China is becoming an issue in 2008 race
How much of an issue will China be in the 08 race? Which candidate for the White House understands best how to deal with China best? I would say Duncan Hunter or John Edwards.
YAHOO-When Democratic presidential contender Barack Obama said in a recent debate that “the center of gravity in this world is shifting to Asia,” he had one nation clearly in mind.
“China is rising and it’s not going away,” said the senator from Illinois. “They’re neither our enemy nor our friend. They’re competitors.”
“It’s impossible to avoid China as a policy issue,” Doug Holtz-Eakin, a policy adviser to the campaign of Republican Sen. John McCain, said in an interview. “Anybody who is interested in being the next president of the United States has to think consciously about how … to have China emerge as a responsible stakeholder.”
Candidates have been raising, in debates and campaign stops, what they see as China’s failure to live up to its duties as an emerging global superpower.
Only protectionists which as a group represent about 2% of voters have this as an issue.
Since Duncan Hunter is on the verge of ending his bid for the GOP nomination, does this mean you have finally decided to publicly support John Edwards?
Can we expect to see an Edwards for Progressive President ad soon?
China isn’t the problem as much as we are. They have low taxes, we have high taxes, that are affecting prices. Our consumers opt for prices that don’t have the costs we place on business here, included in those prices. We can’t even compete with Ireland on things like Lipitor and Zucor where wages are higher than here for the Ave. Mfg. wage.
We can’t pay for our infrastructure maintenance, our future promises for seniors, or other government programs if we don’t increase tax revenues before the boomers retire.
China doesn’t regard itself as a “superpower” that needs to care for the world. It is busy trying to raise over a billion of its own people out of poverty. Its policies are not designed to help us or others as much as help grow their own consumer base and increase the number of things they manufacture and services they provide.
Since they hold about $1.3 trillion of our currency reserves, we also aren’t in a position to make too many demands. But, you are correct that a President should understand why we can’t “compete” with China, Russia, Poland, Ireland, Taiwan, and all the other nations that are rapidly growing their economies with manufacturing and exports.
However, we have a good export report for Q2. The trade deficit declined with almost every nation, except China which rose again.
Quote:
U.S. exports for June continued to benefit from strong global growth and a weak dollar.
The U.S. exported a record amount of goods and services to China, South and Central America, and the newly industrialized countries, including South Korea, Singapore, Hong Kong, and Taiwan.
All major subcategories of exports rose except consumer goods, which dropped 1.4% to $11.9 billion. Exports of foods and feeds, industrial supplies, and autos set monthly records.
Exports of civilian aircraft fell 1.9% to $3.8 billion. Semiconductor exports rose 5.1% to $4.3 billion.
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The U.S. trade deficit with China widened to $21.2 billion in June from $19.6 billion in the same month last year. The trade gap with China was $20.0 billion in May.
The nation’s trade deficit with China has totaled $117.5 billion so far this year, up 15% from $101.9 billion this time last year.
http://tinyurl.com/yseuzr
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As China makes more and more things our consumers want or that are lower priced than we can make with our taxes and compliance costs, healthcare costs, litigation expenses, etc. included, (fair or not), our consumers who have no loyalty to “made in America,” will buy even more from China.
As long as we ask Congress to pay for the things we want by taxing business, instead of us directly, we will see consumers buy foreign anytime their prices are lower.
Tariffs aren’t the solution either. They are our bankers for one thing and can easily retaliate. But, more important, we need reforms, not protection of bad policy here. Even if we were to be able to block China, our consumers would just buy more goods from Vietnam, Korea, Poland, or any other nations that are using the same tactics as China to grow their economies.
Millions of people are rising out of poverty with billions of people yet to go. Don’t expect those nations with those billions still in poverty to be very concerned about whether or not we can compete. It is up to us to find a way to compete.
Bart
What is your plan fall deeper into debt with COMMUNIST CHINA?
Why do you hate Americans and love China so much?
Bart
Is Huckabee a liberal? I think he is an American first and not a sell-out like you and Congressman Tom Price!
Huckabee GOP Latest Star Bashes China
Do you think Huckabee is surging due to his populist message on trade and immigration?
Iowa-Governor Huckabee is a supporter of free trade, but our trade policy is not free because it is not fair. In regards to China, Huckabee would want to see that country start to adopt similar safety, health, labor, and environmental standards that we have in this country. They are basically on a different playing field, and because they can skirt standards that we have to live by, they can exploit those differences and produce cheaper products.
Governor Huckabee is also a support of Country of Origin Labeling, or COOL, for food products. This is especially important in light of contaminated feed and food products brought in from China.
Yes Huckabee is a big tax and spend liberal.
No, Huckabee is gaining some name recognition because he is a clever speaker. He’s got a good sense of humor, but so does Larry the Cable Guy…will you support Larry if he comes out against China?
Can we expect to see an Edwards for Progressive President ad soon on this site?
Bart
If Edwards send a check I will post it! I would take money from Price for an ad!
Should we just go ahead and put a red light over the right side of the screen?
Jan Paul,
1. China’s taxes aren’t all that low, either corporate or personal.
2. The flip side to increasing US tax revenues before the boomers retire is tightening our belts. Getting the Republican’ts out of control is a great first step.
3. Competing with the world is one of the things America does well. What we don’t do well is compete in areas that we should have left alone 50 or 80 years ago, like textiles.
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Your point about taxing people vs. business is very important, and one that had largely escaped me up until now.
—Europe, Japan and other developed economies all have a VAT or similar tax on consumption; America does not.
—They discourage consumption; we do not.
—They mostly run very large trade surpluses; we do not.
Coincidence?
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There is, however, one basic point in your otherwise well argued post above with which I disagree.
As China makes more and more things our consumers want or that are lower priced than we can make with our taxes and compliance costs, healthcare costs, litigation expenses, etc. included, (fair or not), our consumers who have no loyalty to “made in America,” will buy even more from China.
The point I dispute is that any of the competitive advantages China has have anything to do with the US. Their costs, taxes, etc, are meaningless in terms of US trade. Where those factors are deeply important in making China extraordinarily competitive is vis-à-vis other nations such as India, Brazil or Mexico.
Not America.
We aren’t in that game anymore, and haven’t been for decades.
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Mr Konop,
—Germany has much tougher labor safety standards than does America.
—Bulgaria has much more generous maternity leave laws than does America.
—Sweden has much tougher environmental protection regulations than does America.
—Minimum wages are higher in Belgium, France, Ireland, Luxemburg and the Netherlands than in the USA.
When are you going to demand that America follow Europe’s regulatory lead, as you demand that China follow America’s?
Why don’t American workers, mothers and America’s environment deserve as much protection as Europe?
Or, is this a double standard: do as I say, not as I do?
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Did anyone happen to notice that while our trade deficit with China went up, our trade deficit with Japan went down?
And, our trade deficit with Korea went down?
And, our trade deficit with Taiwan went down?
And, our trade deficit with South-east Asia went down?
And, our trade deficit with Europe went up?
And, our trade deficit with Latin America went up?
Did anyone notice that our exports to China rose 60.5% between the second quarter of 2005, just two years ago, and April-June this year?
Nah. I didn’t think anyone would have noticed (except Jan Paul).
Oh, well.
David said
China’s taxes aren’t all that low, either corporate or personal.
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It isn’t personal taxes that are an issue in competitiveness but rather the taxes that affect what shareholders can expect after the application of taxes and how much compliance costs to meet tax requirements since here, compliance is often higher than the actual final tax bill.
However, you are right about China’s tax rates being high but, for Chinese companies and companies outside the economic zones where they were running as low as 11% for businesses they wanted to encourage to locate there plus zero tax on those who reinvested their profits.
I understand they are going to end some or most of that practice and move them up to about 22% which is what they will also tax Chinese and other businesses outside the economic zones.
Do you know if that is true, David?
Also, you can have many social programs, high standards, good treatment of workers and still be competitive. You mentioned the VAT and/or a consumption tax as a means of increasing competitiveness and increasing tax revenues. I agree with that but, it isn’t very popular here because the voters don’t want to pay the taxes. They want somebody else to pay them.
But a tax like that reduces prices on domestic production and increases prices on all imports. It does help with competition but again, has yet to become demanded here by the majority of voters.
I also posted the trade deficit news and the positives in it as well as the negatives. But, the focus seems to be on China because it has grown so fast, has 1.3 trillion of our currency reserves and possible because it seems to be losing its fear of our threats.
Yes, there are things China needs to do but, we aren’t in a position to make many demands on one of our major bankers that we depend on so much to fund our inefficient government.
Jan Paul,
In March this year, the corporate tax rate in China was set at a flat 25%, for both domestic and foreign companies.
That reduced local rates (which were 33%) and raised rates for some foreign investors, mainly ones who had already run through their investment incentives.
It also applies to the Special Economic Zones such as Shenzhen, which were the first place that COMMUNIST CHINA (as Mr Konop writes it) first abandon communism, nearly 30 years ago (1979).
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Strange but true: China had $1,332,600,000,000 in foreign exchange reserves at the end of June 2007. Reserves rose by an average $27.7 billion a month since January 2006, but the trade surplus was just $18.7 billion a month. Where did the extra $9 billion come from? Net investment accounts for less than $5 billion a month, so we’re still short a billion dollars a week . . .
At the pace registered over the past 18 months, $1.4 trillion in reserves is closer to the mark this week.
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The VAT is unpopular in America. Same here in Hong Kong; we just called a halt to even discussing it.
Funny how when you ask the goose what kind of sauce would be best for dinner, it just starts hissing and hissing.
Don’t tax me, don’t tax thee.
Tax that fellow behind the tree!
—Sen. Russell Long (D-La, 1948-87)
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I don’t quite follow your thinking in this one: “ But a tax like that reduces prices on domestic production and increases prices on all imports.”
Such a tax should increase the price of local production (assuming all else is equal), since inputs to production – including the workers’ consumption – would be taxed. As for imports, they get hit the same as anything made locally.
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And, finally:
“you can have many social programs, high standards, good treatment of workers and still be competitive” in areas where you have an advantage.
We don’t have an advantage in consumer goods manufacturing vis-à-vis China, but we do in legal and financial services.
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I guess I’m not going to get an answer (again!) to my question about why Mr Konop doesn’t support higher safety standards for American workers, higher health standards for American consumers and better employment terms for American mothers.
Maybe he thinks American workers aren’t worth as much as European workers.
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Yep, still no answer from Mr Konop.