Meme of the Week
Actually, this one's been in circulation for awhile now...What with a manufacturing slump, national malaise, apparent failure of the Iraq war to produce the anticipated dividends, and most importantly an upcoming election year, it's no surprise that xenophobia is in vogue again, some two decades or so after the Japan-bashing of the eighties. This time the targets are India and China. In the case of China, the point-man is Sen. Charles Schumer, and the issue is currency. A characteristic sampling of senatorial potboiler:
It is true that China has certain natural advantages when it comes to manufacturing because it has a plentiful supply of cheap labor...However, when an additional ... price advantage for Chinese goods is created because of China's currency shenanigans, it is simply impossible for American companies, as well as those of other nations, to compete.
Asia Business Intelligence has an entertaining take:
As with the announced appointment of a manufacturing czar in the U.S., this appears to be the usual election year pressure. Gotta get labor votes, Southern votes, the votes of those who lost jobs to international outsourcing... The Chinese, knowing this, will wait it out. Why make a decision so clearly injurious to China when there is no genuine pressure point applied?
The U.S. would have a better lever if it banned Chinese exports to the U.S. by companies controlled by the children and relatives of decision-making cadres -- now that threat would move mountains. But, uh oh, wait a second, a dispute with the WTO...numerous trade agreements broken...harmful to American importers...failure of detente with North Korea...immediate invasion with Taiwan... Perhaps the asteroid will hit China in 2014 -- promptly resolving the currency issue in favor of the U.S.
Meanwhile, the Asia Times revisits the anti-Japan fervor of two decades ago and concludes that it had unintended consequences: after the hue and cry about unfair trading practices, and resulting US pressure, Detroit found that its gas-guzzling, built-to-obsolesce lemons still couldn't compete. However, protectionist measures did succeed in convincing Japan to move most of its industrial plants to elsewhere in Asia, thus setting the stage for China's emergence as a global exporter.
Pushing the yuan upward might cripple the Chinese economy, already hurt by the SARS outbreak, but it's hardly likely to deliver a renaissance in American manufacturing, the Times argues. Instead, the US economy would probably tank, because much of the ever-growing budget deficit is being financed by Asian countries and their gains from the export surplus.
If under US pressure China floats the yuan, it will have more dollars in its hands and US manufacturers will be unable to reverse the 20-year-old trend of losing to foreign competition. And, because the cost of manufacturing will rise on the upwardly floating currency, the 65 percent of exports produced by Western-owned factories in China will become more expensive and less competitive. Western and particularly US industry would inevitably suffer.
I guess it's "freedom fries" again, but more serious.
5:22:30 PM 
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