19 Oct 2010

China, trade and war

Two people yesterday "feared" China's economic rise. I don't, and that's because China is growing through trade -- every time China sells something, a buyer is made happier.

That's because the gains from trade accrue to both sides.

There are lots of statistics on how China has kept prices down in the US (benefiting consumers) and how China has helped the US expend into more profitable production (benefiting workers).

Two more things:

The complaints about "unfair competition" come from producers who want to raise prices for consumers and protect their market share from Chinese firms (and often international firms producing in China). They have politicians willing to wave the flag to defend their mercantile protectionism, in exchange for bribes.

Isn't it wrong that China is using its money and economic might for political leverage? Yes, but everyone does it. War is the tool of crazy people (N Korea, Iran), not traders who want to get rich. It's not inevitable with China.

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