USA could take the factories from China and relocate them to Vietnam, India, Pakistan, Bangladesh, Indonesia, Mexico, Egypt, Turkey and Brazil. These countries are not as low cost as China. But they could supply us with $10 shirts if not $5 shirts. It would take a concerted effort by US policymakers to accomplish that.
Huh? If China dumps its $ holdings, our money becomes worth less EVERYWHERE. Chinese shirts won’t be $5 anymore, they’ll be $10. So your hypothetical Vietnamese shirt won’t be $10 it will be $20. BTW, the US doesn’t own those Chinese factories anyway, they are owned by Chinese firms or government cooperatives. Wal-Mart et al just buy finished goods from them.
It is nice to think that China “needs” the US, and they certainly like selling us stuff at this moment in time. However there are lots of other markets in the world and they are growing every day. They might not buy as much as we do today, but someday they will. We need China to buy our IOUs a lot more than they need us to buy their Hello Kitty backpacks and LCD TVs now. We need to start producing goods for export again here at home so that we can even the playing field a bit.
