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You must be joking - here are the facts - and what part of “The Chinese now have $1 Tillion in reserves to buy anything and everything American.................
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On our recent trip to China, we were astonished to hear one top official at the Chinese Ministry of Commerce insist that piracy is “negligible.” Just walk down the street in Beijing and you will be offered pirated CDs. Entire shopping malls are devoted to knock-off goods.

From every measurement, other than those of some Chinese government officials, violations of intellectual property rights are rampant. The Business Software Alliance and the U.S. Trade Representative’s office in Washington say that more than 90 percent of the business software in use in China is unlicensed. Just imagine what a subsidy for Chinese business that entails—free software! Nearly 100 percent of the DVDs available in China are pirated.

But the problem does not stop there. The Commission heard testimony this year about the diversification and increasing sophistication of Chinese counterfeiting. Chinese counterfeiters are, for example, fashioning auto parts, including brake pads made out of grass and wood, and selling those under American brand names, even exporting them to the United States. Counterfeit parts are being discovered in commercial airplanes and even in U.S. military vehicles and weapons.

There is growing evidence that pharmaceuticals sold on the Internet, purporting to be from Canada, are actually knock-offs coming from China, and their ingredients are sometimes bogus. The risk to the United States of rampant IPR violations is no longer just economic, serious as that is. They are now an increasing threat to the health and safety of American consumers.

Let’s turn to the trade deficit. At the time of the Tiananmen Square massacre in 1989, the U.S. trade deficit with China was $3 billion. In 1995, the U.S. bilateral deficit with China was about $20 billion. Ten years later, last year, it was ten times that amount, $202 billion. That meant that China accounted for 28 percent—the largest portion of any nation—of America’s 2005 trade deficit of $716.7 billion.
The problem is accelerating as the gap with China continues to grow dramatically. Last Thursday, the Commerce Department said the June trade deficit with China was $19.7 billion, up from $17.7 billion the month before. We sold $4.3 billion of stuff to China in June; China sold $24.1 billion of stuff to us.

Well, so what, some say. Why should this matter?

America’s overall trade deficit requires that we get foreigners to finance the difference between our exports and imports. Foreigners do so either by loaning us the money or by investing in the U.S. Or we can also pay for our deficit by selling American-owned properties held overseas.

So far this big debt run-up has not been painful. That’s because Beijing has decided to loan America the money and at pretty good rates, too.

Some time this year, in fact, China will have accumulated $1 trillion in foreign currency reserves—mainly dollar-denominated securities such as U.S. government and corporate bonds. China has accomplished this in part by buying up the dollars that enter the country to pay for China’s exported goods. The Chinese central bank then uses those dollars to buy U.S. bonds.