How much of America’s carping about the undervalued yuan has to do with fundamental fairness, and how much with the U.S. midterm elections? According to Izvestia columnist Dmitry Kosyrev, the complaints and President Obama’s change of tone are almost entirely election-related. And agreeing with much of the global reaction on the issue, he writes that China’s resistance is a very rational decision not to end up like Japan, which was browbeaten by Washington to allow the yen to appreciate in the 1980s. According to Kosyrev, Japan has never recovered.
For Izvestia, Dmitry Kosyrev writes in part:
Various U.S. administrations have unsuccessfully struggled for years to get China to allow the yuan to appreciate. Talks about how everyone is deflating exchange rates aren’t new – starting with the U.S.: under the Obama Administration, the value of the dollar has “fallen” by about 20 percent – and this policy has been quite deliberate. Since January, the euro has lost about 17 percent of its value. In this crisis, and excuse me for saying so, everyone wants their exports to be like China’s – cheap and high quality – and to revive their economies. This is just the same as if the yuan had appreciated by 20 percent and 17 percent, respectively. Ordinarily, all of this would be extremely boring. But apart from the superficial issue of “currency history,” there are two very specific and truly interesting aspects of the situation.
The first concerns the conceptual anxiety of the Obama Administration’s foreign policy struggles. The second concerns Chinese notions about its transition to a new economic model.
As for the anxiety: After the year that just passed, Barack Obama would not have won a Nobel Peace Prize. Here is an assessment made by the Washington Post: Obama spent his first two years restoring America’s image in the world, and now he is returning to the policy of “using American power”; before there was the peace of the G-20, now we’ll once again have the peace of “the U.S. and it democratic allies.” The promotion of “essential American interests” is on the upswing, and words like “freedom” and democracy” are increasingly returning to common use.
And since China has rejected the idea of “joint control of the world with the U.S.,” America is signaling to anyone who will listen that they’ll be protected from Chinese pressure. Not much will come of this – neither from the smaller countries in Asia or even Japan, who don’t seek an overt “containment” of China – their most important trading partner. But the American public has the attitude of “come on guys, do something!” So they are, including on the currency front.
This is due to the November Congressional elections, but not entirely: voters always want to return to an era that’s one step behind current reality. Moreover, U.S. voters are tired of defeatism. In the United States, it’s once again becoming fashionable to behave as if the world hasn’t changed in the last 20 years. The result has been that a friendly Obama has become an angry one.
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