It just keeps rolling along. "China Inc." keeps beating it's own trade records. It posted a trade surplus of $24.97 billion for August, up from $18.8 billion a year earlier, the customs administration said today, according to CNBC. That's not all, China just passed Canada as our number one trading partner, which although not unexpected, is just another example of the export steam roller that shows no signs of slowing down. All this despite numerous product safety recalls.

We are buying Chinese products at an ever increasing rate. It should also be noted that they are buying our goods and services at an ever increasing rate too. The problem is that they are getting the better end of the deal for now and the gap between imports and exports is increasing. When I wrote Stop blaming China - partners win, whiners lose, I addressed some of these issues, and readers added many more. Some categorized the situation as a Chinese trade war but I take exception to this. I think we are facing very strong Chinese competition and the question is are we prepared?

Our trade deficit is only part of the problem. While China is creaming us with very low labor rates and worse environmental, safety, and legal (piracy) issues, all of which need to improve to level the playing field, there are other issues that we should fear more. That is our failure to compete in producing math, science, and engineering graduates or even having a plan to stimulate improving our graduate rates in these areas. If we do not remain strong in these areas we will be exporting more and more engineering jobs, and worse, the things China imports now might slow down drastically. Many of the things China manufactures now are designed and engineered in the United States. Nothing guarantees this situation will remain as is. It is all very fluid and will become more so. We face the same dilemma with regards to India and eastern Europe.