Geithner signals tougher stance on China

[ray245]

Not even China is going to be able to legitamately fault the US for applying protectionist measures to it's imports provided they do not exceed the level the Chinese slap on their imports: If the US is keen to remind everyone of that fact as they apply their tariffs, the Chinese can only make themselves look like fools for criticising it. Even so, given what's at stake for them you may still see some tantrums from the Chinese plus a few muted yelps from America's other overseas trading partners (who would be affected by some of the tariffs themselves since the WTO doesn't allow trade tariffs to be applied against specific countries except in select circumstances), but little of practical consequence. Meanwhile, stunting China's economic growth through tariffs, while inconvenient for the US in the short term, would serve American long-term interests tremendously, as it would greatly reduce the chances of China ever becoming a true challenger to the US's position as top dog for the forseeable future (though on the other hand it would not serve US interests to fuck over China so completely and absolutetly they have nothing left to lose by dumping their T-bills, so finding the right balance is key).

Welcome to the cold hard game of international politics.

Given that China has enough social problems even with an economic growth of 7-8%, the damage done by tarrifs would be massive indeed.

I think I have to look up, and see how much damage would be wreck on my nation as well. Given the fact that I am not obliged to support the US national interest unless it suits us as a foreigner.

[Ma Deuce]

Given that China has enough social problems even with an economic growth of 7-8%, the damage done by tarrifs would be massive indeed.

To be perfectly blunt, that's their problem, not America's.

I think I have to look up, and see how much damage would be wreck on my nation as well. Given the fact that I am not obliged to support the US national interest unless it suits us as a foreigner.

Nobody here expects you as a non-American to support US national interests, since many countries do have legitimate interests that conflict with those of the US. There's nothing wrong with that. We only expect you to understand that the US like any other nation has every right to pursue it's own interests even if they conflict with those of other nations, even yours. When two countries have conflicting national interests, it does not necessarly mean that one party is morally "right" and the other is "wrong", even to the point where one country getting it's way would be bad for the other. That's not how international politics work. The only thing that detrmines right and wrong are the means by which those interests are pursued (pre-emtive war, for instance), not the mere fact that some countries' national interests will inevitably conflict with those of others.

[ray245]

[

Nobody here expects you as a non-American to support US national interests, since many countries do have legitimate interests that conflict with those of the US. There's nothing wrong with that. We only expect you to understand that the US like any other nation has every right to pursue it's own interests even if they conflict with those of other nations, even yours. When two countries have conflicting national interests, it does not necessarly mean that one party is morally "right" and the other is "wrong", even to the point where one country getting it's way would be bad for the other. That's not how international politics work. The only thing that detrmines right and wrong are the means by which those interests are pursued (pre-emtive war, for instance), not the mere fact that some countries' national interests will inevitably conflict with those of others.

I know, although I do lean towards defending China's national interest. Which is one reason I do not take too kindly, in regards to US protectionism policy.

[Ma Deuce]

I know, although I do lean towards defending China's national interest.

That's perfectly fine; China like the United States has the sovereign right to pursue it's interests as it sees fit, and it's obviously in China's interests to maintain the status quo. It would be foolish and wrong for the US to expect China to act against it's own interests by voluntary relinquishing the trade advantages it currently enjoys, just as it would be wrong for China to expect the United States to act against it's own interests by maintaining the currently one-sided trade agreements.

Which is one reason I do not take too kindly, in regards to US protectionism policy.

Just as the US shouldn't take kindly to Chinese protectionism and currency manipulation. We don't expect you or them to enjoy the results of another country acting it's own interests when it would be bad for your interests, only that you recognize their sovereign right to do so. Because at the end of the day, that's the only real reason nation-states exist: to act in their own interest.

Let's use another clear-cut example that you don't have a vested personal interest in: Few would argue that it's not in the US's best interest to reduce or eliminate dependence on foreign oil. But obviously this would be very bad for petro-states like Saudi Arabia and Venezuela (in fact, it would probably render them destitute). Does this mean the US shouldn't pursue it's own interests by eliminating it's dependence on foreign oil?

[ray245]

Let's use another clear-cut example that you don't have a vested personal interest in: Few would argue that it's not in the US's best interest to reduce or eliminate dependence on foreign oil. But obviously this would be very bad for petro-states like Saudi Arabia and Venezuela (in fact, it would probably render them destitute). Does this mean the US shouldn't pursue it's own interests by eliminating it's dependence on foreign oil?

It's in our national interest to do the same thing as well, so I don't mind that.

[Ma Deuce]

It's in our national interest to do the same thing as well, so I don't mind that.

You're missing the point, I'm merely using that as an analogy: You've been arguing that the US shouldn't institute trade protectionism, because that would be bad for China's economy and possibly your own, even though it'd probably be good for the US. By the same logic, the US shouldn't strive for energy independence, because that would be economically harmful for the petro-states that rely on the US being their biggest customer.

[ray245]

It's in our national interest to do the same thing as well, so I don't mind that.

You're missing the point, I'm merely using that as an analogy: You've been arguing that the US shouldn't institute trade protectionism, because that would be bad for China's economy and possibly your own, even though it'd probably be good for the US. By the same logic, the US shouldn't strive for energy independence, because that would be economically harmful for the petro-states that rely on the US being their biggest customer.

Well, the long term effect does result in those petro-states failing to shift their economy to other aspects, continued pollution and etc.

Moreover, the demand for oil will not fall outright, which means there is still time for those Oil states to change their economic policy and be stable for a number of years.

[Ma Deuce]

Well, the long term effect does result in those petro-states failing to shift their economy to other aspects, continued pollution and etc.

And stalling China's economy would also curb air pollution, given their far laxer industrial emissions standards, plus the additional pollution generated by shipping the stuff over the Pacific.

Moreover, the demand for oil will not fall outright, which means there is still time for those Oil states to change their economic policy and be stable for a number of years.

And imposing tariffs against China will not halt all their exports to the US overnight, which would give them time to adapt.

[Guardsman Bass]

since the WTO doesn't allow trade tariffs to be applied against specific countries except in select circumstances

A side-effect of the "Most Favored Nation" trade policy, I don't doubt. But even if you ignored that and did a country-specific tariff, I don't see how you could seriously threaten it without the Chinese also threatening to dump a large part of their T-Bills (or simply threatening to not buy more, since they are trying to stimulate their own economy at the same time). If a US-Protectionist measure goes through, they're going to lose a great deal of money and economic development from not being able to do the typical Export-Lead Industrialization, and the US Market going into chaos would only be one of their problems.

As for the non-Chinese East Asian economies, one of the arguments I've heard was that in the past, it was in the US's strategic interest that they be allowed to do the ELI process. It made them richer, and thus better potential partners against the Soviets in East Asia.

One other thing I ought to note - it's not as if the relative shrinking of the Industrial Sector in the US started happening when the East Asians could dump subsidized industrial products into the laps of US consumers. The Service Sector actually passed the Industrial Sector as the largest part of the economy (although not more than 50% of it - that came later) in the 1930s, which was not exactly a time of great free trade (particularly after that abominable Hawley-Smoot Tariff*) - suggesting that there are other, potentially stronger factors pushing the US towards a Service Economy. Even if you don't allow trade to undermine your "strategic industries" (and that's a broad category), eventually increases in productivity and technology will lead to needing less employees to manufacture the same products anyways. Assuming, of course, that that technology and productivity is forthcoming - Mexico's industrial development ran into a rather unpleasant surprise that way.

*Speaking of which, what is your opinion of the Hawley-Smoot Tariff? It is nearly universally blamed for creating a trade war that led to heightened trade barriers worldwide and created a worldwide Depression, but it would seem to be right up your alley in terms of your view of protecting US economic interests.

[Fingolfin_Noldor]

A side-effect of the "Most Favored Nation" trade policy, I don't doubt. But even if you ignored that and did a country-specific tariff, I don't see how you could seriously threaten it without the Chinese also threatening to dump a large part of their T-Bills (or simply threatening to not buy more, since they are trying to stimulate their own economy at the same time). If a US-Protectionist measure goes through, they're going to lose a great deal of money and economic development from not being able to do the typical Export-Lead Industrialization, and the US Market going into chaos would only be one of their problems.

The problem with the idea of dumping the T-Bills is the slight side effect of potentially weakening the US dollar against the Chinese Yuan and that is not something the Chinese want either. One doesn't bite the hand that feeds it.

[Guardsman Bass]

A side-effect of the "Most Favored Nation" trade policy, I don't doubt. But even if you ignored that and did a country-specific tariff, I don't see how you could seriously threaten it without the Chinese also threatening to dump a large part of their T-Bills (or simply threatening to not buy more, since they are trying to stimulate their own economy at the same time). If a US-Protectionist measure goes through, they're going to lose a great deal of money and economic development from not being able to do the typical Export-Lead Industrialization, and the US Market going into chaos would only be one of their problems.

The problem with the idea of dumping the T-Bills is the slight side effect of potentially weakening the US dollar against the Chinese Yuan and that is not something the Chinese want either. One doesn't bite the hand that feeds it.

That's true, but as I pointed out in my post, this was talking about the Chinese dumping T-bills in the wake of a US protectionist measure. Whether or not your currency helps make your exports competitive isn't that important when they are already non-competitive for reason of tariffs.