How Chinese Protectionism is Destroying the U.S. Economy

Interesting article in Forbes that explains why the U.S. economy has passed the point of no return:

Chinese leader Xi Jinping knows something Barack Obama doesn’t: America is finished. The U.S. economy is an ocean liner holed below the waterline. In the stateroom, the band plays on – but, on the bridge, the outcome is clear.

With the arguable exception of the late-era Soviet Union, America is sinking faster than any Great Power in history.

As a proportion of national output, America’s foreign debts are already larger than those of any Great Power since the rotten-to-the-core Ottoman empire a century ago. For those who need reminding, the Ottoman empire, which had flourished for more than six centuries, was then within a decade of final collapse.

Because every dollar of current-account deficit (the current account is the largest and most meaningful measure of trade) represents an extra dollar that has to be funded from abroad, America’s foreign indebtedness is now accumulating at a rate of more than $1 billion a day.

There is no way America can export itself back to national solvency. As Xi Jiping knows only too well, this is a matter of technology. As soon as American corporations come up with a more efficient new production technology, they ship it to China or elsewhere overseas where it will boost the productivity of foreign workers. Any corporation that wants to sell in China must not only manufacture there but bring its best technology. Then it is expected to export back to the United States. All this means that the American economy has passed the tipping point. It is now simply too hollowed out to make a recovery. Even apparently solid U.S. manufacturers like Boeing, Caterpillar, and Corning Glass have long since sourced many of their most advanced components and materials from Japan, Korea, Germany, and other manufacturing-focused nations. (For a closer look at Boeing, click here and here. Much of Boeing’s most valuable technology has long since been transferred to East Asia, not least its avionics and its incomparable wing technology.)

In proceeding full steam ahead towards national bankruptcy, the United States is world history’s ultimate example of the triumph of ideology over commonsense. Beginning in the Eisenhower era, succeeding Washington administrations have bet the farm on ever-freer trade. Supposedly this would strengthen American economic leadership. To say the least, the powers that be in Tokyo, Seoul, and Taipei, as well as in Bonn, Frankfurt, and West Berlin, discreetly laughed at such epochal naïveté.

No nation has understood the stupidity of America’s trade policy more clearly than post-Mao China. On the one hand, American leaders have thrown the U.S. market wide open to Chinese exports. On the other, they have ignored Beijing’s in-your-face blocking of virtually all advanced American exports to China. The United States has been by far the most serious victim of Chinese protectionism. ( Forbes)

You can read more at the link, but the article goes on to explain how American corruption is worse than in China and how South Korea gets more goods through the Chinese wall of protectionism than the U.S. does.

So are we watching slow motion national suicide?