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All the blame that United States politicians are placing on the Chinese currency amounts to nothing but political myopia.
In a letter to the US secretary of the treasury and commerce secretary, 130 US congressmen demanded Monday that the Obama administration get tough with China over its currency practices, insisting that a devalued exchange rate provides a subsidy to Chinese companies and puts foreign competitors at a disadvantage.
Some of these US politicians, if not all, use those accusation against the Chinese currency to curry support of voters who are worried about the US unemployment rate.
It may be a time-honored habit for US lawmakers to blame a foreign country for domestic economic woes in tough times. It only reveals perilous political inertia when strength is needed to meet the real challenges in a time of crisis.
Exaggerating the impact of China’s currency policy on the US economy will blind the US people to the causes of their current crisis and delay the meaningful reforms.
If these congressmen are serious about the global competitiveness of US companies, they should, ask General Motors why they earned large profits in China last year while needing multibillion-dollar bailouts at home. China’s foreign exchange rate can hardly be part of the reason because the US automaker has already localized its production. The truth may lie in the much higher US labor costs, an obvious problem that few US politician have so far been brave enough to face, not to mention fix.
Besides, the consequences of a revaluation of the renminbi must include a diversification of Chinese investment from US Treasury bonds into other US assets. If they are not ready for more US hi-tech exports to China or Chinese acquisition of top US companies, these congressmen should be careful about what they are asking for.
