Did the United States really give China $309 billion this year? Some conservatives think so.
Now, it is certainly true, as conservatives regularly point out, that China is no “people’s republic.” According to the U.S. State Department’s 2021 report on human rights practices in China: “The People’s Republic of China is an authoritarian state in which the Chinese Communist Party is the paramount authority,” and “government officials and the security services often committed human rights abuses with impunity.” Government crimes and human rights violations include:
- arbitrary detention and imprisonment
- arbitrary or unlawful killings
- forced disappearances
- harsh and life-threatening prison and detention conditions
- arbitrary interference with privacy, including pervasive and intrusive technical surveillance and monitoring
- serious restrictions on free expression, media, and the internet
- severe restrictions and suppression of religious freedom
- substantial restrictions on freedom of movement
- forced sterilization and coerced abortions
- forced labor
- substantial interference with the freedom of peaceful assembly and freedom of association
- punishment of family members for offenses allegedly committed by an individual
But, writes conservative pundit Terence P. Jeffrey for CNS News, “while China continued to inflict these abuses on its own people, it also continued to run up a massive trade deficit with the United States.”
This is a new low for conservatives: associating trade deficits with government human right’s abuses.
Jeffrey reports that the United States ran a one-year bilateral trade deficit with China of $353.493 billion in 2021. According to him, however, things have recently gotten even worse in U.S.-China trade relations. “In the first nine months of 2021 (when the U.S. was on its way to that twelve-month deficit of $353.493 billion), the U.S. ran a trade deficit of $253.507 billion with China,” but “in the first nine months of this year, the U.S. has run a $309.230 billion trade deficit with China.” That is up about 22 percent from the first nine months of 2021. Therefore, according to Jeffrey, the United States should “pressure China to stop its human rights abuses and eliminate the trade imbalance that in the first nine months of this year has resulted in the American people sending a net of $309 billion to a Communist regime.”
There it is again: the association of trade deficits with government human right’s abuses.
Every month, the U.S. Department of Commerce, through the Census Bureau and the Bureau of Economic Analysis, releases the latest trade deficit numbers. The United States has a trade surplus with some countries, while with others, it has a trade deficit. Because net imports are typically greater than net exports, the United States usually has an overall trade deficit.
There is so much wrong with the idea represented in that report that the American people sent $309 billion to China during the first three quarters of the year simply because of the trade deficit.
First of all, countries and governments don’t trade, that is, engage in international commerce; only people and businesses do. It is simply wrong to talk about the United States trading with China or any other country. Foreign trade occurs when entities in one country engage in commerce with entities in another country. The U.S. government doesn’t buy things from American companies and “trade” them for things that the Chinese government buys from Chinese companies. Even if a business in one country sells a product to the government of another country, that still doesn’t mean that trade is taking place between countries. Trade between entities residing in two different countries should not be regarded as any differently from two entities in the United States engaging in commerce across state or county lines.
Second, trade is not a zero-sum game in which one side gains at the expense of the other. Trade does not result in winners and losers. It is mutually beneficial. Trade is always a win-win situation. No party ever loses anything by trading with another party. And there are no conditions that first have to be met before trade can beneficially take place. In every exchange, both parties give up something they value less for something they value more. Each party to a transaction anticipates a gain from the exchange or it wouldn’t engage in commerce with the other party. For President Trump to say, as he did many times, that “we don’t beat China in trade” is to display his economic ignorance. And yet, many conservatives today have the same mindset.
Because of these two things, then, the trade deficit is a meaningless statistic. That the two parties that engaged in commerce are not located in the same country has no economic significance whatsoever. The concept of the trade deficit is based on collectivism, and efforts to remedy it result in a national industrial policy. Adam Smith (1723–1790) stated it well in The Wealth of Nations back in 1776: “Nothing can be more absurd than the whole doctrine of the balance of trade.”
Free trade, that is, trade not hindered by government oversight, trade agreements, tariffs, or restrictions, is really just commercial freedom. As such, free trade is a human right. It is the attempts by governments to hinder or monitor the commerce of their citizens in order to ensure a balance of trade that are crimes and human rights violations. Conservative protectionists and economic nationalists have things backwards.