I think the U. S. should turn a cold eye on the offer by the Chinese authorities reported by Bloomberg on Friday:
China has offered to go on a six-year buying spree to ramp up imports from the U.S., in a move that would reconfigure the relationship between the world’s two largest economies, according to officials familiar with the negotiations.
By increasing goods imports from the U.S. by a combined value of more than $1 trillion over that period, China would seek to reduce its trade surplus — which last year stood at $323 billion — to zero by 2024, one of the people said. The officials asked not to be named as the discussions aren’t public.
The offer, made during talks in Beijing earlier this month, was met with skepticism by U.S. negotiators who nonetheless asked the Chinese to do even better, demanding that the imbalance be cleared in the next two years, the people said. Economists who’ve studied the trade relationship argue it would be hard to eliminate the gap, which they say is sustained in large part by U.S. demand for Chinese products.
A trillion dollars in trade sounds like a lot but I think we should view it skeptically. The Chinese authorities have a long history of making great announcements that somehow never seem to materialize. Because of our gullible news media announcements are too frequently treated as facts.
Furthermore, a trillion additional dollars over such a short period would introduce serious distortions into our economy. While additional trade would be welcome, additional trade from a command economy is enough to purposefully distort our economy and society in damaging ways. I’d welcome that trade from Britain or France or even Germany because I’d be confident it wasn’t being structured purposefully including with the use of insider knowledge obtained by state-sponsored industrial espionage.
Quite to the contrary I think we should settle for nothing less than that China live up to the commitments it made 20 years ago and immediately end its import quotas and export subsidies, privatize its banking sector, and conform completely with the many WTO judgments against its trade practices. While we’re talking about it we should also get on the back of the WTO to impose serious sanctions on China for its decades of non-performance. Think hundreds of billions or trillions. The penalty should be proportional to the crime.
And while we’re at it why not throw abandoning its armed sand bars, shutting its re-education camps for Uighurs, and ending its Sinification of Tibet into the mix?
Now that would be the art of the deal.
I strongly suspect Trump is fully aware of the deceitfulness of a command economy operating by Sun Tzu rules and has laid his plans accordingly. He also has the full support of his economics team. If not, the man is a master of improvisation.