Posted on 03/02/2007 6:25:08 AM PST by pissant
WASHINGTON – Republican presidential candidate Duncan Hunter's insistent warnings about China's threatening military buildup have stamped him as the Paul Revere of the fast-developing 2008 campaign.
China is picking America's pocket and using its ill-gotten gains to acquire ships, planes and missiles in a challenge to U.S. national interests, Hunter says. By cheating at trade, the 14-term congressman adds, China has also been able to pirate many American industries and high-paying manufacturing jobs.
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But some experts say that the Alpine, Calif., Republican's relentless focus on Beijing's trade tactics is overwrought and ignores important economic benefits to the United States, including hundreds of billions of dollars worth of Chinese investments that help the United States finance its deficit. Campaigning for the Republican presidential nomination over the past three months, Hunter has espoused a view on China that is far more confrontational and alarmist than the one taken by the Bush administration.
For example, Hunter has accused China of illegal currency manipulation that, he says, is seriously damaging the U.S. economy. Federal Reserve Chairman Ben Bernanke, a Bush appointee, is guilty of “appeasement” for failing to challenge China's currency policy, Hunter says. Nicholas Lardy, an expert on the Chinese economy at the Peter G. Peterson Institute for International Economics, is one of several economists who say that Hunter has it backward.
In fact, Lardy and others argue, China's success last year at banking a surplus of over $230 billion in its two-way trade in goods with the United States has enabled the Chinese to bankroll the U.S. Treasury to the tune of hundreds of billions of dollars to finance the budget deficit. As a side effect, China's loans have kept both U.S. taxes and interest rates lower than they might otherwise have been, some economists argue.
“We are financing a government deficit and a savings shortfall by borrowing from abroad, including to a significant degree from the Chinese,” said Lardy. “So it is probably more accurate to say that China's trade surplus is financing our military expenditures than it is their military expenditures.”
Barry Bosworth of the Brookings Institution also disputes Hunter's assertion that China is financing its own military buildup out of its trade surplus.
“They are accumulating foreign currencies which they hold in dollars. But they don't spend the surplus,” Bosworth argued. “If they used it to finance their defense buildup, they would have spent it. Then they wouldn't have a trade surplus any more.” Lardy cites statistics indicating that China only spends about $2 billion a year on military imports, mainly from Russia. Some military experts are dubious about Hunter's alarm over the nature of the emerging Chinese military threat. They argue Beijing's strategy, at least for the time being, is aimed at raising the stakes for the United States in any future decision to intervene in an armed conflict over Taiwan, the breakaway island state that China is intent on recovering.
“Whether or not this would be a broader threat on the shape of where it could turn into a new cold war, man, we are nowhere near that yet,” said Robert Work, vice president for strategic studies at the Center for Strategic and Budgetary Assessments. Hunter's fans, including many with impressive economic credentials, counter that China is not simply being a good neighbor when it recycles its trade surplus by purchasing U.S. government debt. Instead, they say, it is part of a strategy of devaluing its own currency to make American products more expensive in global markets compared with Chinese goods.
Part of this strategy involves maintaining a fixed exchange rate – or “peg” – between the Chinese renminbi and the U.S. dollar. “They can't maintain a fixed peg – unless they recycle dollars back into the U.S. That's why they do that,” said Peter Navarro, a business professor at University of California Irvine and author of “The Coming China Wars.”
“They do fund our budget deficit – by doing so, they are helping essentially to increase our military budget – (But) I think an armed and dangerous Chinese military capable of projecting power throughout the world is far more dangerous than the U.S. military in terms of destabilization.” Navarro argues that the real significance of China's unfair trade policies lies in their success in fueling the country's overall economic growth, which provides the wherewithal to finance a significant increase in military spending.
Some studies say that China over the last decade has boosted its defense budget from 1 percent of its gross domestic product to 1.5 percent. The comparable figure for the United States is 4 percent. “The economic weapon – is translating into a military weapon because the faster China grows economically, the more resources it has to devote to the military budget,” Navarro said. “The key point is that it is devoting a disproportionate share of its new growth to fueling its military expansion.”
Dan Ikenson, associate director of the Center for Trade Policy Studies, at the libertarian CATO Institute, argued that Hunter's attacks on China overlook that nation's advances in becoming a member of the global trading system. Ikenson added that its recent entry into the World Trade Organization offers a forum for reconciling complaints about its objectionable trading practices. Arguing that the United States has benefited along with China from the trading relationship, Ikenson said, “We need to keep our eye on them, and like Ronald Reagan said, 'Trust but verify.' I think that is what we need to do with China and not treat them like an enemy – just keep an eye on what they're doing and prosper along with them.”
Not usually on computer this early but a while ago I e-mailed Laura Ingraham information on Hunter's China trade policy.
Laura & Bill Gertz have been on this big time and to remind her Hunter is on the same page
I pray to god this guy is our next president. The primaries will be tough. He could be a figure against the chicoms like Reagan was to the soviets. It would be the right man at the right time.
Wrong our ICBM's and SLBM have inertial,steller,and gps navigation. We can still nuke accuratly any country on earth without gps. Or dont you remeber the world befor gps when we still had ICBM"s and SLBM's. Trust me they cant cripple our nukes if the knock out our gps.
Again, I'm no "apologist", but we do have to be realistic about the progress that China has made and recognize that since 1975 (Nixon/Kissenger) it's made huge leaps economically and in just about every other way, and that's not going to stop any time soon.
Like any American I'm concerned about the future vis a vis China, but I think the task is to discover a way to live with it harmoniously rather than to be afraid of its success.
That's just being realistic.
Thanks for the dose of reality. I had a hard time believing we'd be that dumb. The russians could surely take out a satellite for some time now.
Peace through strength.
I think the most apt description is, "intentionally two-faced". Don't remember the author, but the book, "The Two Faces of China" gives a good insight into the Chinese psyche. They want to control the world. I didn't say "conquer" - there's a difference. The Middle Kingdom mentality says China is divinely entitled to have everyone else defer to it, AND show that deference. This isn't a matter of international economics or anything else except a national psyche that demands obeisance.
Well .. Hunter is not the first person to notice China.
Bill Gertz wrote a book, "ENEMIES: How America's Foes Steal Our Vital Secrets - and How We Let It Happen".
This is just so great! People respond to true conservatives .. everytime! I love making a total fool out of the drive-by and those who say "he can't", or "nobody knows who he is".
WELL .. THEY DO NOW!!! Go Duncan!!
When are some conservatives going to understand how important appeal (and PR) are? It was clear to many of us in college.
There was a thread last night that said he was speaking at 8:30 am this morning.
That would have been 5:30 am this morning in CA - so I missed it. But .. check the C-SPAN schedule - they might be showing him later on - because he placed so high in the straw poll.
"Honest, your Honor, the Chinaman held a gun to my head and made me shop at Walmart!"
Excuse me .. have you ever met Duncan Hunter - one on one ..??
I'll guess you have not.
So .. until you have .. don't say he has no charisma .. because you've never been in the same room with him. He's very warm and personable .. but when he was the chairman of the Armed Forced Committee .. he was one tough cookie.
When are liberals (like you) going to understand that Hillary is DEATH to this country. Good grief .. didn't her scum of a husband do enough damage to this country to suit you people ..??
The average American has no idea what China is up to. Someone has to tell them. That simeone is a Caongressman and future President. They may not want to hear the truth about China's aggressive policy of trying to de-industrialize the US, buy hey, they are going to hear about it now.
BTW, Hu is in a lip lock with Chavez right now.
****So .. until you have .. don't say he has no charisma .. because you've never been in the same room with him. He's very warm and personable .. but when he was the chairman of the Armed Forced Committee .. he was one tough cookie. ***
Absolutely correct on both counts. I have met him and found him to be warm and personable in every way. He's a large man - and he is definitely a "presence."
He was GREAT as Chairman of the Armed Services Committee.
I said nothing about Hunter's political concerns merely that he has shown he knows little or nothing about the international monetary system. China cannot manipulate currency values over the long haul.
He simply does not know what he is talking about in that regard and revealing his ignorance of the subject won't help his campaign.
Doesn't stop them from doing over the short haul, say the last 7 years.
Dear angkor,
"Like any American I'm concerned about the future vis a vis China, but I think the task is to discover a way to live with it harmoniously rather than to be afraid of its success."
I agree with you, believe it or not.
Yet, in our efforts to live harmoniously with other nations, we can't permit them to take advantage of us. More to the point, if it requires some confrontation with China to avoid permitting them to become the world hegemon, so be it.
Right now, as far as I can tell, we're just laying down and for the sake of "harmony," letting them walk all over us.
That is alarming.
sitetest
China cannot artifically peg an exchange rate. It has a weak currency because of the high inflation rate in China not currency manipulation.
A look at the history of these matters (or a text dealing with International Monetary economic say Heller's) will reveal that when a nation tries to do this it becomes subject to the countervailing forces of the speculators who realize that the fundamentals in the money markets are what is driving the value and they take the other side.
Look at Soros vs the British pound during the early nineties, and the Bank of England is a far more experienced and talented operator than China, his actions forced the government to drop attempts to manipulate the value of the pound (or disguise its weakness might be more accurate).
China could just remove the surplus dollars from the market which would strengthen them and reduce the value of its currency but that would be very costly and no guarantee. It could flood the market with its currency to depress its value but that would create even more inflation which it is currently trying to slow. It could buy US bonds but that would lower US interest rates and the value of the dollar which would in turn INCREASE China's currency's value and they don't want that.
Hunter needs to speak with someone knowledgeable in this matter unless he is just indulging in rhetoric to fire up his followers.
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