Skip To Content
JEWISH. INDEPENDENT. NONPROFIT.
Back to Opinion

Solving The Chinese Puzzle

Last year, the United States ran a trade deficit of $232 billion with China. The Congress of the United States is enraged and wants China to open up its market to products “made in America.”

The first question to be asked is just how it has happened that China has such a huge trade surplus with the United States. The answer is painfully apparent. It was — and is — due to the policy of American corporations that closed their factories in the U.S. to get their work done in China where there was an inexhaustible supply of very cheap labor.

The finished products were made for sale in America. Hence, the huge U.S. trade deficit with China.

In short, the prime responsibility for the huge trade deficits with China was, and is, in the first instance, the policies of American companies.

What can be done about this?

To begin with, China has promised that it will expand its purchases of U.S. products by $30 billion this year. Just how this will be accomplished has not been spelled out. But one way would be for the Chinese to produce more than originally planned for the American market and to sell that surplus in China and remit the income to the U.S.

The U.S. Secretary of the Treasury, Henry M. Paulson Jr., according to The New York Times, proposes to make more room for U.S, passengers and cargo, granting U.S. financial services access to Chinese customers and clearing way for the sale of energy technologies to China.

In short, the mess in China created by the “outsourcing” practices of American corporations is not likely to be cleared up easily. Solving The Chinese Puzzle

Last year, the United States ran a trade deficit of $232 billion with China. The Congress of the United States is enraged and wants China to open up its market to products “made in America.”

The first question to be asked is just how it has happened that China has such a huge trade surplus with the United States. The answer is painfully apparent. It was — and is — due to the policy of American corporations that closed their factories in the U.S. to get their work done in China where there was an inexhaustible supply of very cheap labor.

The finished products were made for sale in America. Hence, the huge U.S. trade deficit with China.

In short, the prime responsibility for the huge trade deficits with China was, and is, in the first instance, the policies of American companies.

What can be done about this?

To begin with, China has promised that it will expand its purchases of U.S. products by $30 billion this year. Just how this will be accomplished has not been spelled out. But one way would be for the Chinese to produce more than originally planned for the American market and to sell that surplus in China and remit the income to the U.S.

The U.S. Secretary of the Treasury, Henry M. Paulson Jr., according to The New York Times, proposes to make more room for U.S, passengers and cargo, granting U.S. financial services access to Chinese customers and clearing way for the sale of energy technologies to China.

In short, the mess in China created by the “outsourcing” practices of American corporations is not likely to be cleared up easily.

A message from our CEO & publisher Rachel Fishman Feddersen

I hope you appreciated this article. Before you go, I’d like to ask you to please support the Forward’s award-winning, nonprofit journalism during this critical time.

At a time when other newsrooms are closing or cutting back, the Forward has removed its paywall and invested additional resources to report on the ground from Israel and around the U.S. on the impact of the war, rising antisemitism and polarized discourse.

Readers like you make it all possible. Support our work by becoming a Forward Member and connect with our journalism and your community.

—  Rachel Fishman Feddersen, Publisher and CEO

Join our mission to tell the Jewish story fully and fairly.

Republish This Story

Please read before republishing

We’re happy to make this story available to republish for free, unless it originated with JTA, Haaretz or another publication (as indicated on the article) and as long as you follow our guidelines. You must credit the Forward, retain our pixel and preserve our canonical link in Google search.  See our full guidelines for more information, and this guide for detail about canonical URLs.

To republish, copy the HTML by clicking on the yellow button to the right; it includes our tracking pixel, all paragraph styles and hyperlinks, the author byline and credit to the Forward. It does not include images; to avoid copyright violations, you must add them manually, following our guidelines. Please email us at [email protected], subject line “republish,” with any questions or to let us know what stories you’re picking up.

We don't support Internet Explorer

Please use Chrome, Safari, Firefox, or Edge to view this site.