Am I too soft on China?

I do get that criticism from some of my mates and mate-ettes... That I seem to be an apologist for China.
All I'd say about this is that I write in defense of China because (1) it's not as bad as people make out and (2) it's on "our side" when it comes to the big issue of today: the battle between Islam and The Rest.
For example, in a recent post on one of my favourite sites, Blazing Cat Fur, the link was to a site by an "Binks".  I found the post by Binks so ignorant that I had to respond and I did so here.
Then, I came across the SCMP article below. For those that don't want to read it all, here's the guts:

• The amount of US Treasuries owned by China: 7.5%
• The amount of US consumption provided by China: 2.7%

In other words, the whole scary thing of China controlling US debt and swamping consumers with "Made in China" products is just so much rubbish.

Big bad China? US crying wolf

Despite the political posturing, Americans still hold most of their country's debt, and still make most of the profit off everything that's sold there

Kevin Rafferty Updated on Jan 26, 2012

Here is a simple two-question quiz for the start of the Year of the Dragon. Sorry, these are not trivia - the world economic mess is too serious - but important questions whose answers are clearly not understood by politicians, particularly in the US, given their posturing. The questions are: how much is the US dependent on China's goodwill in buying US treasuries to pay for American profligacy? And how much do spendthrift Americans rely on China to feed their greedy habit for cheap consumer goods? Please give percentage figures. If you were to ask the average American, and probably the average world-aware Chinese, you would probably get a high number - up to 50 per cent, especially for consumer purchases, surely not below 20 per cent. Try the questions at a family get-together to mark the new year. The correct answers are so low as to make you blink. China, including Hong Kong, holds about 7.5 per cent of US Treasuries totalling US$14 trillion, according to calculations based on US Treasury reports from late 2010. China's share of US consumption expenditure is just 2.7 per cent based on "Made in China" imports, and the true figure is a paltry 1.2 per cent, according to recent research done by economists at the Federal Reserve Bank of San Francisco. These figures should make politicians and opinion-makers think hard about the implications not only for policy, but also for the way they approach economic relationships. The lessons are that they need to think more, and be more careful about slinging mud about unfair trade practices or demanding protection. In fact, 42.2 per cent of US Treasuries are held by American institutions and individuals, 17.9 per cent by the Social Security Trust Fund and other slices of 6 per cent and 2.1 per cent by the US Civil Service Retirement Fund and US Military Retirement Fund. This means that almost 70 per cent of American debt is held by Americans. "We depend far less on the kindness of strangers than you might imagine if you listen to the intertubes," says Barry Ritholtz in his blog the Big Picture. China's big holding reflects both the fact that the US dollar is still the world's pre-eminent reserve currency, and the Faustian bargain struck between the two countries as China geared up its exporting machine and American consumers welcomed a surfeit of its goods. But even when it comes to dressing and amusing Americans, the US is a long way from having sold out the family store to China. Dr Galina Hale and Dr Bart Hobijn of the San Francisco Fed, who write for the bank'sFRBSF Economic Letter, say: "Although globalisation is widely recognised these days, the US economy remains relatively closed. The vast majority of goods and services sold in the United States is produced here. In 2010, imports were about 16 per cent of US gross domestic product. Imports from China amounted to 2.5 per cent of GDP." They analyse the figures in terms of US personal-consumption expenditures and found that in 2010, 88.5 per cent of US spending was on items made in the United States, leaving a foreign share of 11.5 per cent, including 2.7 per cent for China. Authors Hale and Hobijn have another important service to render in their research. They point out that: "If a pair of sneakers made in China costs US$70 in the United States, not all of that retail price goes to the Chinese manufacturer. In fact, the bulk of the retail price pays for transportation of the sneakers into the United States, rent for the store where they are sold, profits for the shareholders of the US retailer, and the cost of marketing the sneakers. These costs include the salaries, wages and benefits paid to the US workers and managers who staff these operations." Their analysis of the costs show that of the 11.5 per cent of US consumer spending on goods and services, 7.3 per cent is the import cost and the other 4.2 per cent is for US activities. But they add that in the case of imports from China, the US share is much greater: the true cost of the imported goods from China is not 2.7 per cent, but 1.2 per cent - since the rest of the price goes into US pockets. "On average, of every dollar spent on an item labelled "Made in China", 55 cents go for services produced in the United States," Hale and Hobijn write. The authors say that this is because retail and wholesale margins are higher on consumer electronics and clothing than on other items. But it is also because many of the imported goods are produced in factories in China at the direct behest of companies like Wal-Mart and Apple, and the Americans have used their muscle to keep labour costs at rock bottom. There are complex moral issues here about whether big US retailers should pay "slave wages" in China and other poorer countries, or raise wages and cut margins or raise prices to continue domestic production. But the intimate connection between powerful Americans and China's export policy shows the hypocrisy of political demands for protection to keep the Chinese intruders out. I am tempted to revise the old saying and claim that there are lies, damned lies and politics (not statistics as in the original).