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US Blaming of RMB Misplaced

United States Treasury Secretary John Snow is in Beijing passing on US concerns about the value of our currency, the yuan or renminbi.

Timely communication and consultation are essential for the United States and China, two of the most active and important players in world trade. This is especially so as economic woes worldwide are crying out for an effective cure.

Considering the sheer size of the two countries' exports and imports to and from each other alone, how the two act and interact will have an impact on the world economic scene.

Exactly because of such high stakes, reason should always be used when the two economies react to each other.

What has pushed Snow to our doorsteps, however, is a tide of complaints that display a gradual drain of sensibility in his home country.

From Washington to major manufacturing bases, the arguments are rampant that China should be held accountable for the economic troubles dogging the United States. It is claimed that by artificially keeping its currency weak, China has gained unfair advantages for its cheap exports to the United States, thus throwing US citizens out of work. A well-touted prescription that is also favored by the White House is the appreciation of the yuan.

Even Japan has jumped on the bandwagon, even though it fell into further economic misery after it raised the value of its own currency under US pressure in the 1970s.

The calls are so overbearing that it would appear that all countries are the victims of Chinese selfishness. So, unless China stops being selfish and re-evaluates the yuan, the United States will suffer, Japan will suffer, and the rest of the world will suffer.

It no longer matters how unselfish China was during the 1997 Asian financial crisis. The very same decision, once acclaimed as heroic, not to devalue our currency when our neighbors did is now coming under fire.

Neither does it seem to matter whether the economic difficulties of the United States and Japan have their roots in those countries.

China is now on trial. As reason gives in, an issue that is economic in nature is dressed up in a weighty political matter.

Snow talked about growth during his visit to Japan earlier this week. He is obviously aware of the significance of growth for an economy.

The US and Japanese economies must grow to get out of their current plights.

The Chinese economy cannot afford not to grow. Once the Chinese economic locomotive loses steam, so does the world's.

In this sense, China's idea of basing its currency policy firmly on its own national conditions is in itself a contribution to the world as a whole because this policy delivers genuine benefits.

As those with insight have observed, the appreciation of the yuan may ultimately go against the intentions of its advocates by throttling the Chinese economy and damaging their own economies in return.

After all, our economies are now interwoven more tightly than ever.

For the well-being of the Chinese and US economies, as well as that of the world, both Snow and his Chinese counterparts should follow the dictates of reason in their dealings with the now politically charged topic.

(China Daily September 3, 2003)

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