(To listen to Peter Goodman’s entire talk, click on Listen to the Story.)
Peter Goodman came to speak to the Louisville Committee on Foreign Relations. Goodman was previously The Washington Post’s Shanghai correspondent. The program was organized by Indiana University’s Research Center for Chinese Politics and Business.
Goodman summed up the economic relationship between the U.S. and China.
“We buy an extraordinary amount of stuff from China,” Goodman says. “China takes the dollars that we send over for the stuff that they send us. And they send then back to us by buying up our government debt, and that keeps our interest rates low and that allows us to keep going to the mall to buy up more Chinese goods. And when we do that, we keep a lot of people working in China who would not otherwise have jobs.”
But Goodman says this model is not stable and that China and the U.S. both need to deal with some serious problems to avert future economic crises.
“We’ve got to save more. We’ve got to invest in our own productive economy,” he says. “And China’s got to figure out a way to consume more and not depend so much on exports or making money available to developers who are building buildings that will one day be empty. We have to worry about overcapacity.”
He says while press reports on public statements by each government about tariffs may seem like gripes from one country, most statements are actually aimed at influencing the actions of their own domestic industries. Goodman says Americans need to understand this and change their attitudes about how to achieve economic growth.
“We have to lose the idea that there’s something unacceptable about having American workers go to work in the United States at companies that are sitting in the United States with the profits ultimately going to a Chinese company, or some other foreign, nationally owned company,” he says.
According to the U.S.-China Business Council Kentucky’s exports to China totaled $604 billion in 2008, making it Kentucky’s ninth largest export market. The group also reports that in 2008 Indiana had $930 worth of exports to China, making it the state’s sixth largest export market. Both states top exports include chemicals, machinery, and computers and electronics.