All the tax cuts or economic stimuli in the world will not help the American economy because the problems facing it are systemic, according to Peter Navarro, economic professor and author “Death by China: Confronting the Dragon — A Global Call to Action.”

Writing in The Los Angeles Times, Navarro says that the real problem is America’s failed trade policies and the current account deficit that are a result of those policies.
Any trade deficit is bad, but the trade deficit with China is especially dangerous.

Excluding petroleum products, China accounts for 70 percent of the nation’s trade deficit in goods.

“This “Chinese import dependence” has led a democratic America to owe the largest communist nation in the world more than $1 trillion, while China holds more than $3 trillion in foreign reserves, most of them in U.S. dollars,” Navarro writes.

China has amassed such a large amount of U.S. currency reserves that the Communist nation could purchase a controlling interest in every major company listed on the Dow Jones Industrial Average.

Each year, America’s trade deficit costs the nation one percent of gross domestic product growth and about one million jobs.

But that isn’t due to free trade. In fact, it’s due to the exact opposite: unfair trade.

“We must puncture the myth that China’s main manufacturing edge is solely its cheap labor. Indeed, while low labor costs are a factor, when you carefully research the biggest source of China’s manufacturing advantage, it is actually a complex array of unfair trade practices, all of which are illegal under free-trade rules,” Navarro writes.

China uses a whole host of illegal subsidies, the piracy of intellectual property, counterfeiting, currency manipulation and the forced transfer of technologies to gain a competitive and unfair advantage on American competitors.

“All of these real economic weapons have led to the shutdown of thousands of American factories and turned millions of American workers into collateral damage, all under the false flag of so-called free trade,” Navarro writes.

“The myth we must expose if we are to ever reverse the job-killing trade deficits we now run with China is the idea that free trade always benefits both countries. That doesn’t hold true if one country cheats on the other. Instead, when a mercantilist China uses unfair trade practices to wage war on our manufacturing base, the American economy is the big loser.”

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