Under-valued Yuan, trade deficits, counterfeiting, etc. all amount to major friction between the U.S. and China

Is China a currency manipulator? Many argue yes. And that may give the rising superpower a trade advantage. A big one. A recent Reuters article opines that the trade deficit between the United States and China is well over $250 billion.

China, until recently had pegged it's Yuan to the U.S. dollar and had under-valued its currency, giving Chinese exporters a trade advantage, according to many trade/economic experts. Many criticize President Obama for not being tougher on China by forcing China to properly value its currency, or by assessing tariffs on Chinese imports that would then make comparable American goods more appealing to consumers. President Obama has indicated he prefers to deal more diplomatically with China rather than try to strong-arm them, according to a recent Reuters report.

The same report points out that U.S. debt levels are a concern for China, especially because China holds billions of dollars worth of U.S treasuries.

Piracy and counterfeiting of American goods by Chinese manufacturers is an enormous concern. Much of the Chinese economic rise rests on the laurels of American companies like Microsoft whose software products are routinely bootlegged; and on other American companies' goods that include but are not limited to DVDs, handbags and shoes. The Chinese government has promised to implement tougher controls.

We'll just have to see how that goes. Read more.

China biggest importer of U.S. goods (they especially like American "waste and scrap")

The New York Times ran an article last month that should be encouraging to American economists, and to the White House, and to Americans generally. It seems that China is the biggest importer of American made products and the Chinese's thirst for good ole Made in the USA is good for our GDP. According to the article, As China Grows, So Does Its Appetite for American-Made Products the states enjoying the biggest impact of this phenomenon are Texas, California and Washington. They export aircraft and computer components to China. (And the author seems to think that China will surpass the U.S. as the biggest importer in the world. China is now the second biggest and the U.S. is the biggest.)

Feeding billions of people is also taking a toll on China's agriculture sector. Apparently they are not making any more land so they also import huge quantities of food products from America like grain. They also need a lot of our cotton.

But it was what the Chinese import from New York that is fascinating. According to the article, New York exported nearly a billion dollars in "waste and scrap" to China last year. China apparently recycles these products to make paper and other merchandise.

That is why I think Donald Trump is massively uninformed about these trade issues and his plans for dealing with China. It will upset the balance of trade in such a way, that the jury is out who will suffer more: China or the U.S. I mean, I am sure, if they must, the Chinese can import their waste and scrap from someplace else. And where would New York sell a billion dollars worth of the stuff if the Chinese pull the account due to high tariffs on their exports to the U.S.?

China, China, China

It's all about China these days whether the subject is human rights or trade. This superpower is such a force to be reckoned with, that U.S. presidential "carnival barker" Donald Trump promises to make the country a major focus of his campaign. Mr. Trump promises to stick it to China in such a way that the country's economy will come tumbling down after the aggressive import taxes and tariffs he assesses on their goods.

Notably, Chinese president Hu Jintao was recently in the United States at the invitation of President Barack Obama to discuss ways that the two countries can work together on issues such as trade, the environment, human rights, energy or other ways, for the benefit of both countries. It is unclear that aggressive taxation of Chinese products will have any postive impact on the American economy or reputation. Moreover, such tactics could get the U.S. accused of anti-dumping by the World Trade Organization and the Chinese could retaliate by manipulating its currency and using other tactics that could be extremely detrimental to the United States' economy. But maybe Mr. Trump knows something that the rest of us do not on this issue. After all, he didn't become a billionaire by playing nice or playing by the rules necessarily.

Having said that, China is still the talk of the international community. Almost every U.S. leader, including New York Mayor Michael Bloomberg, has been making a point of making personal trips to China to try to drum up commerce with the Chinese that would benefit their cities and states.