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There's a trade war (dispute) going on between USA and China, and it boils down to the USA accusing China of not buying enough American products, relative to what they sell to America.

Putting aside other accusations such as currency manipulation, cyber security hacking, etc. If we just focus on this central accusation of 'You are not buying enough of my stuff, while selling too much stuff here!"

I don't understand how that can be a valid 'accusation'. Buying and selling are willing actions taken by market participants, made as a result of their own economic situation. China has total freedom to decide what and how much to buy (import) from any country, as does the USA. If China decides not to buy certain products it probably means either it thinks those products are too expensive, too low quality, or maybe China doesn't need them. Same with USA - it decides to buy certain products from China at certain amount because it has decided it is the right product at the right price and amount. My point is, USA can decide to buy however much from China and vice versa. These are willing market participants.

If so, how can any country 'accuse' of another of not buying enough or selling too much? Whatever China sells is agreed to be bought by USA, it's not like China forces USA buy its stuff. And whatever China buys from USA is its own decision.

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  • $\begingroup$ It is about trade barriers. $\endgroup$ – paparazzo Aug 31 '18 at 22:36
  • $\begingroup$ Well, USA are NOT going to sell the advanced aircraft to balance the trade. So case close. $\endgroup$ – mootmoot Sep 3 '18 at 16:31
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The US president see’s trade as a zero-sum game, where there is always a winner and a loser, being the winner the one who sells more to the other. This view is not shared by most economists, as the mainstream opinion is that international trade is beneficial for both parties (see Ricardo or Krugman for examples).

In the US’s president mind, “to win the game” they must restrict the sales of Chinese goods, using tarifs or quotas. The US can either produce these goods or import them elsewhere. The Chinese, however, are expected to have no other alternative but to keep importing advanced goods, critical for their economy, such as aeroplanes parts from Boeing.

The expected outcome from this policy is less competition for national producers, potentially resulting in more jobs and higher profits. However, end consumers might end up facing higher prices for several goods, resulting in lower real incomes.

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There's no technical justification, it's a political statement. Most trade wars are, in fact, the fruit of politics.

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Why shouldn't that be a valid accusation. The numbers speak a clear language. But that isn't even the main problem. The actual problem is, that while the US was stupid enough to listen to "economic experts" that always told them to open their markets more and more, China was smart enough to massively restrict it's own marked for foreign industries. As an example, if you are a car company and want to sell your products (cars of course) on the chinese market you either had to pay 25% import taxes or, if you wanted to skip that by producing partly in china directly, you had to do it together with a local car manufacturer. That puts the US economy in a huge disadvantage with the results visible in the numbers above.

So the accusation that import/export between china is way of to the benefits of china is correct as well as the accusation that they doing it on purpose.

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    $\begingroup$ Chinese customers are paying more for cars than they would otherwise. This is creates deadweight loss of social welfare. This is basic international trade theory, I recommend you studying it a bit before commenting on the subject. Feenstra's text on trade is a good reference. Krugman's work is also good. $\endgroup$ – Pedro Cavalcante Sep 3 '18 at 20:49
  • $\begingroup$ @PedroCavalcanteOliveira you are wrong, because of their import taxes they pay more for cars from other countries, not their own. Also if you have stronger taxation on all cars that doesn't mean a loss of social welfare. Where do you even get that idea? Taxation go to the state, the state does something with, be it pay for infrastructure social programs or even the military, adding more economic value in the system. In fact private companies are always taking money out of the system to grow personal wealth of owners that are already so rich, that they can't create economic value with it. $\endgroup$ – Etaila Sep 6 '18 at 16:27
  • $\begingroup$ @PedroCavalcanteOliveira If you don't see it in china you can just look at the worlds car makers, when the markets in europe and the us where heavylie restricted, Germany, the US, Britain and France had their own strong car industrie, which generated a lot of wealth in the general public. Today the markets are pretty much open and the british car industrie is gone, the french is just a shadow of what it once was, the US only exists because of the unice road system of the US and only the german manufacturers grew. And in none of these states even germany, the car industry even comes close to * $\endgroup$ – Etaila Sep 6 '18 at 16:39
  • $\begingroup$ * bring the same wealth to the general public that it once had. It is always, ALWAYS importend to be careful with open markets. It doesn't help anyone if you can import everything while you produce nothing. If you belive in fully open markets look at the countries that have that, may it because they belive it or because they lack the power to defend their own market against big companies, like Somalia. $\endgroup$ – Etaila Sep 6 '18 at 16:45
  • $\begingroup$ Ok then, write the paper and submit it to Econometrica. You've just changed international trade theory forever. You'll get a Nobel in no time :) I wonder what makes people who have never opened an intermediary textbook in their lives think they know what they're talking about with such confidence. Dunning-Kruger, I guess. $\endgroup$ – Pedro Cavalcante Sep 6 '18 at 21:04
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When you start importing products from China, you are exporting your jobs to China. It's called outsourcing of jobs.

That's ok as long as you are also exporting products in China, and then China is also outsourcing their jobs into the USA.

Say USA is importing Chinese cars valued at $10 billion. That removes say 10,000 jobs from the American car making industry and those jobs are sent to China.

But you also export cars to China - valued at $10 billion. That removes 10,000 jobs from the Chinese car making industry and those jobs are sent to the USA.

It's ok to have high amounts of international trade. What is not ok is to have a trade deficit. If your imports are above your capacity to export, that means the American jobs are sent into China

These "economic experts" Etalia is talking about are always trying to create confusion and to convince you that you have to increase the poverty in order improve the economy. And they are intensely promoted by the mainstream media. That's the very reason why I'm not watching the media since many years ago and I recommend everyone else to do the same.

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