Highlighting today’s summit between Chinese President Hu Jintao and President Obama is China’s agreement to buy $45 billion of American exports.Bottom line, the Hu visit was about the America's corporate elite getting their claws on some of the U.S, dollars the Chinese have. The visit had very little to do with the rest of us. We didn't get to eat at the State Dinner and Hu isn't sitting down with us to cut business deals.
Nearly half of the deal is for two hundred Boeing aircraft...The rest involves agricultural commodities [ADM?]...American agribusiness is highly automated, and chemical and high-tech goods that are even less labor-intensive.
General Electric and other companies are signing up for deals with China involving energy and aviation manufacturing.
Friday, January 21, 2011
China Deals Go to the Corporate Elite
There has been no public breakdown, that I am aware of, that details who China awarded contracts to whentit wasannounced they were doling out billions. The announcement coincided with the visit of President Hu to the U.S. It turns out that most of the contracts were (surprise) with the corporate elite. Former Labor Departmnet Secretary in the Clinton Administration, Robert Reich, seems to have access to this information and reports:
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Hu wants to export US dollars and import US food, hoping it will dampen prices increases straining the Chinese food supply as well.
ReplyDeleteChina’s Innovative Way of Skinning the United States!
ReplyDeleteMark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.
In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.