the US data likely also understates US exports to china, as some exports to Hk are likely then onsold to China.

To my extreme surprise, the results came out the exact opposite! We only looked at January through April data for 2008, but, for that period the US reported 98.6B in imports from China and 23.7B in exports to China, while China reported 74.3B in exports to the US and 28.0B in imports from the US. In other words, China reported a trade surplus 28.6B SMALLER than the US did. This pattern is evident in each individual month, so it doesn’t look like any one off factor. Both the US and China report bilateral data individually with Hong Kong, but even if you aggregate that in (perhaps you could argue some trade gets confused as to whether it originated from China or HK), this doens’t change things much.

Of course you might ask whether there are definitional reasons, or perhaps differenes in exchange rate at time of leaving source and arriving at destination, etc. However some other interesting data:

The China-Canada data shows the same result. China underreports its bilateral surplus relative to Canada reporting its deficit (for the Jan-April period the numbers are 2.0B vs 9.4B). This is notable since China and Canada are about the same distance away as China and the US (if wanting to isolate transportation issues). However if one compares the bilateral trade data out of Korea and Taiwan to the US bilateral data, they are both very close to in-line. This suggests that the distance isn’t much of a factor, and to some extent neither is seasonality (though would be best to compile a few years’ data to verify this).

Also, we took a look at China vs Korea bilateral data. In this case Korea has a trade surplus with China and neither country is in North America/part of NAFTA. But we still see the same effect, though in this case China reports a bigger trade deficit with Korea than Korea reports a surplus with China.

In other words, preliminarily it looks like China is systematically underreporting its trade balance with trading partners. Further study is warranted.

I agree too with your conclusion: our present game is interdependance

I also have noticed Godfree response (24):

“The Chinese…..play the long game. Often VERY long”

Actually it isn’t. Monetary collapse in the Roman Empire happened as a result of general economic collapse rather than the case.

The case of Germany in the 1930′s is rather more interesting. The Weimar government *didn’t* collapse because of hyperinflation. Hyperinflation in Germany happened in 1923, and by the late 1920′s, the government had successfully fixed that. What caused the government in Germany to collapse was the contraction in the world after 1929, and that the way that was fixed in both Germany and the United States was massive public works projects.

DC: Too bad we have a Federal Reserve Chairman who understands “absolutely nothing” about a “sound money” monetary regime in world history.

You need to read Bernanke’s works on the causes of the Great Depression. He might be wrong, but he has thought a lot about it. One should point out that if he is right and you are wrong, then the policies you advocate would be quite disastrous.

I don’t think that there is currently a conscious goal or desire by China to reach “global supremacy.” There is a desire for China to be a great power, but there isn’t any desire that I can see for China to acquire the global supremacy that the United States has.

China is interested in wealth and power for nationalistic reasons. This puts limits on China’s ambitions, since there isn’t that much desire to make the world look like China. I don’t think that there are that any Chinese who think that the Chinese method of government is universally applicable to places outside of China.

By contrast, the United States is interested in wealth and power for universal reasons, and the American political and economic leadership truly believes that the world would be a better place, if the nations of the world look more like the United States. This means that the US has to be constantly intervening in the affairs of other nations.

Personally, I think it is very unlikely that China will ever have the type of global supremacy that the United States has now for two reasons.

1) Even in the most optimistic scenario, China is not going to be a developed nation until at least 2050, and perhaps for quite a bit longer than that. Several decades is enough time for several radical reshapings of world history.

2) For China to be the global hegemon, it means not only that China has to rise, but that a lot of other nations have to sink, and coming up with a scenario in which China rises, but the other major powers in Asia such as India or Russia don’t also rise, is very difficult.

One thing that Beijing realizes is that if the US self-destructs, it will take China down with it.