September 11, 2003
CHINA'S RMB REVALUATION: A 'SCAPEGOAT' FOR U.S. ECONOMIC PROBLEMS?
KEY FINDINGS
** Critics allege the U.S.
seeks a "scapegoat" in China for its domestic economic problems.
** Chinese papers
prioritize "maintaining a fundamentally stable Renminbi exchange
rate."
** U.S. manufacturing jobs
"will likely continue moving offshore" due to economic realities.
** Washington's supporters
back efforts to end China's "inappropriate exchange rates."
MAJOR THEMES
The U.S. should blame its 'mismanaged economic policy,' not
China-- The "countdown to
the 2004 presidential election" explains why "China, or more
specifically its currency peg, makes a convenient scapegoat." Chinese dailies stressed that China is not
the "principal culprit" for the U.S.' own "shocking wartime
financial deficit and structural unemployment." Hong Kong's independent South China
Morning Post added: "Much of
this criticism makes little sense outside the confines of U.S. domestic
politics." Germany's center-right Frankfurter
Allgemeine said the global economy has "no room for U.S. election
campaign experiments."
Beijing should refuse the U.S.' 'unreasonable' demands-- As the RMB is China's currency, China's
official Youth Reference reasoned the Chinese should "determine how
much it's really worth." Another
Chinese paper warned the world not to "underestimate the Chinese
authorities' determination and capacity to pursue a stable currency." Singapore's pro-government Business Times
backed Beijing, because "governments cannot absolve themselves from
responsibility for fundamentals." A
pro-PRC Hong Kong daily accused the U.S. of seeking to slow down China's
"high-speed" growth and keep it "poor and backward."
The transfer of jobs to China is 'economic in nature'-- "That traditional manufacturing
industries...have begun to move to China is a good example of international
division of labor" according to Indian and Chinese writers. Calcutta's centrist Telegraph said
China "has displaced Japan and other...countries as a low-cost
supplier...in the global supply chain of American companies." A German writer concluded: "China's export successes have little to
do with a cheap Yuan. It is mainly the
labor cost."
Beijing should 'show seriousness in reforming its exchange
system'-- Japanese papers urged
Beijing to "base the exchange rate on a floating rate." Liberal Mainichi noted the
"urgent necessity to allow the Renminbi to convert into other
currencies." Berlin's centrist Der
Tagesspiegel agreed with Japanese writers that "China, too, would
profit from a revaluation," contending that a Renminbi float would
"prevent China from pursuing too reckless an economic policy." Thailand's elite Krungthep Tirakij
criticized all sides, accusing both Japan and China of "manipulating
currency exchange rates for...trade advantage" while saying the U.S.
should "revive its economy by focusing on fundamentals."
EDITOR: Ben Goldberg
EDITOR'S NOTE: This
analysis is based on 25 reports from 7 countries over 7 August - 11 September
2003. Editorial excerpts from each
country are listed from the most recent date.
EAST ASIA
CHINA: “American Election
Campaign Should Not Involve The Renminbi”
Cai Yumin commented in official Communist Party-run international Global
Times (Huanqiu Shibao) (9/5):
"Because the Bush administration’s creation of a shocking, wartime
financial deficit and the structural unemployment issue are very serious
matters, [the administration] has laid blame for these domestic American
economic problems on an intentional devaluation of the renminbi, so that it can
shift people’s attention and simultaneously fight back the Democrats’
accusation of lack of care for lives of the common people. To a certain extent, Bush has been forced by
circumstances to play the ‘renminbi’ card, which is unacceptable.... That Americans have accused us of snatching
their job opportunities is baseless.
That traditional manufacturing industries...have begun to move to China
is a good example of international division of labor. China is not just exporting and not
importing. China imports large numbers
of Boeing aircraft and Ford automobiles every year. China hasn’t complained about Americans snatching
Chinese job opportunities.”
“‘Hot Money’ Speculation: The Chance Of Failure Is Huge”
Zhang Jianping held in official Xinhua Daily Telegraph (Xinhua
Meiri Dianxun) (9/4): "Some
people have exaggerated the issue of renminbi appreciation so much that some
‘hot money’ [international arbitrage funds] is flowing into China. There is a large pot of ‘hot money’ in the
world used for speculation, and once China loosens its policy, that ‘hot money’
will start to flow in. Therefore
maintaining a fundamentally stable renminbi exchange rate should be
stressed. The People’s Bank of China
will further enhance certain tools of monetary policy to offset the increasing
supply of currency caused by ‘hot money.’”
“How Much Is The RMB Really Worth?”
Miao Naichuan declared in Communist Youth League-run Youth
Reference (Qingnian Cankao) (9/3):
“Why has the whole world shown so much concern about the issue of the
RMB’s exchange rate? One must consider
this question within the context that during the past couple of years of
sluggishness in the global economy, only China’s economy has developed
well.... The great trade surplus with
the U.S. allows the U.S. to consider China as the ‘principal culprit.’.... Japan plays a strange role in this
issue.... Its goals are: to shine the
spotlight on China as a scapegoat for the U.S. economy in order to decrease
U.S. pressure on the Japanese yen, and at the same time to pressure the RMB in
order to pass its earlier suffering on to China. Treasury Secretary Snow’s trip to China is
aimed at persuading [the Chinese government] to appreciate the RMB, but many
experts predict that he will not achieve much on this trip. The RMB is after all China’s currency; it is
the Chinese who determine how much it’s really worth.”
“U.S. Blaming Of Yuan Misplaced”
Yan Xizao stated in the official English-language China Daily
(9/3): “What has pushed [Treasury
Secretary] Snow to our doorsteps is a tide of complaints that display a gradual
drain of sensibility in his home country....
It no longer matters how unselfish China was during the 1997 Asian
financial crisis. The very same decision, once acclaimed as heroic, not to
devalue our currency when our neighbors did is now coming under fire. Neither does it seem to matter whether the
economic difficulties of the United States and Japan have their roots in those
countries. China is now on trial. As
reason gives in, an issue that is economic in nature is dressed up in a weighty
political matter. The Chinese economy
cannot afford not to grow. Once the Chinese economic locomotive loses steam, so
does the world's.... For the well-being
of the Chinese and US economies, as well as that of the world, both Snow and
his Chinese counterparts should follow the dictates of reason in their dealings
with the now politically charged topic.”
CHINA: “The U.S. Blames
Economic Recession On China: Media
Exaggerates ‘China Threat’ Theory, Enterprises Promote Patriotism”
Ding Gang and Zhou Xiaojun commented in official Communist
Party-run international Global Times (Huanqiu Shibao) (8/8): “Generally speaking, Chinese-U.S. relations
are in a relatively good phase. The two
sides’ cooperation on political issues like anti-terrorism and the DPRK nuclear
problem is encouraging, but it is difficult to say whether the Chinese-U.S.
trade dispute will unexpectedly create new problems or even impact the two
countries’ overall cooperation.... The
history of Chinese-U.S. relations proves the maxim that ‘cooperation benefits
both and confrontation harms both’.
Escalating a trade problem into a political problem should be strictly
avoided.”
“Don’t Expect Revaluation”
Xin Bei contended in the official English-language China Daily
(8/7): “Though many of the foreign
complaints apparently resulted from either rising protectionism or
misunderstanding of the competitiveness of China’s exports, Chinese authorities
are fully aware that renminbi revaluation expectations are taking shape and
have to be properly addressed....
Overseas observers should therefore not underestimate the Chinese
authorities’ determination and capacity to pursue a stable currency.”
CHINA (HONG KONG & MACAU SARS): "Fewer Industrial Jobs In America? That's Progress"
Jonathan Anderson observed in the independent English-language South
China Morning Post (9/8): "U.S.
and Japanese manufacturing employment, as a share of the non-farm total, fell
by six percentage points between 1993 and this year. To put that figure in human terms, if
manufacturing industries had generated jobs in line with overall employment
growth over the last decade, there would be roughly nine million more workers
employed in the sector today. In other
words, the U.S. and Japan 'lose' nearly one million industrial jobs every year,
and we should not blame political and economic interests for pointing a finger
at China and other low-wage economies.
Or should we? In fact, current
outsourcing fears are grossly overstated.
A detailed look at Asian data suggests the migration of manufacturing
capacity to this part of the world accounts for only a small fraction of the
headline figure. And as any textbook on
economic growth will readily explain, most of the remainder is not really job
'losses' at all, but rather the natural flow of labor from manufacturing into
service sectors, driven by declining demand for manufactured goods at home and
rapid industrial productivity growth....
In fact, this 'loss' has nothing to do with international trade, but
rather with standard economic growth patterns in any economy. A portion of the decline reflects the fact
that consumers tend to spend relatively more on services (travel, catering and
education, for example) and less on manufactured goods as income grows, a trend
that resulted in a cumulative decline of three percentage points in the
manufacturing share of expenditure over the last decade in the U.S. and
Japan. And the rest is due to the very
high growth of nearly 3.5 per cent per annum, compared with productivity growth
of just over 1 per cent in service sectors for the two economies--which has
naturally rerouted labor resources into the service economy."
"The Bizarre World Of East Asian Currencies"
Philip Bowring held in the independent English-language South
China Morning Post (9/8): "East
Asian governments and central bankers are again exhibiting head-in-the-sand
postures towards currency values. In the
mid-1990s, refusal to float or devalue in time was a major cause of the Asian
financial crisis. This time, the posture
could create a crisis in global trade relations. The imbalance between East Asia and the U.S.
has reached grotesque proportions.
Inappropriate exchange rates are beginning to damage Asian economies and
make them hostage to protectionist pressures in the U.S. Tensions are also high over World Trade
Organization issues.... China has two
main arguments for resisting revaluation.
First, it would hurt employment in export industries. Second, it would result in lower profits and
an increase in non-performing loans.
Neither is very convincing....
Unless (trade-oriented economies) change their attitudes to revaluation,
they will end up with growing currency rows between each other, as well as with
the U.S. They all need to stop
accumulating dodgy U.S. debt and acknowledge their own worth. Once, they refused to devalue out of
pride. Now, they refuse to revalue for
the same reason. How bizarre."
"Temporary Sino-U.S. 'Compromise' On Renminbi Exchange
Rate"
Pro-PRC Chinese-language Macau Daily News remarked
(9/5): "U.S. Treasury Secretary
John Snow visited Beijing to raise the issue of renminbi revaluation. After a series of consultations between
Chinese and U.S. officials, the two sides finally reached a temporary
'compromise.' The U.S. seemed to have
accepted the Chinese promise to let its currency return to a free float in the
international market when the time 'matures,' without setting a specific
timetable. This 'compromise' has
temporarily eased international pressure on China to float the renminbi freely
and to revalue it in the short term. At
the same time, China's promise gives U.S. Treasury Secretary Snow something to
report back to the American people....
China's response was not necessarily what Secretary Snow hoped for. However, it should be an acceptable 'win-win'
situation for both sides. Snow also
believed that Chinese leaders are relaxing their control on a currency float
and are preparing for a free float in the financial sector. These can be considered Snow's achievements
from his Beijing visit."
"Easing Pressure On The Yuan"
The independent English-language South China Morning Post
opined (9/5): "U.S. Treasury
Secretary John Snow is just the latest official to bring the message to China
and its Asian neighbors that they must step back and allow their currencies to
trade at values determined by markets, not bureaucrats. Not to do so, the thinking goes, would be to
take unfair advantage in global trade.
China, whose currency trades at around 8.28 yuan to the U.S. dollar, has
borne most of the criticism. Much of
this criticism makes little sense outside the confines of U.S. domestic
politics. American manufacturers' lobby
groups, citing job losses at home, are among the loudest in calling for
redress. Yet many economists believe
that even a revaluation of perhaps 15 per cent will have little effect on
current trends. American manufacturing
and service jobs will likely continue moving offshore, to places like Mexico
and India as well as China, for reasons that include highly competitive labor
costs and rapidly improving quality. Paradoxically, currency volatility would
probably hurt U.S. interests more: a large percentage of China's exports are
produced by U.S. companies which have benefited from the certainty of a fixed
exchange rate, while U.S. consumers would inevitably pay more for imported
goods.... The markets, as well as Mr.
Snow, are indicating fundamental reasons for a change in the currency
arrangements. Now may not be the right
time, but as China is ever more integrated into the world financial system,
such pressures cannot be avoided indefinitely."
"Pressing The Renminbi Revaluation Reflects U.S., Japan And
European Interests"
Pro-PRC Chinese-language Hong Kong Commercial Daily
observed (9/5): "If the U.S., Japan
and western countries succeed in pressing for a renminbi revaluation, even if
they themselves gain nothing or even suffer losses, as long as the Chinese
economy can be mauled heavily and its high-speed economic development can be
slowed down, the interests of the western developed countries, like the U.S.
and Japan, will be matched. A poor and
backward China is what western countries, including the U.S. and Japan, want to
see. It is why the western countries
have always advocated the theory of 'China threat'.... Although the U.S. has an excuse to urge China
to revalue its currency, its attempt and motive are laid bare. There are huge trade deficits between the
U.S. and Japan and the U.S. and Europe.
Since the 80s of last century, the yen has appreciated two times. But how much the trade deficit between the
U.S. and Japan has been reduced?.... An
excuse is an excuse. No cover can cover
up the ulterior motive of the U.S."
"Yuan Snow-job"
The independent English-language Standard contended
(9/1): "A stable exchange rate is
absolutely vital to those outcomes and appeals to China to allow its currency
to float freely or widen the band in which it manages the exchange rate are
likely to fall on deaf ears. That won't
stop Snow from making those appeals. He arrives in Asia armed with letters and
exhortations from US lawmakers, trade unions, and manufacturers' organizations
to put pressure on China and will do so, even though cynics argue he must be
perfectly aware of the fallacy that a higher yuan exchange rate will create
more U.S. jobs.... Even a 25 per cent
appreciation in the yuan would not add a single job in the U.S.... With just two yen out of every 100 spent by
consumers in Japan on Chinese goods and services, it did not require rocket-science
to realize that China was not responsible for deflation in Japan. But then the U.S. economic recovery has so
far failed to budge stubbornly high unemployment, and the countdown to the 2004
presidential election is under way, scapegoats must be found."
Convenient Scapegoat"
The independent English-language Standard editorialized
(8/9): "China's trading partners
are steadily ratcheting-up the rhetoric against the yuan currency peg, which
they say is rigged at an undervalued level to deliver unfair advantages to
mainland exporters. The result, the
critics say, is that along with artificially cheap goods, China is exporting
deflation and unemployment worldwide and throwing the brakes on any global
economic recovery. China policy-makers,
in turn, have remained defiantly determined not to capitulate to the pressure
and this week rallied regional finance ministers to their cause. At their Manila meeting, Association of
Southeast Asian Nation finance ministers supported China's refusal to change
the peg. Read together with latest
economic data out of the U.S. this week, there is a looming danger that what
for the moment is a war of words, could spill over into an East-West trade war
that would serve nobody's interests.
With U.S. Treasury Secretary John Snow in the vanguard, U.S. officials
have launched an attack on the yuan currency peg because that country's labor
unions are demanding they do something about remedying high unemployment. China, or more specifically its currency peg,
makes a convenient scapegoat for other forces that are at work within the U.S.
economy."
JAPAN: "China's
Renminbi: Let The Revaluation Debate
Develop"
Liberal Mainchi opined (9/6): "The issue of revaluing China's renminbi
was a popular topic at the recent ASEAN Finance Minister's meeting in Phuket
over 4-5 September.... China now is second
to Japan in its foreign currency reserves.
Its trade surplus with the U.S. has kept on growing, to the point where
it has overtaken Japan's to become the U.S.' largest trade deficit
partner. While foreign direct investment
has fallen by 21 percent in 2002, the inflows into China has grown by some 10
percent. China's economy has certainly
become a player in the global economy.
That is to say, China has also arrived to the point that its current
commercial relations with the outside world cannot continue. China has joined the WTO, and aggressively
pursued FTA's with foreign countries.
This means liberalization of goods.
But, in its capital markets, just as before, limitations remain
numerous. Most symbolic of this is its
foreign exchange dealings.... The
renminbi's convertability into other currencies remains limited, and there is
almost no dealing in it on the global financial markets. For this reason, currency readjustment is not
occuring efficiently.... Of course, it
is an urgent necessity to allow the renminbi to convert into other
currencies. This is important not just for
global trade, but also for promoting direct investment. These measures would promote the use of the
reminbi as an international currency. It
is not desirable that the currency of a country that is already being called
the "world's factory" be limited to internal use only. If the renminbi did start to be used as an
international currency, it would also contribute to the stability of Asia's
currency system.... Looking in the long
term, the benefits for both China and the world would be large. This consciousness is important.... However, this is not an issue that can be
accomplished through overt pressure.
Using its own experiences, Japan ought to play the role of explaining to
China the benefits of liberalization in foreign exchange markets."
"China Must Be Serious About Reforming Its Currency
System"
Business-oriented Nikkei editorialized (9/5): "In discussions with U.S. Treasury
Secretary Snow, Chinese Prime Minister Wen Jibao declared that 'protecting the
stability of the yuan trading market is in both countries' interests,"
effectively avoiding pressure from both Japan and the U.S. to revalue the
yuan.... To maintain economic
stability, it seems he plans to maintain
the current fixed yuan exchange rate, but we can conclude that he has made clear
his inclination to work towards changing to a floating, non-fixed exchange rate
at some point in the future. Various
foreign countries have made clear to Beijing their belief that the yuan is 'too
cheap' in the exchange market, but there has been no compromise. However, after all, the only way to make all
sides happy is to base the exchange rate on a floating rate, and use market
mechanisms. As China continues to become
one of the world's great economic powers, the time for China to show
seriousness in reforming its exchange system has arrived. Of course, it is to be hoped that China can
implement this floating exchange rate in a stable manner. Confusion in the Chinese economy is, of
course, a minus for the global economy as well.
But, isn't it true that along with the gradual liberalization of China's
capital markets, the rationale for letting the yuan float is being
strengthened?.... Over the past ten
years, as China has maintained a de facto fixed rate against the dollar,
China's industrial competitiveness has greatly strengthened.... Analysts who support a yuan appreciation in
Europe, Japan and the U.S. agree that the yuan is undervalued by between 30-40
percent. From China's standpoint,
imports have boomed since it joined the WTO....
A yuan appreciation could hurt exports, and worsen the employment
environment, and also raises the fear that it could damage state-owned banks
already suffering from a massive bad debt problem.... In order to alleviate these problems, it is
to be hoped China can propose a clear timetable for effective currrency
exchange rate reform. There was a plan
for China to complete this reform at the start of the century, but due to the
Asian economic crisis, it was postponed.
We hope China can take a concrete step forward toward this reform, based
on internal pressure, not just external pressure."
SINGAPORE: "Misaligned
Exchange Rates"
The pro-government Business Times editorialized
(9/11): "Misaligned currency values
are symptomatic of a profound malaise in global economic relationships and as
such, need attention at a global level. Either the groups of senators led by
Democrat Charles Schumer and Republican Lindsey Graham have very short
memories, or they are being irresponsible. The use of the 'exchange rate weapon'
will never provide solutions to fundamental problems inherent in international
economic relations and in the globalization of production.... The problem stems not from exchange rates,
but the structures of the economies that underlie them. Many argue that
exchange rates should be left to the market and that, given freedom from
official controls, rates will adjust to economic fundamentals. This is true
(albeit with time lags), but governments cannot absolve themselves from
responsibility for fundamentals.... It
is not beyond the ability of the world's leading economic powers to come
together and create a framework for rational policy coordination along these
lines. To expect market-determined exchange rates to sort out all the
imbalances on their own is nothing more than a cop out."
THAILAND: “Trying To Do A
Snow Job On APEC Ministers”
The lead editorial in the independent, English-language Nation
read (9/5): “John Snow, the U.S.
treasury secretary, has brought with him a heat wave to the island at a time of
low season monsoon weather. Phuket is
hosting the finance minister’s meeting of the Asia-Pacific Economic Cooperation
forum, and Snow’s agenda is to urge countries in Asia, particularly China, to
move toward embracing a flexible or floating exchange rate regime.... Snow found a strong ally in the Japanese, who
are also keen to see the Chinese renminbi appreciate. Both the U.S. and Japan think China is
intentionally keeping its currency weak at a fixed rate of 8.28 to the U.S.
dollar to undercut exports from other countries. So far Snow has had some assurances from the
Chinese that they will eventually move toward adopting a more flexible exchange
rate regime. But they would not say
when. Under some pressure, China agreed
to show more flexibility in its diplomacy.
But the hard-line stance remains clear that China will only alter its
foreign exchange regime when it deems it appropriate. That is the best Snow can do.”
“China Not Ready To Float Yuan”
Elite, business-oriented Krungthep Turakij said (9/5): “Superficially, the U.S. Treasury Secretary’s
position seems to be based on good principles since he wishes to see a freer
management of Asian exchange rate regimes and monetary policies.... Undeniably, however, (Snow’s) mission in Asia
to pressure Asian nations to open up their economic and financial sectors has a
hidden agenda. The U.S. Treasury
Secretary is facing pressure from American entrepreneurs who are funding
sources for political parties in the Congress, all of whom want Snow to use his
clout as the finance minister of the world superpower to deal with China and
Japan, both of whom have been manipulating currency exchange rates for their
trade advantage.... Nevertheless, we
think Chinese exporters’ edge over their U.S. counterparts--a result of China’s
fixed exchange rate regime--is not the main factor contributing to problems
facing American firms. Rather, it’s
President Bush’s mismanaged economic policy that has led to the country’s worst
budget deficit in history. Instead of blaming
China for undermining the U.S. economy by keeping the Yuan lower than the U.S.
dollar and pressuring China to adopt a flexible exchange rate regime, we want
the U.S. government to revive its economy by focusing on fundamentals such as
increasing competitiveness in the export sector in order to decrease trade
deficits or cutting down defense spending.”
SOUTH ASIA
INDIA: "A Remarkable
Equilibrium"
The pro-economic-reform Economic Times declared (9/9): "Asian countries have seriously
undervalued currencies that need to appreciate, says U.S. Treasury secretary
John Snow. His main target of attack is not India, but China, which has long
followed a fixed exchange rate policy (8.28 yuan to the dollar). Despite huge
trade surpluses and FDI inflows, China has stuck to that parity, and so have
small countries like Singapore and Hong Kong.... Snow's demand for Asian currency appreciation
is, of course, self serving: he is worried that US manufacturing cannot compete
with Asian producers enjoying what he regards as unfairly low exchange
rates.... If the US is bent on buying
more than it sells, others will necessarily sell more than they buy. The
interesting question is not why Asian currencies have not appreciated more, but
why the dollar has not fallen more....
Arguably a dollar standard is better than no standard at all. But if in
this context the dollar does not need to fall further, is there any urgent need
for Asians to drive up their currencies? Maybe it cannot last, but for now it
seems, remarkably, that record deficits in the US and record surpluses in Asia
represent an equilibrium of sorts."
"Currency Conundrums"
Jairam Ramesh wrote in the Calcutta-based centrist Telegraph
(8/7): "The Chinese currency is
under assault--both verbal and speculative.
The U.S.' treasury secretary, John Snow, the U.S. Federal Reserve Bank
chairman, Alan Greenspan, and a couple of American senators have called for a
revaluation of the yuan/renminbi....
China has a huge trade surplus with the U.S. This has happened more because China has
displaced Japan and other east Asian countries as a low-cost supplier and
because it has embedded itself in the global supply chain of American
companies.... As the dollar has fallen
in relation to the Euro, China's competitiveness in European markets also has
increased. As the dollar weakens, China
gains. What will the Chinese do?.... As China's commitments to the WTO begin to
unfold themselves more fully, import demand will also increase. This is already beginning to happen and China
actually ran a small trade deficit in the first quarter of 2003. Regional monetary arrangements could also get
a boost as east Asian countries think of alternatives to investing in
low-yielding American treasury bonds.
However, the more China grows, the more will be the pressure for a
revaluation."
EUROPE
GERMANY: "Scapegoat
China"
Center-right Frankfurter Allgemeine noted (9/3): "Treasury Secretary Snow has found a new
scapegoat for the losses in manufacturing business.... No other country has such a big trade surplus
with the United States than China...and Treasury Secretary Snow is now pressing
Beijing to revaluate the Chinese Yuan that has been pegged to the dollar since
1994. But the Chinese government
rightfully shows Snow a cold shoulder, since China's export successes have
little to do with a cheap Yuan. It is
manly the labor cost that have made 'Made in China' so successful.... A revaluation by ten or even 50 percent would
not change this competition advantage much....
In the long run, there is no way around giving up the Yuan's pegging to
the dollar, but a quick release would create problems for the country: the
banking system is in bad shape, deflation is a great danger, and rural
unemployment is on the rise. In this
situation, there is no room for U.S. election campaign experiments."
"Strong Chinese"
Joerg Eigendorf remarked in centrist Der Tagesspiegel of
Berlin (9/3): "A strong Yuan is not
only in the U.S.' interest but also in the interest of the Asian neighbors and
mainly in Europe's, whose euro has considerably increased over the past few
months. China, too, would profit from a
revaluation. It is true that a weak
Yuan, in the short run, saves jobs in China's export industry, but in the
medium-term, permanent interventions on the exchange markets in favor of the
dollar will increase inflation. Snow's
visit to Beijing shows that China's economic policy is no longer a marginal
topic. China should be integrated even
more into the international community.
This will be the only way to prevent China from pursuing too reckless an
economic policy at the expense of its trading partners."
"Cheap Sports Shoes"
Business-oriented Financial Times Deutschland of Hamburg
contended (9/2): "During his trip
to China, Treasury Secretary Snow plans to put pressure on the Chinese to
revaluate their currency. But this move
not only has no chance, but it is also unreasonable.... Many are complaining about the 'yellow danger,'
because millions of industrious Chinese are manufacturing products for
starvation wages to flood the global markets thanks to their cheap
currency.... But apart from the fact
that not all economists consider the Yuan to be undervalued, this danger is
overdrawn. On the one hand, U.S.
companies produce in China and profit, too.
On the other hand, China does not export high-tech products but mainly
textiles and toys. For the affected U.S.
industrial sectors this may be bitter, but the consumer can be pleased at cheap
sports shows. Wal-Mart alone buys
products in China worth ten billion dollars, one tenth of the entire U.S.
deficit. This is something Snow should
tell his compatriots instead of using pithy words in China."
ITALY: “U.S. Pressures China--Exchange
Must Be Re-evaluated”
Giancarlo Radice stated in centrist, top-circulation Corriere
della Sera (9/2): “Three million
jobs [have been] lost since he’s been at the White House. Two and a half
million [of those jobs] alone were in the manufacturing industry. So...President Bush addressed the United
States with a promise: ‘I will work so that all countries with U.S. production
lines adopt just trade policies.’ He did
not give names, but the warning was obviously meant for Japan, and above all,
China, the two nations that Washington believes are ‘guilty’ of toying with
exchange rates in order to keep the value of their currencies artificially low,
and therefore favor exports. It’s not a coincidence that Bush’s promise comes
just as U.S. Treasury Secretary John Snow is on a key mission in Asia. He will
first visit Japan and tomorrow China.”
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