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Why Donald Trump Is Wrong About China

Why Donald Trump Is Wrong About China
Donald Trump (Getty Images)

By Wednesday, 02 September 2015 07:31 AM Current | Bio | Archive

Donald Trump likes to say he’s a smart man who went to Wharton Business School. He knows how to get things done.

I’m glad Trump wants to apply his business sense to helping the country, but on one subject – China – Trump is completely wrong.

Last Monday, when the Chinese stock market plunged 8.5 percent and sent the Dow down more than 1,000 points intraday, Trump posted a quick Instagram video.

“China is taking our jobs, they’re taking our money. Be careful, they will bring us down.”

No, China is not “taking” our jobs or our money.

China will not bring “us” down, either, if by “us” Trump means the American economy.

We’re doing a fine job bringing it down ourselves. We don’t need China’s help.

In what sense is China “taking” American jobs? It is true that a great deal of manufacturing and other activity that once occurred in the U.S. now happens in China.

Those jobs no longer exist on this side of the Pacific.

This happened not because China took the jobs, but because American business leaders realized they could expand profit margins by using cheaper overseas labor. They could have made a different choice.

Because they didn’t, Americans lost their jobs and Chinese workers gained them.

American executives did this partly because American consumers, like you and me, told them through our wallets that we love our low prices. We go to Wal-Mart and Sam’s Club and fill our carts with goods imported from China and elsewhere.

We say we want to “buy American,” but our actions show otherwise.

This is also why it’s wrong to say China is “taking” our money. We’re giving it to them freely. We sell them dollars in exchange for all that stuff you see on store shelves.

All those dollars eventually have to come home, by the way, which is why China buys so many U.S. Treasury bonds. It is the only financial market deep enough to accommodate the vast amount of cash we spend on Chinese goods.

These transactions satisfy both sides. Everyone gives up something of value and simultaneously receives something of value. That’s how trade relationships should work.

Trump’s suggestion that China will “bring us down” is correct only if we Americans are paying too much for Chinese goods. I see no evidence of that. Wal-Mart shoppers are generally pleased with their purchases.

If Trump’s goal is to reduce our reliance on Chinese imports, he can do that – but it will have a cost. Store prices will go up. Profit margins will shrink. Some American jobs may come back home, but not right away. We’ll feel serious pain in the meantime.

Trump doesn’t mention that part. Does he think we can’t handle the truth, or is he just another politician saying what he thinks we want to hear?

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PatrickWatson
This is also why it’s wrong to say China is “taking” our money. We’re giving it to them freely. We sell them dollars in exchange for all that stuff you see on store shelves.
Donald Trump, China, Wrong, President
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2015-31-02
Wednesday, 02 September 2015 07:31 AM
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