Has the United States Lost Its Self-Confidence? Five Unlikely Consequences

The arguments in “Four serious consequences China and the U.S. will face if the RMB does not appreciate”* were formed using incorrect assumptions. The following counters the views of this article.

1) U.S. manufacturers cannot compete with China?

The U.S. is not just about football, blockbuster movies and hamburgers. From the world’s top 500 list, it is obvious that the U.S. manufacturing sector is still the most powerful and most competitive in the world, but globally, U.S. services in such sectors as finance, retail, food, transportation and entertainment industries are facing strong competition from the rest of the world. The U.S. has big companies in every industry and is the world’s leader in electronics, computers, communications, biotechnology, space and aviation. Most internet companies are American and. out of the three major courier companies in the world, two of them are from the U.S.

2) Trade disputes are limited because 70 percent of China’s exports to the U.S. are products made in China for U.S. companies and U.S., Japanese and European allies. At most, trade wars would result in restricting the import of products from Chinese companies. Mainly U.S. companies with high profits like Apple and Walmart increase the trade deficit. Many U.S. companies, such as the General Motors Corporation, make a profit in China but do not make money in the U.S. or other countries. Because of enterprises with high profits, the U.S. stock market did not collapse from the financial crisis.

3) U.S. treasury bonds are mainly purchased by their own citizens and enterprises. Foreign allies, including Japan, Korea, Taiwan and Europe, collectively purchase even more; it is inconceivable that the U.S. dollar cannot be sustained.

4) Genetically modified products: the opium of modern drugs? The Sino-British Opium War was a result of the tea trade and the opium trade. China prohibited drugs, and in order to maintain the balance of trade, public finance and monetary affairs, the British Empire launched a war on China. After the Opium War, China had no choice but to buy British opium, and later grew their own opium. This decreased China’s purchase of imported opium, and the British then cultivated tea in India. China also has genetically modified products, such as genetically modified rice. China can also stop buying American genetically modified seeds. Besides, genetic modification is not a drug.

5) The gunboat policy opened up the Chinese market, making the RMB appreciate? The U.S. does not approach China the way the British did in 1840 with military superiority; they have engaged in their own laser ballistic technology for many years; China’s nuclear force is very well concealed; the U.S. also does not want to offend 1.3 billion Chinese people. The U.S. already has too many enemies. The U.S. reduces its enemies, makes more friends and cuts military expenditure. The U.S. military budget for this year is US$700 billion; a lot of the equipment is old. If the conflict in the two countries intensifies, no one can bear that burden.

“Four serious consequences China and the U.S. will face if the RMB does not appreciate” leads people to think that the U.S. has already lost its self-confidence. The U.S. debt ratio is not the highest in history. Overall the U.S. is powerful and, unlike the younger generations of the Japanese, Koreans and Chinese who do not want to do manufacturing, this strength can increase the number of people who move into the manufacturing industry.

*This article can be found in its original form at http://www.zaobao.com/forum/pages2/forum_us100222b.shtml