker’ will come calling.
Good luck USA this is going to be the most important war you ever fight.
I think the US priced itself out of the market years ago. Overpriced labor, reverse golden parachutes, and innovative doldrums are the culprits. Capitalism is not just for Americans – make more imaginative stuff better and cheaper, and the tide will swing. stop whining.
I agree joe! Also regarding Dave's comment regarding China subsidizing mfg, I too see that as a large force for US mfg's to combat. However, the US gov't can help by ensuring that regulatory fees, compliance issues, and taxes are low in order to compete through efficiency (as opposed to the Chinese government backing mfg and low cost labor there).
In a sense, the US government back our manufacturing industry by standing back and letting us get to work!