Here, Brink Lindsey explains why he doesn’t think Americans should overreact to the trade deficit with China. He says that while some U.S. businesses may have had exaggerated expectations about the potential for doing business in China’s markets, Chinese imports of U.S. products have been growing “very fast.” “We tend to focus on the cost, that imports are clearly a challenge to U.S. businesses that compete against those imports,” Lindsey argues, “but we can’t forget that those imports didn’t just wash up here on American shores unbidden. They came here because people wanted to buy them.”
Take me back a few years to the approach of our trade agreements with China. What was the thinking at the time that we went into those trade agreements? What was the rationale for the trade agreements? What did we expect, and what was the mood here in Washington? Well, let’s go a little bit farther back and look at the whole evolution of China’s system of government, its role in the world economy. Until the late 1970s, China and global capitalism had absolutely nothing to do with each other. China pursued a Maoist, totalitarian, central-planning economic policy and cut itself off almost completely from the outside world.

Starting in the late 1970s, it took a dramatic turn in a market-oriented direction, liberalizing agriculture, liberalizing prices, allowing private investment to go forward and opening itself up to the world economy, participating in the global economy through export industries, welcoming foreign investment.