Tuesday, October 26, 2010

China and US Fiscal Responsibility

The New York Times today carried "Chinese Telecom Giant in Push for U.S. Market". This article is also similar to the article: "What China Seeks in Chesapeake Shale Deal". In each of these articles, the Times raises the issue of national security: "Some in Congress and the national security establishment fear that Huawei’s close ties to the Chinese military might allow China to tamper with American communications gear." and "China’s $2.2 billion investment Chesapeake Energy involves a potential transfer of technology and intellectual knowledge to Beijing that some people in Washington may find uncomfortable, and that unease could trip up the deal." My concern is that our Congress people do not seem to make the connection that deficit spending is a national security issue.

If our Congress people find the transfer of US technology to Beijing to be potentially uncomfortable, balance the budget. What do our politicians expect China to due with our IOUs? As the Time's articles indicate, China will be buying US assets. And we have given China that money through deficit spending. According to the China Daily, China's holdings of treasury bonds rose slightly to $846.7 billion in July after two months of declines, the US Department of Treasury reported on Thursday."

Balancing the US budget in economic tough times is not simply a question of employment, it is also a national security issue. Time for our politicians to recognize this linkage and to act in a fiscally responsible manner.

PS: Protectionism is not the answer. US corporations buy foreign corporations and Chinese corporations should have the same entitlement.

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