Yesterday, the Commerce Department reported that America’s 2008 trade deficit with China hit a record $266.3 billion. That’s up four percent from 2007’s whopping deficit, also a record.
Virtually every American pundit says an ailing United States has little leverage over a rising China. That, in short, is wrong. For one thing, China’s economy is extraordinarily dependent on exports: a staggering 38 percent of its economic output is derived from sales abroad. Moreover, Beijing’s bulging surpluses have been built on numerous violations of its World Trade Organization commitments and predatory currency practices. The Chinese, therefore, are extraordinarily dependent on Washington’s lax enforcement attitude.
Saying we have little influence over Beijing — China’s many friends love to repeat this mantra — is essentially unilateral disarmament on our part. We have the weapons — figuratively speaking, of course — to get the Chinese to do the right thing. It’s just that we have persuaded ourselves not to use them.
We want Beijing to, among other things, stop supporting genocide in Darfur, stop transferring nuclear weapons technology to Iran, and stop supplying rockets and other instruments of death to terrorists in the Middle East and Central Asia. And yesterday, the Commerce Department just gave the Obama administration 266.3 billion reasons why we can do something about all these irresponsible acts-as well as a few others.