David Broder's War
Dean Broder uncorks a rich defense of the People's Republic of China today, arguing that a trade war would ensue if the Obama Administration moves forward with tariffs on tire imports.
Many in business fear that this is the opening round in what could become a much larger and more dangerous trade war.
For now, the Chinese have threatened only minor retaliation, a cutback in imports of auto and chicken parts from the United States. But both sides have plenty of other, larger weapons they could deploy [...]
The danger is that once you strike the first blow against foreign competitors, you can't tell what will happen next. Obama has taken that risk, so fingers are crossed.
Oh noes, trade war! Except, no, China's consumer base offers little possibility for China to have the room to engage in retaliatory strikes.
Chinese consumers who buy $608 billion of goods from overseas are diminishing the prospects of a trade war with the U.S.
China’s imports, up 68 percent in five years, now amount to almost one-third of gross domestic product, according to World Bank data. The nation’s demand for foreign products is a boon for American companies, which exported $351 billion to China in the past five years.
U.S. President Barack Obama’s 35 percent tariff on tires from China spurred a Chinese investigation into prices of U.S. poultry and car products. Dangers of further escalation may be mitigated by the increasing benefit China provides the world economy. Poised to surpass Japan as No. 2 in GDP, its purchasing power is a lure to firms seeking new customers.
“As China depends more on domestic demand, its rise won’t be seen by the rest of the world to be as big a threat as some view it now,” said Shen Minggao, a former consultant to the World Bank who is chief economist in Hong Kong for the Greater China region at Citigroup Inc., the third-largest U.S. bank.
In fact, with respect to the one threat the PRC made, to look into "dumping" of chicken parts, the Chinese have such an appetite for chicken feet that they would practically revolt if the government tried to cut off imports.
The fact that China has demand and not just supply means that there is an equilibrium where trade laws can actually be enforced. That's all that's been done in this respect, and Dean Broder is just trying to protect the neoliberal consensus by arguing otherwise.