If China's growth is subsidized at all, it's surely subsidized by the amount of goods we buy from them.
But they are a growing competitor with the United States and clearly want to control Asia and the Pacific.
Meanwhile, we have a border problem with Mexico, another country with a lot of impoverished citizens. If we're going to do a lot of trade with a country, Mexico makes a lot more sense than China. Improving their economy could eventually totally eliminate the problem of undocumented "illegal" workers coming across the border for work.
Yet, I hear neither candidate promoting this idea? Why don't they?
That's like saying, "I really need to budget better so I can just pay off my house." You don't just make a few changes and then pay off your house - you just keep making payments for decades. In the case of the U.S./China trade deficit, there is no end to the payments that includes Americans continuing to enjoy such a higher quality of living than the Chinese.
The quality of living of the Chinese has a long way to go, looking at the country as a whole, but it nevertheless is allowing for a growing middle class and actual millionaires and billionaires.
I realize you're Canadian, and that as an American, I should know more about my country than you do, but until recently, I've been out of town, so to speak - under whose Administration did this begin? We're speaking of bonds here, right? The Chinese bought up our debt?
Archae, I don't know if you want to blame politicians, as even most economists didn't see this coming (unless they were profiting from it). I think the real, long-term problem is that most Americans don't understand how the world and economy works, as well as they understand (say) Beavis and Butthead, or Rush Limbaugh.
No, I blame the few who own the politicians.
And the only way we can fix that is to enlighten the voters. I'm not saying it's easy, but is there an easier way?
As of about a year ago China held 1.15 trillion dollars of the 15+ trillion dollar federal debt.
This is less than our annual deficit, in other words China holds less than one year's budget overrun as debt.
Furthermore as of a year ago, the amount of debt China holds was declining. In other words they are _already_ unloading our debt.
Yeah, and Chase Manhattan unloaded a bundle of toxic mortgages to Goldman Sachs - didn't help those who owed on those debts however.
Didn't say that it would.
There are a ton of people here who seem to think China holds most or all of our debt; I just wanted to point out that it is not even remotely true.
Debt, or treasury bills? China may not hold several trillion worth of U.S. treasury bills, but their foreign reserves are several trillion into the black - the net result being that they are holding the chips that America lost betting on balloons.
I was referring to the federal debt; most people here have been talking about that. (e.g., references to them calling in debt if the US government doesn't play nice, clearly refer to the federal debt held by China)
Of course they've been getting lots of cash from the American public buying their products. (That's how they made the money to lend to our federal government!) What usually happens in cases like that is they simply spend the cash themselves, or invest it somewhere. When it's American dollars, however, there is more of a tendency to sit on them because the buck is regarded as a reserve currency. But this is not debt; my holding 10,000 bucks you paid me for something does not indebt you to me unless, of course I lent you the money to buy the product. (I don't think China is doing that but I could be wrong.)
(If people ever decide it's not a good reserve currency, *watch out* because they will be looking to get rid of dollars, and trillions of dollars of liquidity will suddenly be... quite liquid.)
The problem is that US$ flow to China bu Chinese Yen do not flow to the U.S. (because the U.S. has little that China wants to buy). At the end of the trading day China has to do something with that cash - and the people from whom they buy oil would prefer payment in something OTHER than the US$.
Buying treasuring bills is just a way of sending some US cash back to the US$ so Americans can keep buying Chinese product. In other words, US$ is of very little value to the Chinese - they just don't have any other customers who consume so much.
This is devaluing the US$ everywhere - even the Canadian Loonie is worth more now. The only reason the U.S. dollar continues to hold any value is that all western economies are sinking.