Will the US Declare Economic War on China?

[alfred russel]

*One often hears ganshing of teeth about the decline in the US "industrial base" and claims that the US "does not make anything" anymore.  The data does not bear this out - the US actually runs a trade surplus in non-automotive capital goods, including a slight surplus in nonagricultural machinery.

I think we have the world's largest manufacturing sector, but I could be wrong.

[Zanza]

I think we have the world's largest manufacturing sector, but I could be wrong.

The US economy is three times the size of Japan and four times the size of China or Germany, so it would be extremely surprising it it wasn't the largest manufacturer in the world. And probably the largest in every other sector as well, even in mining or tourism or whatever.

[The Minsky Moment]

  China's actions are harming China (and other low-wage countries even more) than they are the US.

But China's actions, by harming China (or to be more precise Chinese consumers) do harm the US and the rest of the world.  The problem is not that we are importing too much from China; it is that China is not importing enough from us.  Were the Chinese economy to be more balanced (and were Chinese policies not biased against US export strengths in services) this problem could be partially remedied. 

[alfred russel]

I think we have the world's largest manufacturing sector, but I could be wrong.

The US economy is three times the size of Japan and four times the size of China or Germany, so it would be extremely surprising it it wasn't the largest manufacturer in the world. And probably the largest in every other sector as well, even in mining or tourism or whatever.

We are awesome. But I think China is closer to us than that once you back out the currency issues.

[grumbler]

Were the Chinese economy to be more balanced (and were Chinese policies not biased against US export strengths in services) this problem could be partially remedied.

See, that is a legit thing to fight a trade war over; I have always agreed with Adam Smith on the value of retaliatory tariffs.  This "wah, wah, the Chinese government is buying US treasury bills and depressing the value of their currency compared to ours" bleat is not.

[Solmyr]

If it came down to a real war, the Chinese would blow themselves up: http://news.bbc.co.uk/2/hi/asia-pacific/8597300.stm