(WP) The makings of a trade war with China - Better than do nothing

[sonomak]

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/26/AR2010092603332.html

The makings of a trade war with China
By Robert J. Samuelson
Monday, September 27, 2010; A15

No one familiar with the Smoot-Hawley tariff of 1930 should relish the prospect of a trade war with China -- but that seems to be where we're headed and probably should be where we are headed. Although the Smoot-Hawley tariff did not cause the Great Depression, it contributed to its severity by provoking widespread retaliation. Confronting China's export subsidies risks a similar tit-for-tat cycle at a time when the global economic recovery is weak. This is a risk, unfortunately, we need to take.

In a decade, China has gone from a huge, poor nation to an economic colossus. Although its per capita income ($6,600 in 2009) is only one-seventh that of the United States ($46,400), the sheer size of its economy gives it a growing global influence. China passed Japan this year as the second-largest national economy. In 2009, it displaced Germany as the biggest exporter and also became the world's largest energy user.

The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't. Every nation, including the United States, would like to do the same, and most have tried. What's different is that most other countries support the legitimacy of the rules -- often requiring the sacrifice of immediate economic self-interest -- and none is as big as China. Their departures from norms don't threaten the entire system....

The post-World War II trading system was built on the principle of mutual advantage, and that principle -- though often compromised -- has endured. China wants a trading system subordinated to its needs: ample export markets to support the jobs necessary to keep the Communist Party in power; captive sources for oil, foodstuffs and other essential raw materials; and technological superiority. Other countries win or lose depending on how well they serve China's interests. The collision is between two concepts of the world order. As the old order's main architect and guardian, the United States faces a dreadful choice: resist Chinese ambitions and risk a trade war in which everyone loses; or do nothing and let China remake the trading system. The first would be dangerous; the second, potentially disastrous.

[Populist_Prole]

1. Seems ironic coming from Samuelson

The ultimate 3rd-way neo-liberal free-trader. But I guess better late than never.

Never could wrap my mind around the fear of the "trade war" hysteria since the US pretty much IS the chief target of China exports. Fear of a "Trade War" really means the multinationals producing in China ( and basically selling to themselves ) fear the loss of their low cost/high revenue gravy trains.

Piss on "consumers". Pre-emptive strike on the usual crocodile tears argument the globalists roll out when trade policy debate comes up. I'm a citizen, not a consumer.

[AdHocSolver]

2. Nonsense. The multinational corporations have control of international trade.

Both the U.S. and China, like most other countries (at least, countries having something of value to exploit for profit), are little more than colonies of the major corporations.

The corporations maintain control through trade agreements such as NAFTA, and organizations such as the WTO, the IMF, the World Bank, and their influence over central banks such as the Federal Reserve.

China is a useful scapegoat for a system set up and operated for the benefit of the multinational corporations.

The corporations claim powerlessness in order to deflect American anger at China rather than the true enemy of the middle and working classes, the corporations.

The corporations could shut down China in a couple of months by refusing to buy their goods. The fact that they don't do it is because the corporations are happy with the way things are.

[Demeter]

3. Hysterically funny

"The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't."

But of course! They learned from the best--US! The kicker is that China is not about to let US based corporations, nor even Chinese ones, kick it around. China is firmly in the driver's seat and intends to stay there.

Watching Goldman Sachs, et al. flailing around trying to get a toehold and some purchase in China is better than anything on TV.

By now China has enough industrial base and trained workers that it doesn't need any outside corporation that won't toe the China line. Not even mighty Google.

[littlewolf]

4. do we really want a trade war with someone we owe

over a trillion dollars too?????