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The problem is that China could do that, but lose it's largest trading partner. And China can't afford to do that. If they could, I would probably be speaking Mandarin right now.

https://www.uschina.org/statistics/tradetable.html

In 2010, US export to China was 91.9 billion US dollar, to Hongkong was 26.6 billion US dollar.

"MAKE Magazine is making that case that any 'maker' who builds, buys or creates electronics should learn (Mandarin) Chinese.

MAKE has no idea what they are talking about. I DO manufacture electronics (electronic data harnesses primarily) for a living and fairly little of the parts we make come from China and most of what we buy is commodity parts. (wire, terminals, connectors, etc) Lots of it comes from Japan and much of it is made here in the US. Sure there are some parts from China but it isn't as much as one might think. The manufacture of many of these products is highly automated and China has no cost significant cost advantage.

Furthermore, virtually all sales of commodity electronic components are done through distributors. You simply are NOT going to buy direct from China unless you are a purchaser for a manufacturing company. Distributors have customer service representatives, most of whom do not speak a word of any Chinese dialect. And even if for some reason you did need to contact someone in China directly, there are a HUGE number of English speakers there. I've been to Shanghai, Hong Kong, Chengdu and other places in China. It is NOT hard to find someone who speaks rather good English.

source of just about everything we buy in the USA.

The US has a $3.7 TRILLION manufacturing sector and most of that stuff we make is also sold here in the US. In 2010 the US imported $364 BILLION in goods from China or roughly 10% of what the US makes itself. A big number to be sure, but nowhere close to "just about everything".

Considering that the US needs China to buy its public debt, more than China needs the US to buy its goods, there isn't much the US can do.

Nonsense. The Chinese government maintains what amounts to a peg to the dollar for their currency in order to make their exports cheaper. (Nominally it is to a basket of currency but really it's still a managed peg to the dollar) The only way to maintain such a peg is to buy treasury bonds. China can (and does) buy public debt elsewhere but they have elected to maintain a currency that is relatively cheap compared to the dollar to maintain exports to their largest trade partner (the US) and elsewhere. It has logic from the Chinese perspective but it isn't like they can suddenly dump all that currency or elect to stop buying it. China is trying to diversify their peg but there isn't a ready buyer for over $1 TRILLION US dollars. They've got no one to sell it to in the short term without trashing their economy in the process.

In 2009 China did almost $300 billion in trade with the US, including $220 billion in exports to the US. That's over $120 billion more than China exports to any other nation (I don't count Hong Kong since that's actually part of China now). You think China is easily going to replace the US in the near future as a buyer for all those exports? Who do you think is going to do it? In time China's domestic market should rival the US but that isn't going to happen for years - possibly decades. China needs the US and they know it.

Much of what they US currently buys in China can be produced elsewhere, albeit at non-trivial cost to move production. I know this first hand because I've had a job doing global sourcing. For most goods China is not the only option, though it is unlikely that much of the production currently in China will move elsewhere. China does not have a ready replacement for the US as an export market, nor do they have the option to stop buying US Treasuries in the short run.

BTW for those who think the US doesn't produce anything anymore, bear in mind that the US manufacturing sector produced almost $2.7 trillion (versus the $220 billion imported from China). In 2008 US manufacturing output was greater than that of China, India and Brazil COMBINED despite manufacturing being a considerably smaller percentage of the overall US economy than for those countries.

Countries like Canada, Australia, and others that provide a lot of mineral and energy resources to China would have a lot more influence.

Canada isn't even in the top 10 trade partners with China and Australia is way down at number 7 (6 if you don't count Hong Kong). China does more business with the US (both import and export) than both of them combined. Further, Canada isn't in the top 10 for Chinese imports either. I think you greatly overestimate Canada's influence in China.

Remember that China does not produce sufficient mineral and energy resources, not to mention food, for its economy and to feed its population.

In a global economy the same can be said of almost any nation. Learn about comparative advantage and why it matters.

As a Canadian, I hope that our government demands guarantees that China not to restrict rare-earth shipments to Canada, or Canada will block all resource and food shipments to China.

I'm sure the Chinese are shaking in their boots...

US-China trade statistics
Guess where most people on our world live who buy cheap chinese products. Hint: it's not the USA.
Hence, if the USA goes bankrupt, they'll have a heavy economic loss, of 18%, but it may be survivable:
Table 7: China's first trade partner is the USA, with 221 billion $ in 2009.
Table 4: China's trade with the world: export in 2009 is 1202 billion $, that gives export to the USA a 18.3% share.

So much for our EXPORTS.

Another way to put that is "so much for the 4.25 to 1 trade imbalance." That ratio has improved since 2008 because the US consumer is broke. It was much higher (5.2:1) and will bounce back if our economy recovers.

The bulk of our exports to China are agricultural. This drives up commodity prices for the US consumer.

Pat Doyle is correct; he has been sold out. The US doesn't protect its markets and workforce. When the US eventually inflicts a carbon tax on itself petroleum refining will move to Asia and the tankers arriving in Texas and Alaska will be filled with gas and diesel in place of crude. More US workers sold out.

Exporting our pollution to Asia is NIMBYism, not environmentalism.

If I interpret tables 4 and 7 on this site correctly, in 2008 China would have lost 17.7% of their exports if they stopped exporting to the USA. So, problems on the scale of strikes and maybe riots, but probably not "a billion out of work and hungry people" because they can still manufacture for the remaining 82.3% of their customers.

You're saying a US-China trade war wouldn't send shockwaves through the global economy and europe and japan in particular ? Doubtful.

Besides if they stop their industry by no longer exporting to us they're stuck with a billion out of work and hungry people with nothing to do but to contemplate the difference between them and the party officials.

If I interpret tables 4 and 7 on this site correctly, in 2008 China would have lost 17.7% of their exports if they stopped exporting to the USA. So, problems on the scale of strikes and maybe riots, but probably not "a billion out of work and hungry people" because they can still manufacture for the remaining 82.3% of their customers.

While what you say is true to a point, it neglects what this trade *is*, and the fact that China is just barely below trade with Canada at this point, and will over take it real soon now.

Canada exports to the US (and to a greater level daily to China) mostly raw materials, not much different except in scale from some third world colonized nation. There are exceptions of course, they do manufacture cars and parts, etc, and some modern networking ear, etc, but by the numbers, petroleum exports top the list.

http://internationaltrade.suite101.com/article.cfm/canadas_top_exports_imports

  Whereas on the other hand, China exports to the US almost completely value-added manufactured items, i.e. economic multipliers, things that build their internal economy to a greater degree than just raw resource exporting. Raw resources for export don't make the top ten list for them, and I doubt they want to do much of that, they would rather use the stuff they got themselves..along with everyone else's stuff they can get their hands on:

http://www.uschina.org/statistics/tradetable.html

Raw resource exports are a short range economic windfall,"fat city" type thing.. long range, sorry, an exploited colony is an exploited colony...

And what you miss is the US is the third largest exporter in the world. While the US imports more it exports a lot too. Here's what the US exports to China.

Falcon

I think this guy is missing the obvious. Who is guying the Ipods....Americans. That means every time apple sells an Ipod there is a net flow of $4 to china.

And you're missing something. Every tyme a Chinese buys something made in the US money flows from China to the US.

I don't see the Chinese buying products manufactured here.

Because you're not looking and seeing the whole picture. Behind Germany and China the US was the third largest exporter in 2007. Here are some things China buys from the US.

Falcon

US manufacturing output is at a record high (PDF). It's true that fewer Americans are employed in the manufacturing sector, because efficiency has increased so much. This is good, for the same reasons that free software is good.

we do sell stuff to China and they trade with a lot of other countries too. http://www.uschina.org/statistics/tradetable.html

Where did you get your economics degree? Perhaps you ought to consider asking for your money back.

Here's is the shocker: China does not run a large trade surplus. (Serious, it's very very small, and was in '04 only slightly in the black.) Now, the numbers "experts" give you tell you that the US ran a $160bn trade deficit with China in the year to April '05. But that is against an overall trade surplus of just $26bn (which, trust me, isn't a lot of money when it comes to surpluses and deficits.)

(For details on China's trade performance, check this http://www.uschina.org/statistics/2005tradeperform ance.html)

But this is not relevent: China imports as much as it exports. It just happens not to import a lot from the US. It does however import a lot from Germany (which, along with Japan is the world's largest manufacturer of capital goods). So, China has a trade deficit with Germany, and a trade surplus with the US. Now: go to Germany. Who do they buy from? Well, lets start with the US. Germany imports a terrific amount of software and financial services from the US.

So: money goes US -> China -> Germany -> US -> ...

(Now, this isn't great if you work in the manufacturing sector in the US, and your job goes to China. But it is great if you're selling fund management products to the Germans.)

Here's another shocker. Between 1998 and 2005, the US lost 2m manufacturing jobs (while, it should be noted, manufacturing output rose). And those jobs went to China, right? No. China lost 15m jobs. Yes, you heard that right fiftenn million manufacturing jobs were lost. (The result, I should add, of moving from an inefficient state system to a marginally more efficient private system.)

Anyway: the point I make is a simple one. Focussing on bilateral trade surpluses or deficits is stupid. You have to look at the system. You also have to remember that those trade deficit/surplus numbers are vey bad at capturing so called "invisible" exports, such as financial services.

Cheers,

Robert

This is untrue. Only 22% of the US national debt is foreign-owned and China doesn't even hold 1/3rd of that. Japan, Europe, and many, many other countries rank higher up on that list.

It is also untrue that China makes "most" of the products used in the US. This FUD is worse than the FUD in the original article.