Gross's discussion of the massive overseas operations by "US corporations" whereing both the producers and the consumers are in the same foreign country - China being the focus of this arrangement - reminded me of a familiar old model: colonialism.

When the European countries colonized various African and Asian countries, it was not the government but rather stock companies (corporations) that had the vested interest in these colonies. It may have worked for long periods then because the European nations were much more militarily powerful than the client states. When we consider our current relationship with China, it isn't obvious that this military advantage is as great (we can't after all, seem to subdue a cohort in Afghanistan, where the big sport is playing a version of polo with a headless sheep, and the primary transport seems to be mules) and we should anticipate that the Chinese will not let us get away with it for long.

Incidentally, the reason that US corporations is in quotes above is that although they are nominally chartered in this country, the owners can be anywhere in the world - including China of course. It might be that the Chinese will take the reasonable and peaceful tack and just buy control of those companies and re-charter them in China.

Considering our trade deficit with China, I'm not sure how apt the colonialization comparison is.

China doesn't really have anything to lose in essentially selling a huge pool of cheap labor to U.S. firms, especially since it's not a permanent export (just an export of the results of that labor), and given their government's apparent regard for the value of an individual human life they're unlikely to take issue with any concievable degree of exploitation of the workers in the deal.

Probably the only thing that'll really draw the ire of the Chinese is if we manage to debase our currency to a point where the trade surplus (on their end) that's priced in that currency loses significant value and/or forces them to decouple their own currency from ours in order to aquire materials that they need to import from anyone other than us.

As for the military angle, that hasn't changed significantly since MacArthur in that we lack the numbers to realistically occupy their land and they lack the ability to get sufficient conventional force across the ocean to be effective against us. The only possibility for either side to produce a lasting result would be through nuclear annihilation, but the retaliation either way would be unavoidable and crippling in its own right.

The purpose of colonization (in the good old days) was economic exploitation - where exploitation merely means taking advantage of the difference in the economic systems of the two countries. Putting military pressure on the colony was really a last resort in most cases since it was costly and had long-lasting and unpleasant after effects.

That's true, but the colonies were generally used as sources of raw materials and to a lesser extent expanded markets for finished goods with a net flow of wealth overall into the colonial power and out of the colony.

In the current relationship between the U.S. and China, we're buying their finished goods much more than they buy ours (even our corporations which make good money in China are either exporting goods manufactured there or selling consumables like food which are more locally supplied than exported from the USA) and most of what flow of raw materials (largely steel in recent years, although China get a lot of that from Australia and other places as well) has been westbound across the Pacific since China's most abundant natural resource is coal which is something which we have more than enough of for our own needs as well, and the net flow of wealth is from the U.S. to China as well.

In an economic sense it's possibly arguable that we've made ourselves more a colony of China than we've mad them a colony of ours. Personally, I'd say our two economies have become fairly codependent and if the relationship were suffered both would suffer, although the current trade deficit/surplus balance might indicate that it'd hurt them more than it would us.