Sec. Locke Singles Out China, Ignores Flaws in U.S. Trade Policy

No sooner had I published yesterday’s piece, critical of Obama for abandoning American workers, when I came across this article.  It seems that the Obama administration understands that our trade deficit is unsustainable. 

The trade imbalance between the United States and China is not sustainable, and the two countries have a joint responsibility to reduce greenhouse gas emissions, U.S. Commerce Secretary Gary Locke said on Wednesday.

China should shift from export-led growth, increase its exchange rate flexibility, and open its markets more, Locke said in remarks prepared for a speech to the American Chamber of Commerce.

The Obama administration’s approach to correcting our trade imbalance defies logic.  Having sworn to adopt no protectionist measures of any kind, he has given up all credibility and leverage on the issue.  In addition, singling out China while ignoring the trade deficit with other nations makes absolutely no sense.  Of course our trade deficit with China is by far the largest of any nation; China accounts for one fifth of the entire world’s population.  But when put in per capita terms (adjusting for the size of the nation in question), our trade deficit with China barely makes the top twenty.  The per capita trade deficit in manufactured goods with other nations like Japan, Germany, Mexico, South Korea and others is much worse.  So what is China to think when they are attacked by the Obama administration for a $270 billion trade deficit when we seem perfectly willing to accept a $100 billion trade deficit with Japan, a nation with one tenth as many people?

The problem isn’t China.  The problem is U.S. trade policy.  Just exactly what did the U.S. expect when it applied the same policy that was already a proven failure all over the world to a nation with one fifth of the world’s population?  Unfettered free trade and blanket applications of protectionism are merely the two extremes in the spectrum of trade policy available.  Each is just as dumb as the other.  Smart trade policy takes into account the role of population density in driving trade imbalances and applies varying degrees of protectionist tariffs as necessary (like a tariff structure on manufactured goods that is indexed to population density) to assure that a balance is maintained. 

The Obama administration can hardly be faulted for taking its cues from economists who, because they are close-minded toward any consideration of the role of population growth in the economy, have no clue as to why our decades-old policy of unfettered free trade (while other nations maintain tariffs) is failing.  But you’d think that after thirty-three consecutive years of trade deficits – a cumulative $9.4 trillion – that those responsible for economic policy would begin to question whether the problem is our own policy and not some failure on the part of the rest of the world.

3 Responses to Sec. Locke Singles Out China, Ignores Flaws in U.S. Trade Policy

  1. Mark Hall says:

    They can ONLY take what we GIVE them….

    We have also starting to see gaping holes in many of our buildings and homes where our “Kitchen Sinks” used to be…



  2. ClydeB says:

    As Mike Folkerth is prone to say, “As an old Alaskan Bush Pilot I offer this view; being low on fuel is not an immediate concern when the engine is on fire.”

    Our economic engine is on fire and solving the CO2 dilemma will not serve as an extinguisher.

    Is it possible that folks so high up in the pecking order actually do not realize that we have manpower, materials and methods at our immediate disposal to correct a major part of the problem?

    I’m regularly amazed at the lack of understanding demonstrated by so many of these people. We need manufacturing to be done at home for home. If surplus goods are produced, export to foreign markets, but don’t assume that the only market is foreign.

  3. mtnmike says:


    As always, excellent reporting on the core issue of imbalance.

    It is that same issue of imbalance that when applied to our horrendous disparity between real wealth and spiraling debt that further complicates the future of our nation.

    Add to that the same imbalance between our need to consume in ever greater quantities and the diminishing resources of a finite planet and we come to a much greater understanding of the words of Physics Professor, Albert Bartlett; “The greatest shortcoming of the human race is our inability to understand the exponential function.”

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