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As MarketWatch.com remarked last Friday, China’s critics are “smelling blood”.
There is one difference. In Avatar, the aggressors who cry for “terror against terror”, led by Colonel Miles Quaritch, are mostly soldiers.
The coalition that is pressuring China to re-value its currency is more complex. Of course it includes politicians like US Senator Charles Schumer, who has reintroduced a bill to impose tariffs on Chinese imports. Recently, however, the politicians have been joined by some academics, who really should have known better.
In a New York Times column entitled “Taking on China”, Paul Krugman proposes a 25 percent tax on imports from China as a means of forcing the PRC to re-value its currency.
No one doubts Krugman’s credentials as an economist; he won the Nobel Prize in 2008. He is no diplomat, however, and he clearly knows very little about China.
Experts differ on whether the yuan needs to be re-valued. At a press conference Sunday, Premier Wen Jiabao stated unequivocally that it does not.
A good number of Chinese and international economists agree, arguing that a drastic appreciation of the yuan, such as Krugman and others suggest, would hurt China’s economy and disrupt the global economic recovery.
China does not want to follow in the footsteps of Japan, which suffered a decade of economic stagnation after the yen appreciated by 70 percent 20 years ago.
Of course, many economists believe that as its economy recovers and exports increase, it will be in China’s self-interest to allow the value of the yuan to rise.
The markets seem to be betting this will happen. An American friend of mine living in Delaware gleefully told me last year that he’d invested some money in China and was waiting for the yuan to be re-valued.
When it comes to economic analysis, we defer to Krugman. Anyone who can find China on a map knows that his proposed solution would be counterproductive.
In Avatar, the indigenous people of Pandora refuse to sacrifice their home to supply the energy needs of the people from Earth, who have depleted their planet’s natural resources.
Like the Na’vis, China is in no mood to be bullied time and again by the very country that brought the world to the brink of economic ruin. China’s leaders and many economists believe the valuation of the yuan is a sovereign matter, to be decided by China and China alone.
In a recent column (“China’s bad bet against America”), Harvard professor and former US assistant secretary of defense Joseph Nye attributes China’s stance on revaluation to short-term political and economic concerns.
In fact, it has far more profound origins.
As every Chinese citizen knows, China was bullied for a century, starting with the Opium Wars. We well remember the “unequal treaties” that allowed the British to drain the imperial coffers of the Qing Dynasty (1644-1911) in return for opium. The sales of looted artifacts continue to remind us of the sacking of the Old Summer Palace and the half-century of abuse that followed.
The Chinese people expect their leaders to continue to act in the nation’s best interest. When economic factors indicate it is time to re-value the yuan, they will. But until then, no amount of bullying or blackmail should make them budge.
Like the invaders from Earth who are banished from Pandora, Krugman, Nye and President Barack Obama should look for solutions to their problems at home.
lixing@chinadaily.com.cn
