Absurd China Trade Policy
Research for Online Investors

by John Dalt

5/10/11

Representatives from China and the U.S. are concluding the “U.S.-China Strategic and Economic Dialogue” meetings today in Washington.  Treasury Secretary Tim Geithner places foreign exchange rates for the dollar/yuan, intellectual property rights and U.S. firms access to investment in China as U.S. goals.

China wants the U.S. to address budget deficits and assurances that the $1.1541 trillion dollars in U.S. debt (as of 3/01/11) they hold will be repaid with dollars that retain their value.  The U.S. is represented by Sec. of State Hillary Clinton and Geithner.  China sent Vice Premier Wang Qishan and State Councilor Dai Bingguo.

Vice-President Biden spoke to the group yesterday.  Hillary Clinton raised human rights with her counterparts.  Bloomberg reports that Sec. Clinton brought up arrests and detentions of advocates of political openness in February.  Clinton said, “Like friends we discuss those differences honestly and forthrightly.  We have made very clear, publicly and privately, our concern about human rights.”

Vice Premier Wang appeared on the Charlie Rose show last night and said, “It is not easy to really know China because China is an ancient civilization and we are of the Oriental culture.  The U.S. is the world’s number one superpower, and the American people, they’re very simple people.”

This morning, China’s National Bureau of Statistics reported their Balance of Trade for April was $11.4 billion.  This was higher than the $10 billion expected after March’s negative $7.3 billion.  A countries trade balance is simply exports minus imports in dollars.  If China is successful in supplanting the dollar with the yuan as the world’s reserve currency, then we will all report these numbers in yuan terms in the future.

International Business Times (US edition) quotes China’s Commerce Minister Chen Deming said, “The way to resolve the imbalance is to ease the export control regime of the United States toward China and to encourage U.S. export to China rather than restricting Chinese export to the United States.”

Now we understand.  Hillary is channeling Jimmy Carter, like a debutante at the Miss America pageant.  All she wants is ‘world peace’ and ‘human rights.’  Geithner wants the yuan to appreciate in value so the U.S. can let the dollar get up off the mat.  China wants the technology that they can’t steal from our industry or military.

Please don’t misunderstand; it is important that the U.S. publicly champion the rights of people that are oppressed in the world.  If not us, who will?  It is also important to conduct trade with China on a level playing field.  This one has been tilted too long to favor the Chinese.  Their predatory practices have disseminated industries in the U.S. while restricting the ability of U.S. companies from profiting in the Chinese market.

Do these problems go away if the Chinese government stops ‘disappearing’ dissidents?  No.  It appears the administration needs to call in Donald Trump as the new U.S. trade representative!  That is funny, I don’t care who you are.  And that is the absurdity of our present trade posture with China.

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The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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