12.7.11

LAWS OF CONSERVATION.  A country that wishes to promote exports ultimately finds itself in the position of ruining its economy in order to make consumers in other countries better off.  So mote it be with China.
We can of course thank China's low wages in part for the dramatic decreases in real prices for clothing and toys purchased in the U.S., but we can also thank the Chinese government for manipulating its currency in favor of American consumers, and we should be grateful for the billions of dollars saved by Americans over the last decade from that manipulation.
China's trade policy requires the sanction of the Chinese.
Overwhelmingly, though, the beneficiaries are non-Chinese consumers (including Americans) of China’s subsidized exports.  In contrast, the people unfairly burdened are exclusively Chinese citizens – both as consumers forced to pay higher prices at home, and as taxpayers forced to fund Beijing’s practice of purchasing U.S. dollars in order to depress the price of the yuan against the dollar.

It is, in fact, obscenely unfair for Beijing to oblige the Chinese people to hand over chunks of their wealth to Americans, even the poorest of whom is far richer than is the typical man or woman in China.
Whether that logic will carry the day remains to be seen.

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