Sunday, September 13, 2009

Trade War With China Brewing

The threat of a trade war, which is in response to Obama's decision to adopt protectionist measures as a payoff to the Union and Democratic senators could wind up being one the most devastating policy choices of Obama, and considering his choices that is quite an accomplishment.


The action by China’s commerce ministry came as both governments are facing domestic pressure to take tougher stands against the other on economic issues, even as leaders seek to work together to combat global security threats, like the nuclear ambitions of Iran and North Korea. Mr. Obama’s decision to impose a tariff of up to 35 percent on Chinese-made tires came after he promised labor unions during the 2008 campaign that he would more strictly enforce trade laws, especially against China, which has steadily gained manufacturing jobs as the United States has lost them.


The Chinese government’s counter-move came at the end of a weekend in which Mr. Obama’s act triggered a crescendo of nationalistic vitriol against the United States on Internet sites in China. “The U.S. is shameless!!” said one posting, while another called on the Chinese government to sell its huge holdings of Treasury bonds.


The commerce ministry’s threat against American auto and chicken shipments came a day after the same agency had issued a fairly formulaic criticism of the tire dispute. The abrupt shift toward a more combative stance underlined how Chinese public opinion, expressed on the Internet, is starting to influence policymaking in Beijing.


For many years, American politicians have been able to take credit for standing up to Beijing by taking largely symbolic measures against imports from China in narrowly defined categories. But rising nationalism is making it harder for Chinese officials to gloss over American criticism so as to preserve an unbalanced trade relationship in which the United States buys $4.46 in Chinese goods for every $1 of American goods sold to China

Considering the Chinese government relies on Nationalism to legitimize their rule, I can see why irrespective of the economic cost the Chinese might retaliate against America. If that happens, its gonna get ugly here and around the world mighty quick, all so Obama could pay of a few constituencies.

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