When it comes to solving America's trade deficit, some economists say instead of going after Beijing, the White House should look into some of its deep-seated domestic problems first. CGTN's Wang Guan takes a closer look.
WANG GUAN WASHINGTON The White House has rejected the framing of the ongoing trade disputes between the U.S. and China as a war. Robert Lighthizer, U.S. trade representative Peter Navarro, President Trump's key trade adviser, and Wilbur Ross, U.S. Secretary of Commerce have all come forward in the past couple of days and justified Washington's trade actions against China.
WILBUR ROSS US SECRETARY OF COMMERCE "When we are 500 billion down, this isn't a trade war we can lose. We've had this trade deficit issue for a long long time."
ROBERT LIGHTHIZER US TRADE REPRESENTATIVE "We had 375 billion deficit in goods trade with China. This is unsustainable. They are half of our problem."
PETER NAVARRO, DIRECTOR WHITE HOUSE NATIONAL TRADE COUNCIL "When China joined the WTO, they promised to play by the rules. They didn't. Their GDP grew from 1 trillion to 12 trillion. And in the meanwhile we lost 60 thousand factories and 5 million manufacturing jobs. That's on China."
WANG GUAN WASHINGTON The White House seemed to acknowledge that intellectual property and alleged technology transfers are just easy targets while the Section 301 investigation is a weapon in America's trade toolbox. The ultimate goal is to resolve the deficit and more importantly perhaps, to prevent China from challenging America's dominance in global economy. Some U.S. experts say this is Washington's tactics of scapegoating others for its own problem. Stephen Roach is professor at Yale University and author of book Unbalanced: The Codependency of U.S. and China. He argues that American household's consume-now-pay-later culture and savings shortfall explain much of America's deficit with China. Roach wrote "American politicians love to blame China and trade deals as the major source of pressure on U.S. jobs and wages. But when it comes to the trade deficits, the U.S. made its own bed.The country has been living beyond its means for decades and drawing freely on surplus saving from abroad to fund the greatest consumption binge in history. Politicians, of course, don't want to blame voters for their profligacy; it is much easier to point the finger at others." According to the World Bank and the U.S. Federal Reserve, in 1970, U.S. household consumption was 666.6 billion dollars, in 2017 that figure is 13.7 trillion, or nearly 70 percent of GDP. The U.S. has 4% of the world's population but consumes 22% of its goods. As America is buying more, they are doing so with borrowed money. According to Federal Reserve and U.S. Census Bureau, U.S. family debt is 14% of disposable income in 1970. In 2017, U.S. family debt is 73% of disposable income. In the meantime, Americans borrow more and save less. The saving to GDP ratio dropped from 13% to just 2.6%. And if one looks at the deficit chart, this is where problems begin. 1975 was the last time the U.S. has seen a trade surplus. That said, deficit spending is not necessarily a bad thing. Nor is America's trade deficit with China. Former U.S. Secretary of State Colin Powell spoke to CGTN a few years ago.
COLIN POWELL FORMER US SECRETARY OF STATE "China sent stuff to Walmart. Walmart sells it. The money goes back to China, and then China lends to us to solve our deficit. A wonderful business cycle. Nobody's gonna put that at risk. It benefits all parties."
WANG GUAN WASHINGTON "Experts point out throughout history, it's a common place occurrence for countries going through industrialization to experience trade surplus. The U.S. has 93 years of trade surplus between 1874 to 1970. Germany had 84 years of trade surplus starting in the 1880s, Japan witnessed a 30-year straight surplus from 1981 to 2010. And as China picked up pace in ITS industrialization process, surplus with the world specifically with the U.S. began in the 1990s. WG, CGTN, Washington."