Yesterday, Obama played host to the vice president (and heir apparent) of the People’s Republic of China.
Christi Parsons reports for the Los Angeles Times, Feb. 14, 2012, that Obama greeted Xi Jinping in the Oval Office on Tuesday morning, a venue where U.S. presidents usually receive only America’s closest friends. For that matter, no previous China vice-president has received a 19-gun salute or an Oval Office meeting with the U.S. president.
In a joint appearance before their meeting, Obama told reporters that the U.S. relationship with China is based on “mutual interest and mutual respect,” and that the United States welcomes China’s “peaceful rise.”
If that sounds just a tad obsequious, here are the reasons why:
1. China is keeping the addicted-to-debt U.S. government afloat.
China is a major creditor nation and the largest foreign holder of U.S. public debt (U.S. treasury notes and bonds) at $1132.6 billion as of November 2011.
2. American consumers are addicted to “Made in China”.
Ever since relations between the U.S. and China were normalized in 1979, our bilateral trade has been in China’s favor, and the trade deficits for America grow ever larger every year.
The gap between US imports from China and what we sold China rose to $273.1 billion in 2010, the largest trade imbalance we’ve ever recorded with a single country. While US exports to China grew by a third last year to an all-time high of $91.9 billion, imports worth $364.9 billion travelled in the other direction, an increase of 23.1%.
But, but, we are told that things are improving! U.S. exports to China in 2011 for the first time eclipsed $100 billion!!!
Alas, if we look at what America is exporting to China, the picture darkens.
In a report for the Heritage Foundation’s The Foundry blog, Dr. Derek Scissors shows us why:
Top 10 U.S. Exports to China, 2011
|Category||Value ($ billion)|
|Waste and Scrap||11.5|
|Semiconductors and related products||5.2|
|Meat and poultry||2.2|
|All U.S. exports||103.9|
Dr. Scissors comments;
“The leading item is waste and scrap, which certainly does not fit comparative advantage. The performance of agriculture, led by soybeans, does make sense given the huge American lead over the PRC in arable land per person. Aircraft and plastics materials also fit, though the volumes would be higher if the Chinese market were fully open. Autos may be a surprise given recent disputes—the U.S. sends completed cars to China, which sends parts back.
It is reasonable that semiconductors and computer equipment are on the list, but it is seemingly not reasonable that the totals are so low. This becomes stark in comparison to Chinese exports. Including printed circuit assemblies, China exports more semiconductors and related products to the U.S. than the reverse. Computers are far worse: The PRC sends many times the value of computers and equipment to the U.S. than the reverse.“
Now let’s look at what China is selling us.
Top 10 Chinese Exports To the U.S., 2011
|Category||Value ($ billion)|
|Toys and sporting goods||21.7|
|Women’s and girl’s clothing||19.1|
|Semiconductors and related products||13.6|
|All U.S. exports||399.3|
Dr. Scissors asks the billion dollar question:
“Why isn’t the more advanced economy sending technology products to the less advanced economy?
Typically, more economically developed countries use less developed countries as suppliers of raw materials and agricultural products, while the more developed countries supply high-tech goods to the less developed countries. The top 10 US exports to and imports from China are a profile of the typical trade relationship between a less and more economically developed country. It’s just that America is in the role of the less developed partner.
But then, why pay for that which you can steal? (h/t Jay)
In 2010, China became the world’s second largest economy. Last year, the World Bank said that if current trends continue, China will overtake the United States to become the world’s largest economy in 2030.The Standard Chartered Bank in a 2011 report suggested that China may become the world’s largest economy even sooner, by 2020.
But both the World Bank and SCB are outdone by the Organization for Economic Co-operation and Development (OECD).
Using purchasing power parity conversions, the OECD estimates China will overtake the United States in just three years — by 2015. [Source: Wikipedia]
Xi Jiping will be around when that happens. He is expected to take over China’s presidency and is set to lead China until 2023.
More sucking up: Defense Secretary Leon E. Panetta yesterday welcomed Chinese Vice President Xi Jinping to the Pentagon with full military honors for what was the first ceremony of its kind for a visiting vice president. [Read more, here]