China: Friend or Foe?

China is the new land of opportunity. Their economy has the fastest growth rate in the world and is projected to grow larger than the U.S. in a few years. American companies are building operations in China and expanding capacity in the U.S to bring more goods and services to the flourishing Chinese market.

Legend has it that our history with China started when Christopher Columbus found the American continent while he was looking for a new trade route to China. In many ways, we are still looking for new avenues for trade with China.

Since 1949, and the overthrow of the government by Mao Tse Tung, China has been a socialist country. The world watched in horror as the Red Army, China’s military force, brutally crushed the 1989 rebellion in Beijing’s Tiananmen Square.

Who can forget the picture of the military tank, poised to run over the man who seemed to defy the will of the Chinese government?[1]

The safety and security of China has been challenged for centuries. The Chinese were attacked and overrun by other cultures, leading them to isolate from the outside world by building the Great Wall of China.

Sentiments between the American and Chinese people run deep. The Japanese seized Chinese territory during World War II, and cruelly imprisoned and killed Chinese citizens. It was not until the end of the war that the U.S. came to the aid of the Chinese.

During the Vietnam War, Americans fought in defense of South Vietnam while the Chinese fought with the North Vietnamese and propelled them to victory.

How much has isolationism in the Chinese culture, and challenges to their security, played a role in driving China to become a major power?

For over two decades, China has embraced their version of capitalism as a means to strengthen their economic and military power, and protect themselves from outside threats. China and the U.S. are major trading partners – and competitors – on the world stage.

With our challenging history together, will we treat China as friend or foe?

Will we be able to expand our markets with China while securing our borders?

China is moving rapidly to an industrial economy and away from their purely agriculture focus of the past. The transformation has been dramatic. For the first time, in 2011, the urban population of China is now larger than the rural population.[2]

China is the world’s largest exporter of goods,[3] and is second only to the U.S. in the amount of imports.[4] China is a critical trading partner, with combined exports and imports to the U.S. that are second only behind Canada.[5]

The top two exports from the U.S. to China are electrical machinery and power generation equipment, which represent nearly $23 billion in sales from American companies. In 2010, we had $91.9 billion in exports to China.[6]

The strategic importance of the relationship between China and the U.S. cannot be underestimated. Trade with China equals jobs in the U.S.!

China also holds $1.5 trillion of the U.S. debt.[7]  America is a debtor nation to China.  In August 2011, the credit agency Standard & Poor’s downgraded the U.S. debt, causing China to react sharply.

The official Chinese news agency, Xinhua, said, “To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.”[8] This sounds like a good thing to do.

“China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets,” Xinhua said.[9]

The addictive spending of our government has forced the Chinese government to “lecture” the White House and Congress to fix the problem. The addictive spending of Washington is a threat to the economic security of our strategic partner…and to the American people.

Is it any wonder that the Washington Power Brokers do not understand the threat that our spending and debt pose? The Chinese understand the importance of this threat.

The first principle of True Capitalism is that you do not hurt your trading partner.

True Capitalism is an economic system of trade in which all trading partners believe they receive equal or greater value in exchange for what they give up.

Washington’s delirious spending is hurting our key trading partner, the Chinese, and in doing so is hurting the American people. Less trade with China equals fewer jobs in America. The Chinese hold our debt, and they are becoming uneasy lenders. What if their nervousness drove them to call our loans, or stop buying our debt?

China understands something that the White House and bureaucrats do not: economic strength is might.

When will Washington learn the same?

Now is the time for action. The American people must know the simple truth that Washington’s “addictive spending” is killing our trading partners, and killing us too. We can deliver a clear message to Washington: restore economic freedom!

Get involved in the 2012 elections. Attend a caucus meeting in your state. Make up your mind to get the word out to your neighbors. Challenge the candidates on spending policies that destroy economic trade.