CRI听力:Trade deficit with China a "Made-in-the-USA" problem: US economist

“The US total trade deficit is determined by the US. We’ve run a constant trade deficit in the United States in total since 1975 for every single year. We don’t save enough. We invest much more than we save. Getting China to reduce its bilateral trade deficit by hundreds of billion dollars with the United States is not going to shrink the total deficit at all.”

--Steve Hanke, professor of applied economics at Johns Hopkins University

A US economist has said that America's total trade deficit, and its deficit with China, are "made-in-the-USA" problems and have nothing to do with China.

Container ships wait to be unloaded at the Port of Oakland on Wednesday, March 7, 2018, in Oakland, Calif. The U.S. trade deficit rose in January to the highest level since October 2008. [Photo: AP]

In an exclusive interview with China Radio International, Steve Hanke, professor of applied economics at Johns Hopkins University, also said that to deal with trade disputes with China, the United States should seek legal and commercial means within the framework of the WTO and other international organizations.

Professor Hanke previously served as a Senior Economist on President Ronald Reagan's Council of Economic Advisers in 1981-82.

For more on the trade relations between China and the US, including the recent tariffs move made by the Trump administration, here's the interview between Steve Hanke and our Washington correspondent Liu Kun.

Q: How do you comment on the policy take by the Trump administration against China on trade and intellectual property  disputes?

A: There’re ignorant of international trade arithmetic in the Trump administration. And that’s not been the only administration that has this problem in the United States. The trade deficit is made in the USA trade deficit. It’s not made in China or any foreign country. The US total trade deficit is determined by the US. It has nothing to do with China or Korea or the European Union or anybody else. We’ve run a constant trade deficit in the United States in total since 1975 for every single year. So why I said it; it has nothing to do with foreigners; it’s determined by the US. We don’t save enough. We invest much more than we save. We have government deficits almost every year and those deficiencies between investment and savings determine the level of our total trade deficit. Getting China to reduce its bilateral trade deficit by hundreds of billion dollars with the United States, which is a goal they have, is not going to shrink the total deficit at all. It will have no effect at all. What if China magically would reduce their bilateral surplus with the United States, that surplus will be filled in with a hundred billion dollars by Koreans, Vietnamese, Europeans; so the total pie would be the exactly the same size. 

Q: How do you comment on the Chinese reaction so far?

A: I think it’s very mild, very majored and that might be true today. Let me give you an example from the 1980s. Then the big bilateral trade deficit the US had was Japan. Japan was huge. Sixty percent of total trade deficit the United States had with the rest of the world was for by Japan. We forced them to stop sending Japanese cars to the United States and they agreed to do it. My worry is that China is a huge powerful country and I personally do not think China would allow itself to be pushed around like Japan.

Q: In reality what are the better ways to solve the intellectual property and trade disputes with China for the United States?

A: For one thing I agreed with Chinese point of view that you should use the World Trade Organization as much as you possibly can. That’s one. And you should also use contracts. Many contract provisions can be dealt with through the International Chamber of Commerce, and World Bank Arbitration and things like this. They should go for legal and commercial ways. This is commerce.