Regarding China and economy. It isn’t outsourcing that’s the risk, but rather Chinese toys. If the firm is Chinese, and the production is Chinese, then the money flows only one way. Into China.
Actually, you’re completely in error there. The Chinese get paid in dollars for their exports to the US. Where do these dollars go? Dollars are useless in China, so the money can only go abroad. Part of them get diverted to purchases of oil, which is traded in petrodollars, but that still leaves a huge chunk of change. That leftover cash has predominantly gone… back to America, to Chinese puchases of US Treasury notes.
How do you think America finances its budget deficits? The Chinese have had no choice but to do exactly that.
And if you think the Chinese are free to pull the cash out, think again. The collapse of the US financial system would mean the collapse of China. But even if that would happen, the US has the right to freeze foreign assets. (That, more than anything, is a guarantee that there will be peace between China and the US).
If you don’t think a freeze would never happen, think again. The US still holds, IIRC, some quarter of a trillion dollars in Iranian cash in its treasury, stemming from the days of the American embassy hostage crisis of 1978-80 (the US Treasury dutifully pays interest on the money, but refuses to let Iranians have it, until all the issues and claims from the embassy takeover are resolved. That’s not likely to happen, though there was some talk about it when Khatami was in power).
Information-based economy? Who needs it when they can undermine you with mass-produced, slave-labor made fluffy teddy bears?
A Finnish friend once described a recent purchase of some electronic gadget he needed at work, and marvelled at the power of globalization when this gadget came by the way of the Philippines. When I asked how did he find this gadget, he mentioned that it was through a website, which turned out to be maintained by Americans. When I asked how he paid for it, he mentioned it was paid through a credit card… maintained by American financial institutions.
So there you have it: Americans never even had to deal with the manufacturing, or the shipping of the product. The only thing they controlled was the marketing and financial information. That’s a pretty good chunk of change for merely providing information. (Keep in mind that financial services are part of the information industry).
How’s the trade difference between China and the US doing these days? Still horribly large?
Again, the US deficit in regards to trade in China is really an irrelevant factor if the Chinese have no choice but to invest the money back in the US. You should read up on the significance of globalized trade, before venturing statements on its feasibilty.