Our Presidents Missing Spine

In December China issued an ultimatum to the remaining American manufacturing base. At that time China issued new rules to American companies that sell to the Chinese government.

The new rule will require these companies to transfer all of their research, development and patents to China as a condition of selling goods and services there.

Many of the impacted American trade groups joined together and sent a letter to several US government officials in protest.

Here are some excerpts from these letters:

"Of most immediate concern are new rules issued by the Chinese government in November to establish a national catalogue of products to receive significant preferences for government procurement. Among the criteria for eligibility for the catalogue is that the products contain intellectual property that is developed and owned in China and that any associated trademarks are originally registered in China. This represents an unprecedented use of domestic intellectual property as a market-access condition and makes it nearly impossible for the products of American companies to qualify unless they are prepared to establish Chinese brands and transfer their research and development of new products to China.


We respectfully request that your agencies make this issue in particular a strategic priority in your bilateral economic engagement with China; develop, in consultation with the business community and like-minded foreign governments, a strong, fully coordinated response to the Chinese government; and raise this issue with your Chinese counterparts in all appropriate unilateral and bilateral settings and forums." - US Trade groups

In response the White House has taken the following action as reported in the Wall Street Journal.

"In an unusually broad response, U.S. officials from several government agencies have approached the Chinese to relay concern over the proposed rules, according to people familiar with the situation. "We are expressing our serious concerns with all appropriate counterparts in the Chinese government," said Carol Guthrie, a spokeswoman for the U.S. Trade Representative's office."

It never occurred to the Obama administration to respond in kind. With the current trade imbalance favoring the Chinese, that would have gotten their attention.

Instead Obama is expressing his "concern".

Last September Obama got the G-20 members to agree to a Paper Tiger communique protesting Chinese business practices.

All talk with no bite.

It could be that Obama is afraid of getting China angry since they are financing his dangerous deficits. They already dumped some U.S. Treasury Bonds a couple months ago just to let Obama know who is in control.

When they do this, it raises the interest rates the US pays to them for financing our deficits.

With China maintaining a false currency they can keep the exchange rate where it is, and not impact the trade imbalance. It has not wanted to diminish the value of the dollar relative to the yuan because that would raise the prices of Chinese goods to Americans and reduce the prices of U.S. goods to the Chinese.

"There is little chance that China will dump the dollar while America still has lots of industry and research and development left that China wants to steal. If it were to crash the dollar, it would cause investment in the U.S. manufacturing sector to come roaring back, which would wreck its plans. The U.S. should, however, fear the Chinese government's threats to bring about a dollar collapse in the future." - Howard Richman

We are currently losing our blue collar manufacturing base to China. With Obama refusing to impose a trade balance between the two countries as is allowed through the World Trade Organization, we will soon lose our good paying white collar research and development jobs as well.

"We could impose a tariff on Chinese products in proportion to the trade deficit. When the U.S. trade deficit with China goes up, the tariff rate goes up; when the trade deficit goes down, the tariff rate goes down. When trade reaches approximate balance, the tariff disappears. If the Chinese government continues to exclude American products from its markets, it would be excluding Chinese products from American markets." - a/t

China is fighting a trade war with the US, and just like the War on Terror, Obama's lack of a spine does not bode well for us winning.