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China, U.S. Policy »

How Not to End Chinese Currency Manipulation
[24 March 2010, Comments Off on About Sanctioning China (and Then Being Sanctioned by China), Tags: , , , , , , ]

The Chinese Renminbi, whose largest denomination remains 100 yuan ($14.64)

In the recent hoopla about sanctioning China for currency manipulation, there are a few factors that are being overlooked. These factors suggest that sanctioning Chinese exports won’t help the United States achieve the economic results one would hope to achieve.

To begin with, the goal should be reducing the trade deficit with China not for its own sake, but to produce more jobs in the United States. (After all, this is why China’s currency manipulation matters.)

So U.S. companies need to find more demand for products they produce, either here or elsewhere around the world. Yet if the U.S. slaps a 25% tariff on Chinese goods, it might as well give up on selling much at all to China’s 1.3 billion-person market.

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China, U.S. Policy »

I’ve heard many people over the past few weeks question whether we should continue engaging with China as we have–or, even more starkly, whether we should engage with China at all.

The argument goes something like this: Engagement was supposed to produce a different kind of China than we’re seeing today, one that shares U.S. interests. Because the Chinese government is behaving increasingly aggressively against the “status quo” and has been moving backwards on political and economic reforms, engagement has failed and we need another policy.

I understand the frustration underlying this kind of argument; I, too, am deeply troubled by recent trends in China. But we should question the assumptions and reasoning above. Here are a few reasons why:
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China »

Google’s threat to exit the Chinese market, which I discussed here yesterday in the context of human rights and Google’s corporate interests, has two other important dimensions.

First, there is growing and universal concern in the business community about unfair Chinese business practices (this was previously limited to the manufacturing sector).

Second, we should all be deeply concerned by the massive cyber espionage program China has been developing and deploying, which is aimed at learning inside information on foreign companies and governments.

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