US-China Relations: Getting Beyond Political Rhetoric

obama-china-speech-111309-lgAt the beginning of George W. Bush’s presidency, political rhetoric regarding China took the form of old-school Cold War mantras. At the time, US consumption and Chinese production were as dependent on one another as heroin addicts on Afghan poppies. Thus, the “threats” were nonsensical political scapegoats.

As President Obama makes his way through China, we are witnessing more silly talk. Part of the President’s agenda is to convince the Chinese that importing US goods will “create even more jobs on both sides of the Pacific.” Um, no.

If China steps up US imports, they will cannibalize their own production (i.e., jobs). While this would be partially offset by their need to have the US make money to pay off our insane debts to them, as each moment passes China’s economy is growing less dependent on US consumption.

With one of the largest populations on Earth, China’s internal consumption will ultimately offset historic dependence on foreign consumption of their goods. Like the mafia, eventually China will not care how we pay them their interest so long as we pay. Global politics is a fierce Machiavellian game. As Warren Buffett eloquently explained in I.O.U.S.A.: One Nation. Under Stress. In Debt,Thriftville owns Squanderville in the endgame:

Aren’t we tired of this BS? The cold hard truth for US citizens is we must work to create a sustainable economy. We must set our sights on explosive industries such as alternative energy and health technology. The longer we sit home and imagine the Chinese buying our shitty cars or exotic financial securities, the shorter the road to serfdom for more generations of US citizens who will be stuck paying off the reckless debts of our elders.

As with the previous administration, our government is wasting time giving empty speeches for the US media to pump at home. If you believe in the coming wave of jobs based on Chinese consumption of current US goods, I have some strongly defended US Dollars to sell you …

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