EUROPE HAS A BIGGER TRADE DEFICIT WITH CHINA THAN THE USA

• YOU KNOW ALL THAT CONVENTIONAL WISDOM (CW) THAT SAYS THAT THE SO-CALLED US TRADE DEFICIT WITH CHINA IS WHY OUR DOLLAR IS GETTING WEAKER, AND THAT IT'S A THREAT TO OUR SECURITY AND PROSPERITY?

• WELL. THAT CW IS BS.

• EUROPE'S CURRENCY - THE EURO - IS "STRONGER" THAN THE DOLLAR RIGHT NOW, AND GUESS WHAT????????? THEY HAVE A BIGGER TRADE DEFICIT WITH CHINA THAN WE DO! (AND THEY ARE JUST AS DEPENDENT ON IMPORTS OF ENERGY AS WE ARE, TOO!)

• SO DON'T FOR THE CW/BS! (MORE ON THE FALLACY OF TRADE DEFICITS HERE. AND HERE AND HERE.)

• CURRENCY VALUATION IS A VERY COMPLEX THING WHICH DEPENDS OF SEVERAL IF NOT DOZENS OF FACTORS. THE POPULIST NOTION THAT WE NEED TRADE BARRIERS AND A STRONG CURRENCY IS WRONG.

HERE ARE THE FACTS OF EURO-CHINA TRADE: STRAITS TIMES:

CHINA yesterday pledged to do more to expand imports from Europe and give market forces more play over its currency during a tense one-day summit with the European Union.

Addressing EU criticisms over its ballooning trade deficit with China, which the bloc blames mainly on the yuan's weakness against the euro, Chinese Premier Wen Jiabao told the summit participants that Beijing did not seek the lopsided trade nor was it solely responsible for the currency situation.

'In China's open market, every trading partner is treated equally,' said Mr Wen, who along with other Chinese leaders and officials vowed to continue dialogue with their European counterparts to resolve the currency spat.

However, the Chinese Premier also told the audience of European and Chinese business leaders attending the summit that China would hold firm to its policy of reforming the yuan gradually.

'China will continue to reform the RMB exchange rate regime in a gradual, proactive and manageable manner,' he said, while insisting the Chinese currency was not the only reason for their trade dispute.

He added: 'I believe that the main cause of the rise of the euro is the big fall in the value of the US dollar.'

... EU trade officials have lately become as vocal as their American counterparts in criticising what they say is a significantly undervalued yuan.

The trade deficit of the EU with China is likely to reach a whopping 160 billion euros (S$341 billion) this year, while the United States' trade deficit with China was US$232.5 billion (S$336 billion) last year.

The 27-member EU bloc is China's largest trading partner.

• THE WEAKER DOLLAR HURTS THE EU AND MORE THAN IT HURTS US.

• YOU WONT HEAR THAT FROM THE BDS-AFFLICTED LEFTISTS IN THE MSM - THEY WANT TO USE THE WEAK DOLLAR TO BASH BUSH AND THE GOP.

• ESPECIALLY NOW THAT OUR VICTORY IN IRAQ IS MORE OBVIOUS, AND IT'S WINTER - AS A RESULT, THEY CAN'T GO NEGATIVE EVERY DAY AND EVERY NIGHT WITH DEFEATISM AND GLOBAL WARMING FEAR-MONGERING.

• HENCE THEIR EMPHASIS OF THE WEAK DOLLAR AND THE WEAK HOUSING MARKET AND - THEY HOPE - A WEAK CHRISTMAS RETAIL PERIOD.

DON'T FALL FOR IT.