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Donald Trump Has A Lot to Learn About China
Posted By Bryan Riley On April 21, 2011 @ 4:00 pm In Economics | Comments Disabled
This is how Donald Trump  recently described China: “They’re making all our products. They’re taking all our jobs. And then they loan the money back and we pay them interest. It’s an amazing phenomenon.”
A strong statement, but only one-third of it is true.
China is not making all of our products. Imports of goods from China are just 2.5 percent the size of the U.S. economy.
China is also not taking all our jobs. According to Heritage Foundation analyst James Sherk , “Research shows that trade has had little effect on overall manufacturing employment. Instead, it has shifted jobs from less productive firms to more productive domestic firms.”
China does, however, loan the U.S. government boatloads of money for which U.S. taxpayers pay billions of dollars in interest. Last year alone, China bought  $204 billion in U.S. Treasury bonds and notes. Of $414 billion in U.S. interest payments  on Treasury securities last year, $142 billion went to foreigners  in China and elsewhere.
Just who does Trump think is responsible for this amazing phenomenon? Chinese economic ministers did not force the U.S. government to run a $1.3 trillion deficit in 2010. Our politicians did that without any outside help.
We have a trade deficit with China in part because the U.S. government finances its activities by selling China hundreds of billions of dollars in Treasury debt each year. That soaks up dollars that could have been spent by China on U.S. exports or invested in productive private-sector companies.
The one Heritage Foundation paper Donald Trump needs to read is The United States vs. China—Which Economy Is Bigger, Which Is Better  by Heritage analyst Derek Scissors. As Scissors explains:
America can and should win the economic competition. However, it should not hope for China’s failure. An economically weakening or stagnant China hurts the rest of the world. In contrast, a China on a more sustainable course benefits everyone.
As a prominent businessman, Trump is positioned to highlight the many tax and regulatory challenges that make it difficult for U.S. companies and workers to compete. Focusing on these made-in-the-USA problems would allow him to have the greatest impact on our country’s future.
Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2011/04/21/donald-trump-has-a-lot-to-learn-about-china/
URLs in this post:
 Donald Trump: http://money.cnn.com/2011/04/17/news/economy/trump_china_trade_war/index.htm
 James Sherk: http://www.heritage.org/Research/Reports/2010/10/Technology-Explains-Drop-in-Manufacturing-Jobs#_ftnref3
 China bought: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/s1_41408.txt
 interest payments: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf
 went to foreigners: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
 The United States vs. China—Which Economy Is Bigger, Which Is Better: http://www.heritage.org/Research/Reports/2011/04/The-United-States-vs-China-Which-Economy-Is-Bigger-Which-Is-Better
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