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the president will be entertaining a special guest at the white house this
week president of china who him todd
relationship between china the united states intense as of late
china recently demonstrated its military prowess in showing off a new stealth
fighter plane and long-range missiles capable of taking out u_s_ aircraft
carriers
the show of force prompted a not so friendly visit by u_s_ secretary defence
robert gates last week
also china must play a role in negotiating teams with north korea
if the u_s_ is to see any success origin that nation to drop its nuclear
ambitions on an increasingly volatile korean peninsula
but perhaps the top item on the agenda for president obama and who
with the trades
that is the huge trade deficit
between our nation and china and a manipulation chinese currency it only
makes the problem worse
if the deficit persists
it looks like our economic recovery may remained stagnant
so now the president obama has the chinese leaders attention this week what
does he need to do to improve our economy relations between two
superpowers both short and long run
scott policy in the studio is executive director of the alliance for american
manufacturing scott welcome
tom great to be with you thank you thanks for joining us can you describe
to our viewers wifey trade deficit is with the consequences are a lot lately
but but just you know let's let's start at the beginning
absolutely
ultimately it means it's a drag on economic growth and it means it's money
that we have to pay back just like the budget deficit
most people don't know about the trade deficit
what it is in real terms
is the fact that are imports for vastly greater than our exports
and in the case of china
probably about two hundred and fifty billion dollars to three hundred billion
dollars just last year alone
but more goods that came in from china than we exported
china's is about a five to one ratio that means that china's able to
accumulate foreign currency reserves
and literally tom it means that factories are closing
jobs are being lost and the status piling up
leave we close forty two thousand factors here's the bush administration
yes in a ford two thousand jobs for details
factories this country
it does it also mean that
for every billion dollars that the chinese end up with and they're if you
set aside while they were present eighty percent of our total national trade
deficit
that every every dollar every you know struck billions it's ever direction said
in a billion here boo
every billion dollars that they end up with indian surplus we end up in deficit
really because their dollars ultimately the only place they can spend as in the
united states
and so they end up coming over here and by her office buildings by our company
is final and the final minds fine
and eventually we become a vassal states about
right now they're just fine art bother also bundles think they're also bind
about israel's refund for notices about that
and and so
if we end up being
well vacillation i think that's exactly right i mean it it is almost a trillion
dollars that they hold again uh... treasuries five which is extraordinary
amount hours which is extraordinary amount
but they also or buying up u_s_ companies now by putting greater stake
in u_s_ companies
they're buying up real estate for sure father entering into joint ventures
tourist at washing their own foothold in the american market again
it's because of this wealth that they've been able to humiliate because they have
a vintage sino that is
has a very mercantilist policy
by and they are unfortunately a lot of folks in washington have been fine
with that both democrats and republicans
for far too long and now we're dealing with the consequences of that we have a
jobless recovery we have stagnant wages and we'll chinatown demonic mercantilist
was really
arguably invented by antiseptic called tutor plan forty fifty seven as i recall
and
and then
you know and took england from being a country that literally exported nothing
but wall
to be in industrial power
am alexander hamilton seventeen ninety one proposes thirteen point eleven point
plan
for american marketing department was was adopted by congress in various
pieces in seventeen ninety three
for the washington a couple by executive order
and from seventeen ninety three
until the early eighties
we had
a system the protected domestic manufacture most of its curve c ever
served during the entire period
was thirty one percent they dave went down as low as funny up as high as forty
over various wars and things
and then
with reaganomics came the end of the terror system and then bill clinton
courses
throughout the close the door with nafta and gatt liberty l
is there anything now
thirty years on their obama can do
to protect american industries
without
you know shortages completely bombing out of the w_t_o_ and saying we're going
to go back to work and listen
you've touched on a big point com which is that we have limited our options but
through the w_t_o_ by our entry into it and then the terms of china's entry into
it
by ed so we have agreed not to do certain things and so it will literally
would take backtracking from that a little bit
the only our top shins available to obama right now
or kind of cleanup
if china as
imports that are surging into this country
you determine that they've harmed in industry after the fact
the industry or the union and the steelworkers of action filed a number of
these cases
but can petition for relief
bienen bush tibet at one point he actually went through terrified steel he
said that's right bush dead and actually obama has on tires and he may well do so
on chinese wind turbines that which is bound to be an issue of contention this
week but the challenges again combats clean up i mean that's not a proactive
policy
and ultimately you're going to be faced with these millions of manufacturing
jobs and lost the forty two thousand factories that you indicate in the force
that numbers grown
since the recession is really
turbocharged rosas at least does and that's exactly right
and so it is it is a good bit of a mass and
five which i think the the bigger challenges though that the political
elite in both parties
somehow support this policy they think it's okay
and that's really the saying for years that the first political party that goes
back to what ross perot is promoting
and adopts protectionism
and proof that you hardly enough i mean pat buchanan and i agree on december who
helped anything bad i can and i agree i was going to be strange
but the first political party that adopt this policy i think is going up
star really winning elections and you know that's the populace position but
ascot or who are out of time stopped all thanks so much for the next time and
things like a very cogent x explanation beckett executive
china izzy our lunch across the board when it comes to economic growth
investments in new technology and will continue to do so
plus american changes tune on our frankly ins
same in so-called
free-trade policies
but his latest out for a in the early eighties reaganomics set-aside you know
hamilton's plans i mean as i mentioned just a minute ago scott
and in
them by eighty nineteen eighty five we had a trade surplus with china for over
a hundred years
in nineteen eighty five we had our first trade deficit with them it was six
million-man
dollars
a six million dollars is like walking around money insignias is exhibited
virtually nothing
six million dollars rivers this graph here
six million
this discrepancy not to scale so it's just the i mean it's just its
a billion is a thousand million
so this is six-man
in nineteen eighty five
ninety eighty six we had our first billion dollar trade deficit we went
from
six million tha thousand
six hundred and sixty four million
by nineteen eighty six
into town and then this continued as you can see while here than pricier better
better over here
uh... nineteen eighty five
nineteen ninety we were a ten billion
and if we can advance those
and by nineteen ninety five we were at thirty four billion
by two thousand we receive three billion again this is not to scale the solution
is shouldn't should have you not
and they were like above two hundred billion in two thousand five
and we're now
for two hundred and fifty two billion of this is
every single yet this year or last year
the chinese accumulated two hundred and fifty two billion of our daughter
six
old easily ice pack in when this started with reagan
two hundred and fifty two billion dollars
and the only thing they can do with that money is come here and by this country
it's fitzy it is enacted as an economic
disaster