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Gordon Chang: "The Chinese have a right to maintain mercantilist practices. Yet we have every right to counter them."
Howard Richman, 8/16/2011

Writing in the August 7 Forbes Magazine (Obama Can't Say the Word "China"), Gordon Chang points out that President Obama is ignoring one of the primary causes of the US economic malaise. He writes:

“There is no doubt this has been a tumultuous year,” said President Obama on Friday as he began his speech at the Washington Navy Yard by talking about the American economy. “We’ve weathered the Arab Spring’s effect on oil and gas prices, the Japanese earthquake and tsunami’s effect on supply chains, the extraordinary economic uncertainty in Europe. And recently, markets around the globe have taken a bumpy ride.”

Each of the events he mentioned lowered growth in America, yet all of them were marginal and temporary. If we want to start a meaningful conversation on the topic, there is one word he needs to utter: “China.”

He goes on to point out that Washington is doing nothing to counter China's predatory trade practices, even though we have the right to do so:

So China has insisted on accumulating dollars as a direct result of government policies. Apart from violations of their trading obligations, the Chinese have a right to maintain mercantilist practices. Yet we have every right to counter them.

We designed the scaled tariff as a WTO-legal way that countries can counter mercantilism. Its tariff rate would be adjusted quarterly in order to take in half of our trade deficit with each country as government revenue. It's rate would go up as our trade deficit with a country grows and go down as it shrinks. It would not apply at all to countries, such as Canada and Brazil, with whom our trade is in balance or surplus. Thus it would strongly encourage China and the other mercantilist countries to take down their barriers to our products in order to reduce or eliminate our tariff upon their products.

Comment by mark zoppolato, 8/18/2011:

China manipulates markets and currencies to destroy competition and economies,,,!!!!!   It is not playing monopoly ,,it is destroying capitalism.