Economic Misconceptions Concerning US-China Trade
Return to Russia, China, U. S. Rivals, Adversaries, Enemies 1/29/19

Panelist Yukon Huang Economic and Trade Relations with China See Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong

1. Economic Misconceptions Concerning America's Poor Attitudes Toward China.
2. Tensions are leading to inappropriate policy. 
3. Tensions grew as China became a significant world power.
4. Specifically, Tensions caused by
    China's trade surplus causing US trade deficit leading to
    Perceived Excess US investments in China
    US Intellectual property loses
5. Exploring China Trade Surplus
    US deficit and China Surplus are not interrelated
    US negative trade balance began about seven years before China increased surplus
    Most of China's US measured manufacturing trade surpluses leaves China
    as payment to Asian the supply chain providers and the product's owner like Apple
    So China's trade surplus is a Gross amount, before distribution.
    It is not like profit, a measure of gain. Of the $800 recorded as Chinese trade surplus from an iphone,
    only $25 stays in China. Apple gets $400 dollars.
    Asians work hard, save a lot, sells well-made products at very low costs to the US consumers.
    US consumers pay with borrowed dollars which go overseas to be the world's money.
    The US is the world's banker and can print money.
    Want to steel a lot of money, own a bank.
    In effect, US deficits are paid for by foreigners.
6. Exploring US Investment in China
    Most comes from Europe which makes in China what it sell in China. Example: Airbus.
    US China Investment is minimal because major exports like agriculture and Boeing are US made.
    US companies invest where they get the highest return and will not invest in low margin manufactured
    goods unless they can offshore manufacturing to pay both lower wages and taxes.
    US invests around the world in services related to finance, health care, insurance
    and education because profit margin are large.
    Services are blocked by the Chinese though investment services may be opening up.
7. Intellectual Property Loses
    China excels at generating profit using foreign technology
    Foreign companies use their tech in china
    China imports, buys and steel technology.
    Steeling is difficult and stops at personal income of about $30,000.
    China is poor and will be steeling for a long time. It is a problem.

8. US has gained from China's lowering the cost and investment requirements in
    low value added manufactured goods made in Asia.
    US has Gained from investing in high value added services requiring her innovative capabilities.

See Reform Contradictions Facing China's New Leadership, Yukon Huang