The voices of protectionism in the US are getting shriller. Particularly the US. But what they are missing is that the US is now symbiotically linked to China, and vice versa.
The US needs Chinese cash to fund its deficit, and Chinese investment funds to help buoy stock prices, and cheap Chinese products to keep inflation down.
Many of the serious captains of US industry are said to get it, but the power of the Republican Party is such that they are not willing to speak out about it. Meanwhile, in China debates on policy in general are becoming more and more open. A complete flip in roles in taking place here, which reflects the dynamism of China and the failure of the Bush administration to recognise reality in any of a hundred ways.
The future is not mutual protectionism, but the realization of mutual dependency. China is ahead in the awareness race. The US needs to catch up.
I now see that at least one US CEO has come out and said what needs to be said. This from today’s FT:
The head of Caterpillar on Wednesday warned that deteriorating trade relations between the US and China could plunge the global economy into recession and called on Congress to back away from protectionist measures.
Good for him.