While most Americans fixate on the nation's enormous budget deficit, the U.S. trade deficit rose a fantastic 25.4 percent during last year.
Actually, we aren't doing all that badly. There are only two real trouble spots - Japan and China.Nearly two-thirds of the deficit is with those two countries, the most protectionist in the world. But they present very different problems.
Our deficit with Japan is an old one on which we are making little progress and which we have little hope of resolving soon. Our deficit with China is new and is growing much faster.
The Japanese problem is no longer as serious as it once was. Primarily an exporter of high-tech products, Japan devastated our industry for years. But it is no longer an unbeatable threat.
U.S. efficiency and technology are catching up - in autos, computers and electronics. The Japanese now have their own problems. They will remain a formidable presence in our market, but not more than that.
China's exports to us can't be as easily matched. They are primarily low-tech products whose costs we can't hope to beat.
Unless we shut them out, their volume is bound to swell, raising the trade deficit still higher.
The answer, of course, is to crack into both the Japanese and Chinese markets to balance their exports to us with ours to them.
The Japanese, unfortunately, lack the appropriate appetite. Japan is the only rich country in the world whose people willingly endure a lower standard of living to protect their domestic industry.
The Chinese problem is quite different. The appetite there for American goods of all kinds is extraordinary. But we have plenty of Western competitors, and the Chinese are particularly difficult customers.
The government really wants not the products but the technology to produce its own versions. It is less interested, for instance, in foreign auto plants than in foreigners helping to build a Chinese auto industry.
And while pressing hard for technology transfer, the Chinese also are stealing as much as they can, especially in computer software and entertainment products.
This reflects one of the biggest problems in resolving our trade problems with China: Few of the deals the government agrees to are enforceable because Beijing doesn't fully control the provinces, or the large private economy the army has built.
China is a more disorderly society than it likes to admit, never mind the Communist Party. In fact, disorder has been the rule in Chinese history.
As well, while China's appetite for Western goods is very great, most of its people are very poor. It will take a long time for them to have the money to buy enough U.S. products to offset the river of cheap goods they produce at the world's lowest prices.
So while we should continue to lean on Asia's two economic giants, we should look more closely in another direction: the rest of Asia. There's quite a bit of it.
South Korea, Taiwan, Singapore and especially giant Indonesia amount to a substantial market.
All four are growing rapidly; none has the political power or cultural insulation of either Japan or China.
To be sure, Japanese investment in Asia vastly exceeds our own. But that can be matched. Indeed, it already is happening, though too slowly. For too long, U.S. business has paid more attention to Europe.
They want not only an American military presence, but a financial one, too. They are happy to trade, though their markets will require considerable opening.
That's where the near-term cure for the U.S. trade deficit lies - with the smaller nations of Asia.