Economy

China should not take the medicine for a US illness

By Han Dongping (chinadaily.com.cn)
Updated: 2010-09-26 17:16

Western liberal economists have been promoting the free market economy as a panacea for the world's economic problems. Many third world countries bought the theory and began to reduce the role of government in the economic fields, and liberalize their markets.

The result is that we have a globalized world today. Multinational corporations are often dominant in the third world countries. The truth of the matter is that the powerful countries do not need to protect their markets. But if the weak do not protect their markets they would be crushed by powerful economies.

The US protected its markets when it was weak in the early days. They even fought a brutal civil war to settle the fundamental disputes between its northern industrializing states, who wanted to use high tariffs to protect their emerging national industry, and the agricultural southern states, which wanted to buy cheaper European industrial products for their farms without paying high tariff.

In the early days, the western nations sent their troops to colonize the third world countries in order to open more markets for their products. In today's world, the US used the IMF and the structural adjustment programs to open markets for its multinational corporation.

The governments of the western nations, Spain, France, the British in the early days, and the US today, have been behind their companies. They are also willing to fight wars for their overseas economic interests.

Today, the US is pressing China to value its currency. It threatens to label China as a country that is manipulating its currency, which will enable the US government to put a high tariff on China's exports to the US Every country in this world manipulates its currency, because it is its currency.

Can the US government say that it does not manipulate its own currency at all? Can the US government name any country in today's world that does not manipulate currency to the best of its interests?

Every country does and should manipulate its own currency for its own benefit and at its own risk. It is not any other governments' business to press another government to value its currency. If we really believe in free market, then let the market do its job. If any government manipulates its currency in defiance of the market, it will be punished by the market in the end. Is not that how the market works?

The American government presses the Chinese Government to value its currency because it felt that the Chinese exports to the US take away the American jobs. It seems that the US government wants the Chinese Government to take the medicine for an American illness.

Its threat to labeling China as a country that manipulates its currency is like finding some unreasonable excuse to have its way like the wolf in the famous fable where the wolf justifies preying on the lamb for polluting its water even though the lamb is down stream.

What the US should do is to solve its unemployment problem by creating more jobs for the American people in America, not forcing China to take the medicine for its sickness. Doing that may hurt China in the short run, but will do the US no good in the long run.

The Chinese government should resist the US pressure on the currency issue, like every sovereign state should do. It should make the decision on the currency issue solely on Chinese national interests, not giving in to the US pressure.

Han Dongping is Professor of History and Political Science at Warren Wilson College, NC. The opinions expressed are his own.