October 24, 2003

China-Bashing as Political Cowardice

The Economist condemns China-bashing:

Economist.com | China and the world economy: WORRIED about the loss of manufacturing jobs? Anxious about America's huge trade deficit? Trying to explain the cause of deflation in Japan? In tough economic times, politicians need someone to blame. And today the rich world's scapegoat of choice is China.

When George Bush met China's president, Hu Jintao, at the APEC summit in Bangkok this week, he was under intense pressure from manufacturers and congressmen back home to persuade China to revalue its currency, the yuan, currently pegged at 8.28 to the dollar. Bosses in industries from clothing and toys to furniture and consumer electronics are complaining about "unfair" Chinese competition. They claim that, by keeping the yuan artificially low, China is stealing jobs from America and causing a record trade deficit. Legislation has recently been proposed in Congress to levy big tariffs on imports from China.

The relocation of manufacturing jobs to low-wage economies has been happening for years. But concerns are intensifying now that service-sector jobs, such as software programming and call centres, are shifting too, as firms take advantage of cheap telecommunications to use workers in India and, more recently, China.

China-bashing is also popular in Japan.... In the euro area too, politicians and businessmen are complaining that because China refuses to let the yuan rise against the dollar, the euro is bearing an unfair share of the burden of dollar depreciation. The euro has risen by almost 40% against the dollar over the past two years. This week, Giulio Tremonti, Italy's finance minister, called for protectionist measures against China.

Is China guilty as charged? It is true that it is running a $120 billion trade surplus with America, but China's total surplus is small--it runs deficits with some other countries--and many economists forecast that it may turn into a deficit in 2004. China's current-account surplus is expected to be only 1% of GDP this year. Despite foreigners' complaints about the country's rampant export growth, imports have grown even faster (see chart). In the year to September, China's exports rose by 32% and its imports by 41%....

The heart of rich countries' complaints is an unwillingness to accept responsibility for their own economic faults. It is easier to point the finger at China. But the real cause of America's trade deficit is its low saving rate, the result of surging household borrowing and a big budget deficit. Similarly, Japan and Europe should not be tempted to use the cheap yuan as an excuse to postpone much-needed reforms. The proper cure lies at home.

Posted by DeLong at October 24, 2003 11:54 AM | TrackBack


>"...But the real cause of America's trade deficit is its low saving rate, the result of surging household borrowing and a big budget deficit...."


The "real cause of America's trade deficit" is the self-destructive and arguably TREASONABLE Transnational Corporate Fundamentalist "friendly" macroeconomic policy we've been pursuing--"damn the 'torpedoes'"--for MORE than twenty years now:




"My oh my!" You say. "What to do? What to do?"

GLAD you asked:




"Whoa! Slow down there, Cowboy," you say. "Where's the fire?"

Glad you asked:




Posted by: Mike on October 24, 2003 01:08 PM

"How did we manage to go so wrong?" You ask.

WELL, that's a long story....

Remember THIS guy:


He was "right on the money" about guys like THESE guys:


Only, thanks to 'stand-up' guys like Teddy and Franklin it took a little longer than Lincoln imagined for Wall Street 'royalty' to get a real 'buck stopper' in the White House:


Since then, while you were sleeping in your OWN bedroom, the TRUE meaning of "trickle down" has "morphed" into--


--well, let's just say, "torrent" and keep this "clean"...

Posted by: Mike on October 24, 2003 02:02 PM

Damn those folks at the Economist! [shaking fist]

They obviously have an agenda.


This is one of those times that really scares me. Remember the very constructive bashing of Japan a few years back? I remember seeing on the news a rally in which a Toyota was driven to a GM plant and the workers came out and bashed it for a while. Like I say very constructive.

A bigger fear with regards the Chinese is that there are a lot of people who are egging for a war with them. With Japan this was never a subtext, but with China nascent there are plenty of folks that are hoping for a fight. The "China is evil and they took your job" approach is very dangerous for this reason.

My personal feeling is that China is unlikely to challenge the US directly and that there will be plenty of time for the two countries to figure out how to coexist such that each has real power and both are able to grow faster because of it. Maybe that's a wee bit Panglossian.

Posted by: Saam Barrager on October 24, 2003 03:30 PM

Far be it from me to point TOO "fine" a finger with this "bashful" rant, BUT...




Posted by: Mike on October 24, 2003 03:40 PM

Another post about the evil of the Bush Administration in responding to the pressure applied by China bashers that doesn't mention all the Democratic presidential candidates and party leaders who are applying the China-bashing pressure.

To paraphrase a famous detective, one post by a Democrat on the evils of China bashing that doesn't mention any of the leading Democratic China bashers could be an accident. Two might be a coincidence. Three begins to look like carelessness...

Posted by: Jim Glass on October 24, 2003 11:47 PM

>"Another post about the evil of the Bush Administration in responding to the pressure applied by China bashers that doesn't mention all the Democratic presidential candidates and party leaders who are applying the China-bashing pressure...."

They're not so much "evil" as they are out of touch, venal, arrogant, banal AND stupid, Jim. But if it makes you feel any better, PERSONALLY, I think you're right to drag that OTHER Transnationally Corporate Fundamentalist political party into YOUR party's "quagmire".

While "professional", "national" dems AREN'T as bad about "bashing China" when it serves their political purposes as those proudly, OPENLY fascistic, fear mongering pubs:


On the whole, in MY book, they're just as cynical, just as irresponsible, just as ignorant AND just as ignoble.I think we Americans (and, for that matter, ALL of us earthlings) deserve better than we've been getting lately from American political, academic, religious, military, commercial, cultural AND media leaders--across the board...

>"...Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

>This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence economic, political, even spiritual is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

>In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

>We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together..."

Dwight Eisenhower, January 17, 1961

Posted by: Mike on October 25, 2003 05:19 AM

If you are Republicans with a McKinley era mindset, as this administration seems to be, this is good Yellow Peril stuff.

All the prattle about China's exchange rate is just part of Bush's attempt to put the blame for his failure to resurrect the job market on someone else.

Posted by: BobNJ on October 25, 2003 06:59 AM
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