Sunday, July 08, 2007

NYT: Dems on China "Wrongheaded"

Even the New York Times sees trade wars with China as a "wrongheaded prescription," and "misguided." From an editorial, "Politics and the Yuan", here's the NYT:

Just in time for the presidential campaign, Barack Obama has joined Hillary Clinton on the misguided bandwagon of those seeking to penalize China for manipulating its currency. Last week, the two senators and Democratic candidates signed up as co-sponsors to a punish-China bill that would mandate retaliation against countries that keep their currencies cheap to boost their exports....

Still, the prescription is wrongheaded. There is no guarantee that a rise in the value of the yuan would, on its own, boost American workers’ wages or the economy in any significant way. Many of the things China exports to the United States have not been made in America for a long time. Forcing China to revalue the yuan would likely also lead to higher prices for goods in the United States and to a rise in interest rates if China decides to stop buying American Treasury bonds.

And it will complicate the management of a long list of nonfinancial issues the two nations urgently need to address....

Starting a trade war is not likely to change Beijing’s mind. And it will make it harder to persuade and pressure China to become a more responsible exporter and a more responsible international player.

So make a note, I agree with the New York Times on this issue.

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