Whoa there, [job] killer!
Posted by jeckert on 04/15/2010
The misalignment of the Chinese yuan, also known as the renminbi, is costing jobs not only across America, but across the globe. According to an editorial in Foreign Policy by renowned economist Fred Bergsten:
"In a world where subpar growth and high rates of joblessness are likely to remain for some time, China is exporting large doses of unemployment to the rest of the world -- not just to the United States but also to Europe, Latin America, India, Mexico, and South Africa."So, what would happen if the Chinese were to play by the rules and revalue the yuan, according to Bergsten? First of all, it would lower the U.S. global current account deficit anywhere from $100 billion to $150 billion. This would in turn create between 600,000 and 1.2 million jobs in America. And, to top it off, a revaluation of the Chinese yuan would boost jobs without costing the U.S. a dime. Bergsten recommends multilateral steps toward solving this issue. However, the most effective way to move forward with China is to impose immediate economic consequences should they not revalue their currency. China's behavior should change without erecting tariffs. Bergsten does, however, make several very valid points, including the fact that the "protectionist" label often thrown in the face of America should, in actuality, be turned on the Chinese themselves:
"Such currency manipulation is a blatant form of protectionism. It subsidizes all Chinese exports 25 to 40 percent. It places the equivalent of a 25 to 40 percent tariff on all Chinese imports, sharply discouraging purchases from other countries. It would thus be incorrect to characterize a policy response by the United States and other countries as "protectionist" -- such actions should in fact be viewed as anti-protectionist."Read more here.
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