Since the global economic crisis began to ease, the U.S. has renewed its pleas to Beijing to allow the value of its currency, the yuan or remnimbi – to float freely, i.e.: to rise, which would make U.S. exports cheaper for Chinese consumers and reduce America’s annual trade deficit with China.
But Christiane von Hardenberg of the Financial Times Deutschland warns Americans to be careful what they wish for, since this will hurt American consumers, who will have to pay more for Chinese imports.
For the Financial Times Deutschland, Christiane von Hardenberg reflects European concerns of worsening U.S.-China ties when she writes in part:
The time for soothing silence is over. For a few months, the endless whining by U.S. officials that China should at long last let the value of its currency float freely had died down. That was in the spring of 2009, when the global economic crisis had struck with full force. At the time, fears were circulating that everyone would retrench and a wave of protectionism would drag the world into a deep recession. U.S. delegates kept quiet.
But now China’s economy is again going strong. At the same time, unemployment in the United States is still climbing, most recently to 9.7 percent. So now the whining has begun again. According to observers, Washington may soon formally accuse China of currency manipulation – an accusation that could further strain an already tense relationship between the Americans and Chinese.
The Americans would be better advised to keep quiet. As long as Beijing feels like its being pushed into a corner, it cannot be expected to give way. Besides, the reason it continues to vehemently oppose a revaluation is obvious: a stronger currency is no silver bullet. In order to bring a sustained boost to domestic demand, China’s social system must be completely turned inside-out. Retirement and health care planning must provide enough security so that rather than saving their money – Chinese spend it.
In addition, a stronger renminbi is no panacea for America’s economic problems. The jobs are gone and they aren’t coming back. U.S. companies no longer make many of China’s top-selling exports – furniture, toys and sneakers. If the value of the renminbi rises, it will be U.S. consumers that have to pay the difference. Instead of getting bogged down in disputes with China, Americans should use this time to build a more competitive export industry.
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