Get to know the name Xi Jinping. He is currently Vice President of China, and in 2013 is expected to become general secretary of the Chinese Communist Party, the next leader of the country. Xi is traveling in the US this week, meeting with President Obama and them stopping in Iowa and California to discuss local trade possibilities.
Last August US Vice President Biden did a tour of China; this trip is considered a reciprocation and a chance for Xi to discuss economic and trade issues and develop bilateral cooperation.
Currency Rates And Trade Cheating
A key topic of discussion with President Obama will be currency exchange rates. China manipulates its currency, holding its value very low, making Chinese-manufactured goods cost much less on world markets than it would if it was allowed to float at market rates. This manipulation enables them to seize jobs, factories, companies and industries from the rest of the world. It is the cause of the massive trade imbalances that many countries have with China. In addition China uses government subsidies, government-owned enterprises, intellectual property theft, forced technology transfer and various other barriers to allowing US-made goods to compete within China and hindering the competitiveness of our exports to world markets.
While China has been gradually increasing the relative value of their currency, it is still as much as 30% undervalued with little sign of China's willingness to bring the value all the way up to market rates at any speed. In 2011 our annual goods deficit with China was $295.5 billion. (Our overall U.S. trade deficit in goods and services with the entire world was $558 billion in 2011.)
President Obama has asked Congress for $26 million to set up a new Interagency Trade Enforcement Center to investigate unfair trade practices that hurt US manufacturers. He is also requesting a 3.4 percent increase in the Commerce Department’s 2013 budget, to assist with export efforts. This is part of his effort to double US exports, to increase jobs and help fight trade deficits.
See also: Washington Post, Views from China’s vice president, a Q&A with Xi.
Americans Think China Dominates
As Xi arrives in the United States, a new Gallup poll shows that Americans see China as the world's leading economic power. The release, Americans Still View China as World's Leading Economic Power, explains,
Americans believe China is the leading economic power in the world today, by a significant margin over the United States. This is the second consecutive year the majority of Americans have viewed China as economically dominant; previously, China held a smaller lead. By contrast, in 2000, Americans overwhelmingly believed the U.S. was the leading economic power.
In fact, the US is still the dominant economic power. But China is growing relative to the US, and their economy continues to show rapid growth while our own remains mired in the after-effects of the recession. China's growth is the result of their trade policies and massive internal infrastructure investment. American ideologues prevent us from maintaining and modernizing our own infrastructure, calling it "government spending." This means that the economic soil in which our companies are enabled to thrive is malnourished. The ideologues also prevent us from countering China's trade policies, calling it "government interference." The result is that we send our companies out to compete against national systems, and even our largest companies are not large enough to compete with that.