China Trade

Everybody has an opinion about trade with China, and here is mine:  let’s trade ‘em Ben Bernanke for Fu Ying.  Throw in a minor league pitcher if we have to – President Obama comes immediately to mind.

Fu Ying is China’s Vice Foreign Minister, who Friday announced that China would not use its foreign exchange reserves (i.e. dollars) to rescue other countries (i.e. Europe).  She explained that “foreign reserves are akin to savings” and not to be squandered by governments.  Whoa.

While the U.S. and European central bankers have all promised to infuse defunct European governments with as much cash as it takes for them to become even more defunct, Ms. Fu has decided to “follow market economy principles” instead, which she listed as “safety, liquidity, and proper profitability.”   Yes, the “P” word!  

Her explanation in China Daily reads like the Daily Paul. She does not believe that Europe can be saved by bankers; she does not believe economic decisions should be driven by political considerations; she does not believe that foreign investments should be made to gain power and leverage over another nation’s affairs.  She does not see debt as a pathway to prosperity.  Have mercy.

Ms. Fu makes the gibberish spewed by Fed Chairman Bernanke and Treasury Secretary Geithner sound like…gibberish.  Our money men lobby the Chinese to strengthen their Yuan to assist us in weakening our dollar, and then we call them currency manipulators when they refuse to play along.  We lecture China about lack of transparency while Bernanke is pumping unknown trillions into the western banking cartel in secret.    

While the Chinese decided not to risk a nickel on Greek debt, they invested almost $400 million into Hungarian factories in just the past few months.  Not because they particularly love Hungary, but because they make stuff at a profit in those factories. Those are the “market economy principles” that the Chinese seem to understand completely and we seem to have forgotten entirely. 

They bet on winners while we bet on the losers’ banks. That is why their economy is growing and wages are rising, while our economy is stagnant and our wages are falling.  China’s economic growth has “cooled” to 9.2%; that is suckage here. 

Winning is why the tone of a China Daily article on the burgeoning yacht market here was so prideful; a nation that could not even feed itself a generation ago is now buying yachts.  The Chinese are not ashamed of prosperity; they are grateful for it, and to the people who have brought it to them.  We take our far-greater abundance for granted.

The Chinese people have actually lived the squalor of atheism and communism.   They know what it is like to be equal – equally starving.  They tried “We are the 100%” for half a century and it left them as the collective owners of nothing worth occupying.

And they learned first-hand how unlimited government power turns to mass murder; they cry on the graves that taught them.  They don’t need a lecture from Ben Bernanke about central banking or central economic planning or central anything else for that matter.  While we make noise, they make things. They don’t theorize about free trade here in China; they trade. 

The Mayor of Zhengzhou City joined us for dinner on Sunday night after a long day of work.  “Us” is a group of Canadian, American, and Chinese firms doing a deal without the assistance (or should I say interference) of our governments.  All of us were working yet another Sunday at the end yet another 80-hour work week while our own President was calling us lazy on his way out a 17-day vacation from doing nothing about our nation’s problems.  Eat your own peas, Mr. Obama. 

The President also had the gall to tell a high school audience that market economies have never worked.  Perhaps he should order his Department of Teleprompters to cook something up for him since that thing the capitalists invented must be an illusion.  Or try this: come to the border of the Koreas, look North then South and tell me which one works – markets or government.  The trouble with things plainly obvious is that they can’t be seen by people whose heads reside deep inside the orifice. 

President Obama’s singular achievement in the realm of industrial policy was to commandeer General Motors and deliver them to his union patrons.  We now have to recall 40,000 Government Motors Volts before they blow up and explain the 653,000 cars sitting in dealer inventories built to make GM appear profitable after the government bought it.  He is half-right: market machinery doesn’t work when he is the operator.  And it was not the market that gave us 15,000 abandoned windmills when the government subsidies and tax breaks dried up; it is going to take a boatload of carbon and scads of dollars to tear them all down and dispose of all that metal.   Thank you again for saving the planet.

That’s exactly the kind of nonsense Mao used to do over here - build a mountain of unneeded tractors according to the 5-year plan just to prove the 5-year plan was genius.  It is the sort of thing that makes sense to people who spend other people’s money for a living and know nothing else.  In case you have learned your history in a government school, here’s what comes next - censor anyone who questions the pile of tractors (or wind turbines, or Chevrolets), detain the ones who won’t shut up about it (just passed that law), and eventually start killing en masse when the prisons fill up. 

Talk to an ancient Chinese person and they will tell you that they never dreamed it could ever come to that in China, either.  No one ever does until the relatives start to go missing.       

Socialism’s apologists will bemoan the income gap in China just as they do in the United States, and just like Chairman Mao did here when he forced his capitalists out of the country and took their property 75 years ago.  But according to the World Bank, only 4% of Chinese live below the world consumption poverty line now, down dramatically from over 65% when economic liberation began in the 1990’s. 

Poverty was not cured by Mao’s government-imposed equality; he made it lethal.  Poverty was eradicated in China when they rejected the socialist ideology and turned to wise leaders – like Fu Ying and Mayor Hu - who were committed to “follow market economy principles” and let their new 1% lift a whole nation out of despair.  Maybe President Obama can find some time on his vacation to read a little Friedman or Hayek; or maybe Mayor Hu would lend the President his autographed copy of “Capitalista!” to start him off gently.      

Shared sacrifice is only a noble goal if your aim is to be sacrificed in the first place.  They have had their fill of the collectivist lie in China, and they are putting it in their rear view mirror by adopting American’s gift to the world – free enterprise.  Bring on the yachts.   


“Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D.  Visit Tim’s website www.timnerenz.com to find your moment.