Ignorant of the simplest facts!

In Macleans's Magazine, August 8, 2011, page 13, Columnist Paul Wells states:

"When (China's) President Hu Jintao was in Ottawa last June, he announced Canada and China had set a goal of doubling bilateral trade volume to $60 billion in five years, by 2015.  But here's the thing.  China's trade with the rest of the world more than doubles every five years. Its trade with the U.S. has more than doubled in recent five-year periods....Harper's (prediction) amounts to a promise to fall no further behind."

These statements are absolutely unbelievable.  Does Paul Wells not understand how pernicious and damaging these statements are?  How they put an upbeat face on a disastrous situation?.  Does he not understand the disservice he is doing to the Canadian people?

Let's get some background.

Balance of Trade in manufactured goods between Country X and all other countries in the world is expressed by professionals in the following way:

Balance of Trade = Exports minus Imports

If Country X exports $100 billion worth of manufactured goods per year, and imports $50 billion worth of manufactured goods, then the Balance of Trade in Manufactured Goods of Country X is a POSITIVE $50 billion per year.

This situation is good for Country X.  The people of Country X have manufacturing employment, and the country benefits from the value-added effect of manufacturing.

But suppose the situation reverses itself due to unwise policies followed by the Country X government, and the situation becomes:

Exports $50 billion per year

Imports $100 billion per year

Balance of trade = exports minus imports = $50 billion minus $100 billion

       = minus $50 billion per year

In other words, now Country X has a NEGATIVE balance of trade in manufactured goods with all foreign countries of $50 billion per year. 

First of all, everyone has to understand that the $50 billion amount is real physical wealth leaving Country X every year.  In time the impoverishing effect of this hemorrhage of wealth will become apparent.

Any intelligent person can see from the above discussion that in relation to trade in manufactured goods we have to know in which direction the goods are going.

We look at

Exports minus Imports

Call to mind your school arithmetic and even algebra if you wish.  There is a great difference between a positive number and a negative number. 

The little bit of arithmetic shown above tells us the NET result of our export/import activity. 

If the NET result is POSITIVE, then Country X is in good shape.

If the NET result is NEGATIVE, then Country X is in bad shape, with real wealth hemorrhaging out of the country to pay other countries to do manufacturing for Country X.  At the same time, there are many unemployed workers in Country X who could be doing that manufacturing, rather than standing in line at unemployment offices and requiring unemployment insurance and welfare payments from the government.

Simply mentioning a "trade volume" is absolutely meaningless.  We have to know the NET result of "Exports minus Imports" to know if we are heading in the right direction.

I suspect that "bilateral trade volume" is calculated in a way that breaks every rule of logic, arithmetic and algebra.

There is some export of manufactured goods from Canada to China.  The value of the goods is a positive number from the standpoint of the ordinary working men and women of Canada.

There is a huge import of goods from China to Canada.  Our stores are filled 90% with goods made in China.  Again from the standpoint of ordinary Canadians, the value of the goods is a disastrous negative number.

Prime Minister Harper is an economist and therefore should know the difference between a positive number and a negative number.  Yet what he is doing is stripping the plus sign or the minus sign as the case may be from the export and import amounts.   The result in arithmetic and algebra is the "magnitude" of the number.  Then Harper and all the bureaucrats and columnists simply add the two magnitudes to get a very attractive number which they try to sell to the populace.

China has announced a policy of becoming self-sufficient in all common manufactured goods by 2020, and extending the policy to include airliners, communications systems, and railroad systems by 2050.

I guarantee that any increase in "bilateral trade volume" is accomplished by an INCREASE IN IMPORTS FROM CHINA, while exports to China at best remain level.

Hilary Clinton gave a speech in January 2011.  She also talked glowingly about trade with China.  She also totally disregarded plus and minus signs and simply added magnitudes.  She doesn't seem to know or care that America's negative balance of trade in manufactured goods with all foreign countries is over $500 billion dollars per year, somewhat over half of that being due to "trade" with China. 

Unfortunately, Canada's negative balance of trade in manufactured goods with all foreign countries is proportionally even worse, at $89 billion dollars per year. 

Hilary Clinton is effectively a lobbyist for China and as such is in conflict of interest with her other job, Secretary of State.

Is Stephen Harper also a cheerleader for China, putting a happy face on Canada's decimated manufacturing sector and disastrous unemployment situation?