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March 19th, 2010
01:00 PM ET

Heat rises on the China-U.S. relationship

[cnn-photo-caption image= caption="CNN business correspondent Christine Romans examines the ever-complicated relationship between China and the United States of America."]

By Christine Romans, CNN

(CNN) – The Chinese are mad at the Americans, mild-manned economists are bashing each other, and the heat rises on the China-U.S. relationship.

That heat has risen every day, all week since Chinese Premier Wen Jiabao’s uncharacteristic tongue-lashing of the United States in his annual press availability last weekend.

He blasted the U.S., its president, and its policies and warned in very clear language that we don’t want to make China our enemy. It wouldn’t be good for either country.

He’s right about the last point, but what is less clear is the path out of this mess.

The Chinese are angry that the U.S. is selling arms to Taiwan, that the president met with the Dalai Lama and that U.S. officials have urged China to let its currency rise. An artificially low yuan makes anything “Made in China” cheaper than U.S.-made goods.

Two years into a crushing recession, the political winds are blowing in the direction of anything that will help American jobs. A bill this week introduced in the Senate would slap Chinese products with tariffs as retaliation for China keeping its currency artificially low.

Former Secretary of State Colin Powell told PBS anchor and Bloomberg contributor Judy Woodruff that the U.S.-China relationship began strongly under this president and has deteriorated ever since. Usually, the conflict over Taiwan and the Dalai Lama is an exercise in diplomacy: the Chinese scream, we say we have our principles, and then everyone gets over it.

This time is different. Action against China in Congress is more likely than anytime in the last four years, the Google dispute adds a new wrinkle, and, as Powell described it, the Chinese are “more stiff” in their talks and diplomacy with the U.S. than they have been in recent years.

After this difficult and uncomfortable week for the world’s most important financial marriage, Reuters is reporting that the Chinese are now trying to cool down the rhetoric and are sending a special trade envoy to Washington later this month.

Enter the dueling economists.

Nobel Laureate Paul Krugman wrote this week in the New York Times that it is time for Congress to act on China. He advocates a 25 percent surcharge on Chinese imports. He criticized the U.S. government for not taking any action and said it has spent the last six years “pretending not to see the obvious.”

Krugman on China – New York Times, March 14
"Chinese currency policy is adding materially to the world’s economic problems at a time when those problems are already very severe. It’s time to take a stand."

A stance that infuriated Morgan Stanley economist Stephen Roach. When asked by Bloomberg Television if that demand was like taking a baseball bat to Chinese policy, Morgan Stanley’s Stephen Roach replied “we should take out the baseball bat on Paul Krugman.” He says America is lashing out on China instead of taking care of its own problems, like saving more money.

China Policy: Roach versus Krugman – Bloomberg, March 19
“We should take out the baseball bat on Paul Krugman.”

That, in effect, is where we are in China economic diplomacy. Not very diplomatic. And the spat between these two perfectly reflects the two views on China.

What’s at stake for you and me if this relationship sours? A rankled China even more emboldened to do deals with American enemies like Iran and Sudan, for one. And an article in Foreign Policy magazine makes a strong case for what happens in the U.S. if the Senate gets its way - higher prices for your iPod, your iPhone, every toy, game and piece of apparel you buy, and even potentially, your food.

Hands Off the Yuan – Foreign Policy, March 16
"If the prices of Chinese components (like fabric) and simple goods (like buttons) rise, the prices of finished products made primarily in the United States rise in turn. All that does is increase costs for American consumers."

Sen. Chuck Schumer (D-NY) said if he has to pay more for an iPhone, so be it. It is about returning American jobs.

After a tough week, this story is just getting started.

Filed under: Business • China
soundoff (58 Responses)
  1. lxguest

    This topic is only part of the story of globalization.
    Why could China export so much? It is U.S. /Japan/E.U./Taiwan investment and technology. In the end, it is U.S. got the most profit from Chinese export, remember, 70% of high-tech products exported by China are made by foreign companies. What do we get? Meager slary and pollution, because we have lax regulations on both labor protection and evironment.
    The Western giant companies crushed many Chinese industries. We found more and more good produced by Western companies with only Chinese names. How many industry are still Chinese? Maybe only priliminary resource companies.
    This is globalization, we have better living conditions, but we also made many problems. If I can say ,it is always the rich counties gain more, though it is help poor counties to some extent.
    If U.S. impose high tariff on Chinese goods, it is more likely that U.S. captalists will cry more. For China, it is painful, but just as you guies said, we pay for it, so somehow, we can have our own industry and the Gov. will forced to reform rather than brag the GDP increase, because these GDP mostly fall into pockets of rich cats in west and a small number of Chinese.

    March 22, 2010 at 12:07 pm |
  2. JB

    Making products in China, but keeping an American name on that products and reaping the benifits does not make it American made.

    March 22, 2010 at 11:16 am |
  3. ViperMD

    Its time for the US to buck and remember why it is extraordinary and doesn't need to cower in front of anyone:

    There are many, many reasons to understand the extraordinary strengths of the US and for optimism in the future:

    1) The US is the world's largest manufacturer, with a gross output of nearly $5 trillion ( >$2 trillion in GDP contribution) producing 20% of all the world's manufactured goods, a market share it has held for decades – Japan and the EU have had their shares decline precipitously, something rarely noted – also America produces one-third of all the world's high tech goods. (manufacturing jobs have been lost in less competitve industries, yet has remained strong in higher and higher value industries)
    2) Spends 45% of the world's research and development money, guarenteeing future prosperity
    3) At $15 trillion, it remains by far the largest economy in the world, 4x's larger than China
    4) The US is deliberative, self-critical, and self correcting, and so unlike incessantly criiticizing Europe and the Middle East, it is dynamic and fluid, changing as it needs to–identifying problems and rapidly fixing them
    5) Its unmatched culture of leading universities, think-tanks, public debates, entrpreneurship, coupled with its domination of technology and science provides it with an extraordinary productivity and potential.
    6) Despite what some may say, the US, without imposing, has the most attractive culture the world over; this is a reflection of the overt and subtle things about America and Americans which makes it so emulated and great.
    7) The net worth of Americans even after the 'Great Recession' is some $60 trillion, a sum equivalent to the entire world's annual output (GDP).

    March 22, 2010 at 9:41 am |
  4. JB

    Just about everything in Wal-Mart, Lowes, and Home Depot comes from China, and they call this fair, I don't think so.

    March 22, 2010 at 9:29 am |
  5. robert railey

    we made two big mistakes we took health care a service to mankind and turned it to a for profit industry we took capatalism the idea took away all controls and placed it above america itself the jobs we sent to china a lot profited health ins. so what we did was shoot ourselves in both feet greed by american busines is the root cause of all our problems and until we change the attitudes in this country we will grow weaker and china stronger russia could not destroy us but china has found our acchiles heel the god of american business cheap labor

    March 22, 2010 at 8:12 am |
  6. justin

    I have an issue when the leader of the free world feels the need to get something done when almost 50% of the country and possibly more don't want it. I don't call 219-212 a Great Victory. A vote like that may have won him the presidency but it will lose him the trust of the country.

    March 22, 2010 at 6:35 am |
  7. Victor Cheng

    I am a businessman from Wuhan, China. My first trip to the America was in 1985, when I was selling fabrics to the US. You and us have changed a lot since then. The American Industries have come sophisticated, more tech and service-concentrated and there is no place for traditional jobs anymore. I see it as an achievement. People have to admit that you can not do everything well. If Obama wants to increase the competitiveness of American products, he should encourage those industries that you have advantages, such as computers, airplanes, creative stuff. Sticking to exchange rate is deemed as not friendly, or something dark. We know what happened to Japan in the past 20 years.

    March 22, 2010 at 5:21 am |
  8. Bill Manderfeld

    How about some good old fashioned tarriffs on Chinese imports. It will hurt for a bit, and then maybe our dollar will get back to being worth something, and American goods will be bought and made by Americans. Any selling weapons to the Taiwanese? Lets hope we have not agreed to defend them...then we are in for WWIII.

    And I don't mind paying a few dollars more for an ipod, when they should have been made here in the first place.

    March 22, 2010 at 4:02 am |
  9. JA

    Allowing the Yuan to rise in value will drive inflation in the US. Since a significant portion of consumer goods come from China, the increased cost would not help the already strapped US population coming off high unemployment, and facing the prospect of being forced to pay for Health reform (not to mention carrying the burden of funding a bailout for the poorly managed bank & finance industry). The time for this type of action was back in the mid 1990's. Wouldn't it make more sense to focus attention on assisting the remaining US industries still producing in the US and boosting opportunities for more manufacturing in the US rather than 'blaming' China for our problems. The truth is that the average American's hunger for cheap products is what has driven all of this. And, after having all this cheap product the general population continues to be one of the lowest in the world in saving money in personal investments. Oh well, we can't expect Politicians to be truthful, and the media is certainly not to be trusted with the truth either. What a great country we have!!!

    March 21, 2010 at 9:41 pm |
  10. knives

    I think the US is doing what they call protectionism. Here in the philippines, we are losing jobs because of the manipulated currency of taiwan, japan (yes, our currency has higher value than yen!) etc etc BUT we cannot not do anything about it because we do not have a voice and power like US. How about if No Country should manipulate their currency, maybe that will be fair not only for the US but for the rest of the world.

    March 21, 2010 at 9:39 pm |
  11. Adam (Chicago)

    FINALLY. FINALLY I see a piece of information that gives me a glimmer of hope that SOMEBODY out there gets it. Everyone that ever said that American would have to compete globally is sooooo brain it's next to impossible to begin a debate. Chinese have no minimum wage, a far lower standard of living, no EPA, no unions, any of that. How exactly are we to compete with people that make $2.00 a day while we live in a nation where the median home price is north of 150k? Simple math people.

    March 21, 2010 at 9:05 pm |
  12. Trent Meehan

    The Yuan MUST be allowed to float relative to the US dollar (and other world currencies). Anything less is an unfair trade practice equivalent to stealing from the US worker.

    March 21, 2010 at 8:34 pm |
  13. Rob

    Like everything else now-a-days, we get idiot people spiing stories to make it seem like if we do anything about a bad situation right now, it will destroy us all and our 'wonderful' present day life.
    Healthcare, Campain Finance reform, Chinese currency, Global Warming, whatever...

    Never in my life have I seem so many uninformed people that vote parrotting whatever the fear-mongers say and trying to say it's the truth.
    Get informed.
    Learn to read more than one source and form your own opinion, based on facts.
    Stop being lazy and taking people's words for it because they are on TV.

    Ok I admit it. I forgot that I saw this before when we invaded Iraq too...
    WTH is wrong with our Country!

    March 21, 2010 at 8:31 pm |
  14. Sailingwindward

    It's about time we realize what Americas economic problems are. In 1992 China imports where 25 billion a year, today it's 337 billion a year, that's a 1300% increase in China imports. Doesn't take a mathematician, or an economist to figure this out.

    March 21, 2010 at 7:25 pm |
  15. Shivram

    There is a saying that "Any plan/strategy is only as good as its plan B".

    So what is the US plan B when it comes to the strategy of relying on a communist regime that is inherently at odds with the very principles that the US democracy stands for and is inimical to its economy?

    I would strongly support the US building reliable democratic and almost-as-low-cost alternative to China in India. So that when the price of iPhone does rise, it does so by a few dollars, not in tens of dollars. And the US would not likely face the situation of dealing with dictatorial regimes that are at odds with the very principles that democracies stand for and that are in bed with the enemies of US such as Sudan etc.

    March 21, 2010 at 7:07 pm |
  16. bryan

    I hope they will still loan us money. Who is going to pay for barak's worker's paradise?

    March 21, 2010 at 6:47 pm |
  17. Burton Strait

    Since we started losing jobs to Japan, Korea and Tiawan back in the 1960s, it is about time the someone among the (???) that we elect to Congress has seen the light and wants to do something about it.

    For those who weren't around then, the first industries to be exported were the small electronics, radios,etc., cloth and clothing manufacturing, and shoes. This was basically because of Union's greed that forced owners to find a cheaper labor source. What did Congress do? NOTHING!!!

    Labor demands for higher wages and benefits dominated the late 1960s and 1970s. We had price controls to try and stop the inflation, high interest rates, small foriegn cars, the BUG and TERCEL. Better transportation for the dollar than American built cars. Congress wasted their time chasing Nixon, while they should have been paying attention to the economy.

    Then came the 1980s, with Reagan and a real recession and with a National Debt of less than a TRILLION dollars!!!!. Unemployment in parts of the Country in excess of 10%. You know there is a recession when you are unemployed, for the 90% employed, they don't give a sh@#$. That is what is happening now, But now I'm being sidetract. This recession didn't end in some parts of the Country until in the early 1990s. At the same time Foriegn cars are getting far more competitive.

    With the 1990s came the Free Trade laws and the really brilliant Congress that rescinded the Glass Steagal Act which made it possible for the Wall Street crooks, along with the crooked Mortgage processors and Mortgage Banks to decimate the economy in the next decade.

    In the 2000s, appproximately FIVE MILLION jobs were sent to foriegn countries, while our Congress were allowing the lies of the Bush II administration to put us into an unnecessary war, and Wall Street and the Mortgage Banks into creating the worst Depression the Country has experienced since the 1930s. Further, when the Country was experiencing full employment, Congress did nothing to increase taxes and keep the National Debt in check, which at the end of 2008 was over TEN TRILLION DOLLARS.

    As a final summation, there are three adjectives that at least one of which applies to everyone in this Country and they are "RICH, GREEDY and STUPID. And all three apply to almost all Members of this United States Congress.

    March 21, 2010 at 3:57 pm |
  18. A. Smith, Oregon

    I find it entirely ironic that China is now acting like the Republican Party where balancing the incredibly UNBALANCED trade between Chinese Exports to America and America's Exports to China is now suddenly so contentious. This wave of UNBALANCED trade heavily favoring CHINA has been in place since Bush Sr.

    Former President Reagan and Bush Sr. had in their power the authority to immediately freeze the huge Silver Commodity takeover that occurred in the 1980's. They waited and China who was setting on Millions of Pounds of near worthless Silver became filthy rich overnight as Silver prices went up some 30x their previous worth.

    Bush Sr. was certainly China's best friend and China certainly got their money's worth out of Bush Sr. and extended thru Bush jr. The trade imbalance with China is hideous! America should be the ones jumping up and down yelling!

    March 21, 2010 at 2:59 pm |
  19. Max

    We have waited too long for China to balance the books and allow the yuan to establish its own value. As far as Taiwan I do and have always supported a free Taiwan and the same goes for the Dali Lama and Tibet.

    March 21, 2010 at 2:55 pm |
  20. schott

    I very much admire the Chinese in many regards, but with the matter of trade, they seem to want it all their way. Their way or the highway.
    Well, I have had enough of this childish behavior. We are talking about nations, not children. After all, we are the ones with the huge imbalance completely slanted their way. And try to buy a decent pencil these days!

    March 21, 2010 at 12:40 pm |
  21. paul

    i think is the right time for usa to prove they are world power, china have taking too much ,i don’t know who is china to speak any how before America ,but this country is the most bad country i ever see treating people like a goat ,i think American have to do something to stop them bragging

    March 21, 2010 at 11:53 am |
  22. Gilbert

    A surcharge on all chinese imports because of their artificially devalued currency is the logical way. If we end up paying more for cheaply made chinese products, so be it. In the end, the US will benefit by producing them here, with better quality, adding needed jobs that will pay taxes that in turn will reduce the deficit. We are enriching a potential enemy of this country at the expense of the jobs of the American workers.

    March 21, 2010 at 11:48 am |
  23. Phillip Svehla

    Let them keep their currency low, but I'm all for tariffs. Great article thanks!

    March 21, 2010 at 10:08 am |
  24. Salman Latif

    I guess the issue is far, far from resolved. I wonder who's going to win it out eventually.

    March 21, 2010 at 9:52 am |
  25. Bruce from Bloomington Illinois

    The US population and its insatiable demand for consumption, combined with weak political leadership have been almost solely responsible for building the Chinese economy from third world status to what it is today. If we expect China to be 'grateful' to us for this gift, and therefore be fair or reasonable in economic negotiations, we are deluding ourselves. The Chinese currency (the Yuan) will remain undervalued, they will continue to steal our intellectual property, conduct industrial espionage, and ignore international patent law until we have an administration and citizenry willing to face facts and stand up to them. Unless we wake up soon protect American jobs and put our economic house in order, we are basically f****d !

    March 21, 2010 at 9:30 am |
  26. Jazt wattzberg

    I think between China and USA will make a new war. World know about it. In my brain have one big question about.

    March 21, 2010 at 3:17 am |
  27. brian

    go to walmart pick up any item and see where it's made,not in the US ! something has to be done! china is getting to big for it's pant's. i would be happy to pay more if we had good jobs here!

    March 21, 2010 at 12:41 am |
  28. Vinh

    When will we learn that if we keep letting the American corporations (especially Hi-tech industry) keep sending all manufacturing and engineering/research jobs overseas to China and India, then we will not have anything left in this country soon. Anybody can be an executive that outsources the jobs overseas, and make all countries like China and India become more powerful? We can outsource those executives first to China, and let them live and make money there without our help. Those are responsible for weakening the US economy by pouring money and helping China to build up their own economy there? All products from the US companies are manufactured in China? How can it be? They all hide behind the reason "cheap labor" and "worldwide competitive", but thses US businees executives are reaaly the ones who are responsible for bringing down the US economy, just like those in the banking industry that have pushed the whole conutry into this worst recession sinc World War 2? China undersatns exactly the greed from all US companies and they are taking advantage of that and are turning around to bully us. The big deficit and the debt that we owe China is the result of the work of the US corporations with help from Congress that fails to do anything to protect the country's interest.

    March 20, 2010 at 11:20 pm |
  29. Manna Kasha

    Hmm. Do the American consumers choose only according to price? Have they no taste? If they are savvy shoppers, they should judge the quality of the goods, and select even if it is more expensive.

    Alternatively, if the Americans are patriotic, they can always boycott goods made in China.

    Well, I suppose selling arms to Taiwan makes money for America anyway. Why not sell the same stuff to China as well? Nobody can complain, and it will reduce the trade deficit with China as well!

    March 20, 2010 at 10:41 pm |
  30. Bob Sterner

    We must bring jobs back to the states, regardless of the costs, delaying this action will do nothing but bring the US down to a third world country.

    March 20, 2010 at 8:34 pm |
  31. Jiaping Yang

    Everyone in China knows that the Chinese government deliberately makes its currency low in proportion to the U.S. dollar. In other words, if the U.S. dollar devalue, the Chinese Yuan will follow the suit.

    With CPC (Communist Party of China) in power and without freedom of press, the eyes of Chinese people are covered by and ears filled with CPC's propaganda materials. The CPC does not want to see U.S. as No. 1 in the world for long, instead, it wants China to be No. 1 in the world. The CPC regards U.S. as its obstacle into the No. 1 position.

    As long as CPC is in power and as long as there is no freedom and democracy in China, the conflict between the U.S. and China is inevitable.

    March 20, 2010 at 7:26 pm |
  32. lifeaftereighty

    Has anybody else considered that maybe LESS transparency was better? Are we ready for this? Knowing everything that's going on except for what's really going on?

    News is a thing of the past. Gossip is rampant.

    March 20, 2010 at 6:43 pm |
  33. azezel

    The last thing you want is the dollar to be unpegged over night.

    March 20, 2010 at 1:49 pm |
  34. Ralph Patch

    I agree with Krugman and Schumer. We need to quit letting China push us around.We don't all need ipods,50" TV's and all the rest of the junk people think they can't live without. I'd rather pay more, have less and keep Americans working with decent paying jobs.

    March 20, 2010 at 1:41 pm |
  35. roland hayes

    I believe that all of this China thing began when tricky dick whent to the great wall in the 60`s. We the united States have been under the boot of China ever sence. All this for money, trade, and millions of consumers. What a crock. Wake up America, it is the people that makes this country great, not cash for the big wigs.

    March 20, 2010 at 11:40 am |
  36. kaydownsouth

    more heat will rise between the u.s. and china, because the chinese govt. wants re-payment of their loans to the u.s. with dumb republicans keep saying no new taxes, so the less u pay on your bill the interest and debt u occur. so the the govt stay stupid and keep the deficit soaring and the republicans happy. make chinese govt happy amercia raise taxes and pay your bills. stop having china, japan and other counties pay our debts

    March 20, 2010 at 10:16 am |
  37. Jason Glugla

    Let me think about it for a moment, would I rather pay higher prices for a few items and have America retain the ability to produce things or have America's future controlled by a communist dictatorship? I really would like to know where these things made primarily in the U.S. are. Are these the Chinese windmills which are shipped in and bolted together in the U.S. ? Maybe it is the train for America's high speed rail which will likely be built in China with technology stolen from France and Germany.
    China doesn't seem to agree with things like technology patents and they have found willing idiots to ship them all of their technology. It is unfortunate that we don't learn from history. We are dealing with a country that was built upon thousands of years of brutal dictatorships known as emperors which are celebrated. A country with a wall built
    around it and a country which sent hundreds of thousands of troops
    to slaughter those of the United Nations only a few years after Americans had died fighting for it against the Japanese. I guess there
    isn't much point in going on, it is best to just surrender to the fact
    that we don't learn.

    March 20, 2010 at 9:58 am |
  38. Keven

    Considering Wall street and big business profited from moving countless North American operations to China, India and Mexico beginning in the late 70's seeking better returns on the backs of cheap labor, who's fault is it anyways. Legacy companies crumbled and cut the labor forces with abandon until tech companies came to the rescue only to fall into the same cauldren in mid 90's into 2000.
    Who doesn't remember calling for services only to be speaking with someone overseas. A shocker most were truely unnerved by but told welcome to the age of the global economy. Stocks rose creating an artificial state of euphoria that had anyone with a job buying overvalued real estate across the USA. Heck the baby boomers were ready to retire and were selling those high valued assets to pay for their steadily increasing health bills. That is, if they could afford health care.
    Then came the Madoffs of high finance, pulling a Harry Houdini with billions. Great trick that left bankers along with wall street brainiacs scratching their heads unable to answer where the money went. They know, but no one is willing to spill the beans for fear we would all jump off the nearest high building, as we frantically study the 100 most popular Chinese dialects, in hope of employment in this global economy.

    March 20, 2010 at 9:45 am |
  39. joe

    why is CNN and the United States always so concerned with "what China should do". What about instead start thinking about what "the US should do". China is on the other side of the world yet the United States constantly tries to use them as a scapegoat for all their problems. Take some personal responsibility for onc...e and stop complaining about everyone else!

    March 20, 2010 at 9:44 am |
  40. Richard

    Slap the tariffs on the Chinese. I would rather pay more for clothing and since it brings back jobs to America. Make America strong again!

    March 20, 2010 at 6:19 am |
  41. Anil

    Its is obvious to any dumbhead that imports to US if taxed will protect US industry and jobs .As an Indian i wonder why the US politicians are just talking and not doing anything to protect their domestic industry . This should have been done 10 years back. Americans cannot suffer due to the overpopulation and bad governance of other countries.

    March 20, 2010 at 4:21 am |
  42. Andrew

    Welcome to the Trade Wars. China thinks it has a beef with the US government, when, in fact, it's about to have a beef with most all US citizens.

    Yes prices will rise, but people will go back to work. It simply wasn't sustainable for people to consume so much, so cheaply and to have everybody but China shut out of the manufacturing sector.

    The US can't pay unemployment benefits on borrowed money forever and when Americans are slap out of money, they won't be buying anything from China, so the whole setup isn't sustainable for China either. China needs to reform itself–crackdown on corruption, increase wages for working class, diversify and focus on quality and innovative products.

    March 20, 2010 at 2:59 am |
  43. mike

    Why is this even up for discussion? China is and has been manipulating its currency for years. It has gotten us low prices on their goods and moved many many jobs from the US to China. You can debate it all you want whether it is good or bad. BUT currency manipulation is no different than adding import duties or export subsidies, both are forbidden under WTO rules, which they are a member. We should demand either they float their currency, or we add import duties. If you want free trade to work, it has to be free trade, not some sham.

    March 19, 2010 at 10:59 pm |
  44. yz

    The bottomlines are, (i) China is actually willing to let its currency rise, but at its own pace; (ii) China-U.S. economies are basically complementary to each other and therefore price rise of chinese imports would hurt American consumers more than help American workers.

    March 19, 2010 at 8:52 pm |
  45. Kieth gosney

    China has been building its infrastructure since they combine communism with capital markets. They have no intention of letting Tibet go nor are they give up on uniting Twain to China. Neither is china going to stop targeting our weakness, if they need to go to war in the distant future. China will help, only if furthers its national interest, us with our problems. Don"t expect China to help with Iran situation. Tariffs and manufacturing will return to American shores in order to protect American vital interest , while remaining engage in the world.

    March 19, 2010 at 7:19 pm |
  46. elenore

    You are wrong production would and is moving to countries like Haiti,Honduras,Afghanistan,etc..The goods aren't anymore at the dollar store they are in fact still a dollar.And by the way you don't save money with slave labor, the companies give that to stock holders.And guess what if they charge to much people won't buy so maybe it's okay if stock holders are little less greedy for awhile.However those people in these countries are free to buy from us whatever they want.They are free to own things you know like land,companies,businesses,unlike China.China is not a real market because they have no free markets.They are not free and they have like no middle class so they can't buy anything even there own goods.However moving production to other countries gives companies like Walmart better advantages they can have ownership of production,companies,and a free market to sell goods unlike China.China is going to have real issues soon they are over producing to keep up employment,they tried to blackmail U.S. and European manufacturing companies with there short term rare Earth Elements monopoly to move production there,they have to much bank lending which won't be repaid by there government owned companies,real estate issues,under valued currency.If American companies were smart more would start moving production now especially since mining for R.E.E. is taking place in other countries again.And by the way why is everyone always using the same people who caused this economic problem in the first place as people to listen too.There greed will always lead them only to do what good for the rich not the rest of us.

    March 19, 2010 at 6:13 pm |
  47. Sam

    China also has large stakes in the US Treasury, I recommend to wait until we are out of this depression and in an economic boom to put the tariffs on Chinese goods.

    March 19, 2010 at 5:19 pm |
  48. Jony3322

    It is to take the jobs back to USA soil. We must do every thing to accomplish it. We should not let Chinese making decision for us on the job creation in USA. There are nonsense of talking about USA depending on China to survise. I agree with Sen. Chuck Schumer. If we have to pay more for the product made in USA, so be it. Products made in China mostly are junk any way. Stuff made in China is increasingly endanger our life here in USA: toys with lead, milk with poisons, Cars or parts of cars met no standard safety causing deathly accidents etc... Also, cheap products made in China belong to USA companies. So, these USA companies must also take up responsibilities to rethink about taking their manufacturies back to USA to create jobs so that American citizen can have jobs to buy their products.

    March 19, 2010 at 4:14 pm |
  49. Jenny - Hillsboro, OR

    I truly hope Congress follows through and imposes tariffs on goods from Communist China. They refuse to address their currency issue and have thumbed their noses at us. It is well past time for the U.S to finally act in the interests of its' own citizens. Unfair trade policies are a big part of the reason we find ourselves in this economic dilemma.

    March 19, 2010 at 3:33 pm |
  50. keith

    I agree with the notion that if you don't have a job, you don't have the money to buy any products. So in regard to having low prices of an iPod or etc., if you don't have a job then you don't have the money to spend for any of such items. In the 90's, people are able to buy products, i.e. like a computer worthing ~$7K, with no concern...that was due to because we have a job. Now, if suplus is > demand, then what is good for the whole economic structure? As if the government is willing to nurture the jobless for another 10 more years? Sure, if the government will take care of its people and give them the $ to spend for these products then we don't care if China holds all the job... But this is not a paradise, and the average people is suffering day by day without a job. As for Stephen Roach, if you happen to read this, go shove those iPods in your rear if you want to acquire more than 100 iPod in your living room. Most of the people withou a job can't afford those iPod from China, let alone living in a poor condition with enough living expense to survive. I don't mind buying an iPod for $1K, if job were to create at home... Roach's statement, "...instead of taking care of its own problems, like saving more money..." Well guess what? If people see that the iPod costs $1K, then they will save their $. Isn't this is what Spehen Roach wants? What is so hard about this? Or is Mr. Roch a hypocrite, and only concerns of making a penny (in term of a cheap iPod) by selling out his country?

    March 19, 2010 at 2:35 pm |
  51. Michael Traynor

    This situation isn't a simple one. We need to view the whole situation and work from there. China has the potential to be a great ally to the United States and our friends, however, to this point they have limited the basic freedoms of their people and have refused to acknowledge basic human rights. They will wield a huge amount of power if they can keep their economy stable through the next century, so any moves should be carefully considered (unlike the Nixon administration, we should consider the ramifications of our dealings with China). If the Chinese government would end the artificial devaluation of their currency we still would probably not see a massive return of basic manufacturing jobs to the United States, those jobs would be sent to other countries where labor is cheaper than the United States and we employ free trade. A better policy moving forward may be to enact broader fair trade agreements highlighting the need internationally for common expectations on quality of life and cost of labor. The simple fact is that many of the Chinese people that make our buttons and fabric are very poor by any western standard, and simply slapping on a flat 25% tarriff to imported goods from a billion person country could have seriously destabilizing effects on their economy, and eventually, their government and sphere of influence, which would not be good for the United States in the long term (look at what happens in other largely destablized regions...). It will be interesting to see what developes from all of this. I agree that we need more jobs, I simply think the answer is more complicated than bringing back jobs already sent overseas. It should never have been done in the first place. We use to take pride in our industry and economy, and we've lost that pride over the years.

    March 19, 2010 at 2:07 pm |
  52. james g

    Went to buy electric heaters for home use, all 4 brands were made in China. Needed a new spatula, both brands of coffee makers were made in China. We've lost ? million manufacturing jobs? Our current problems have been years in the making.
    Considering wage increases since 1987: 90% of lowest paid workers split 10% of those gains, the next highest 9,9% split 55% and the top 0.1% got 33%. Unemployment of lowest paid workers is around 17%, unemployment of the top wage earners is around 3%, see current high-end auto show, no recession at the top!
    Mexico's tourism dollars are 3rd behind their oil revenue and remittances from their citizens working abroad.

    March 19, 2010 at 1:54 pm |
  53. Donna

    As Chuck said..who cares if those prices go up. The American Companies making things in China instead of the US should be ashamed of theirselves. First for enslaving those in another country and second for being party of the destruction of our economy (yes if the people don't have a job they can't buy those i-Pods which keeps the economy going).

    March 19, 2010 at 1:17 pm |
  54. kaydownsouth

    beware america mississippi governor is considering a run for president 2012.... do not let the repubilcans take us back 50 more years in 2012!!!! keep your support for president obama , today, because it will show tomorrow (2012)

    March 19, 2010 at 1:03 pm |
  55. Tom from Los Angeles

    Higher prices just means they would competively priced, maybe Walmart; which should really be renamed China Inc. will start to buy products manufactured here in the US.

    March 19, 2010 at 11:31 am |
  56. George Hague

    Paul Krugman should be careful because when goods and services (money) stop flowing across borders, soldiers start marching across borders. Stephan Roach might want to consider that if Americans save too much money, the American economy may just collapse because the U.S. economy relies too heavily on consumer spending. Developed nations like the United States should focus on creating wealth within their borders so that the average population can enjoy a good quality lifestyle. Foreign trade is a necessity for all countries to prosper but the balance of trade has to make economic sense. That doesn’t mean that someone should be building a factory in Silicon Valley to manufacture $2.00 sunglasses so Walmart can sell them for $40.00. That’s not going to happen because it doesn’t make sense. Money well spent that would create wealth would be to educate a population that would come up with innovative ideas to pump new economic growth at home.

    March 19, 2010 at 11:10 am |
  57. Mike

    Why should US play econimically fair if other countries just want to keep their curriencies down and increase our trade defecit and take jobs away by making good made there cheaper.

    March 19, 2010 at 11:03 am |