There's a recent article at Bloomberg regarding Chinese concerns over the U.S. budget deficit (“U.S. Assures 'Concerned' China It Will Shrink Deficit,” http://www.bloomberg.com/apps/news?pid=20601087&sid=as7NE_Rygqpk). The article describes a recent round of Strategic And Economic Dialogue (SED) talks hosted in Washington, and how the Chinese officials present voiced concerns about the extent of U.S. government borrowing and money printing, as well as the stability of the U.S. currency itself. This is understandable, as China holds over $800 billion in U.S. Treasury debt.
What is interesting is the “concerns” the United States has brought to the table. Under President Bush, a large part of these concerns had to do with trying to pressure the Chinese to open their financial markets to investment (and control?) by international firms (think Goldman Sachs or AIG, for instance). Under Obama, the tone has changed and the emphasis has become different. It seems that the U.S. realizes that it no longer has any leverage to insist on greater access by foreign firms to Chinese financial markets. Yet now the U.S. is calling on China to shift toward relying on domestic demand for economic growth rather than exports. According to the Bloomberg article, U.S. Trade Representative Ron Kirk said, “They have to build more of a domestic spending society... [If they do,] software, movies and the creative arts will be a great market for the United States.”
This is really funny. The financial and military arrangements which have allowed the First World and the U.S. in particular to expropriate the rest of the world's wealth are now unraveling. China has so far resisted much of the pressure brought to bear by the U.S. to allow its financial markets to be raped by the likes of Goldman Sachs (although the Chinese are rightly concerned that the large amount of U.S. debt they hold might become worthless). Yet the leaders of the U.S. are still enamored of the idea of trying to get something for nothing. Our trade deficit is now huge, we no longer manufacture much of what we use, and we are running out of financiers of additional debt by which we might buy things from other nations.
So we are now calling on China to stimulate their domestic demand for some of the few things we have left to sell to the world – “software, movies and the creative arts.” Shall we thus give out Jonas Brothers' song downloads or copies of People Magazine in exchange for Chinese tractors, heavy machinery and hand tools? Or how about Hannah Montana or America's Got Talent DVD's in exchange for Chinese furniture?