Master Of Arts Essay

837 WordsApr 17, 20124 Pages
No Trade War with China, Please By Michael Elliott There's something deeply nostalgic about watching a U.S. Treasury Secretary fly to Asia to press a nation that is running a massive trade surplus with the U.S. to revalue its currency�and then come home with nothing to show for his trip but soothing waffle. In the late 1980s and early 1990s, the target of U.S. ire was Japan; now it's China, from which Treasury Secretary John Snow has just returned with assurances that the Chinese will soon show "flexibility" in their currency policies. For a while, trade tensions with Japan were a focus of U.S. domestic politics and threatened to damage relations with one of Washington's crucial partners. Now some in Congress are already beginning to complain about China's "unfair" trading patterns. With a U.S. election season upon us, is China's growing economic muscle going to become a political issue? It shouldn't, although it's easy to see why it might. In 2002 China's trade surplus with the U.S. was $103 billion, twice what Japan's was at the height of Japan bashing 12 years ago. With its abundance of cheap labor, China can undercut American manufacturers of everything from toys to furniture to clothes. China has long pegged its currency, the yuan, to the dollar, and not long ago U.S. policymakers had nothing but praise for the way China managed its foreign exchange. In the Asian financial crisis of 1997-98, China did not devalue the yuan�and hence make its exports cheaper�when other Asian nations did. Had Beijing followed the herd and taken export markets from its Asian competitors, the economic recovery in Asia would have been delayed. But as the value of the greenback has slipped on international markets, Chinese exports have become even cheaper. Hence the clamor from some of those who directly compete with China for the country to revalue the yuan upward�just as there

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