Hypocrisy over renminbi

0 CommentsPrint E-mail China Daily, March 17, 2010
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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, tend to make use of the accusation on the Chinese currency to curry support from 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. But it only reveals perilous political inertia when strength is needed to meet the real challenges in a time of crisis.

Their exaggeration of the impact of China's currency policy on the US economy will blind US people to the causes of the current crisis and thus delay meaningful reforms to fix them.

If they are serious about the global competitiveness of US companies, these congressmen should for example, ask General Motors management why they made large profits in China last year while requiring multibillion-dollar bailouts at home. China's foreign exchange rate can hardly be part of the answer because the US automaker has already localized its production. The truth may lie at 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 yet 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.

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