Snow promised to bring up complaints about China’s currency manipulation that many in U.S. manufacturing circles say are responsible for surging Chinese exports and 2.6 million lost jobs. (Snow did, but got little to show for his efforts, according to press reports.)
China pegs its yuan at 8.3 to the dollar, which analysts say makes its products about 30 percent cheaper in the U.S. market – before you consider the wages Chinese manufacturers pay their slaves, er, workers.
Calling the currency allegations good fodder for the 2004 U.S. political debate, an editorial in the Sept. 4 issue of the International Herald Tribune agreed it would be better if China allowed its currency to float freely, but…
"China’s financial system remains fragile, and sudden currency volatility could lead to a banking crisis that could spell disaster for the world," the editorial said. "Washington would do better to urge China’s leaders to focus on their lack of preparation to assume their proper role in the world’s financial order."
So U.S. workers searching for jobs in a depressed economy are supposed to take comfort in the fact that Chinese bankers can sleep better at night knowing they have a few more months to get their houses in order.
From London, The Economist said Chinese policymakers "have more pressing things to worry about than effects on others of a cheap yuan." The magazine said it’s more important that the Chinese rein in their overheated economy without pushing it into recession.
"In trying to achieve this, they deserve support, since China is one of the few bright spots at a time of sputtering worldwide economic growth," said the article, which then described how China’s booming economy has led to "irrational exuberance" in lending.
Both articles imply that U.S. workers are grossly overpaid and that, somehow, China should be rewarded for its low wages. A Chinese factory worker earns $1,182 per year vs. $29,000 in the United States, another foreign publication, The Financial Times, notes.
Such frequently-cited comparisons remind me of what my friend Richard R. Oswald said about yet another article extolling the need for the United States and the European Union to lower their farm subsidies to help third world farmers: "Great theory. I’m going to sharpen my hoe and practice going barefoot."
This tendency to overlook the failure of foreign manufacturers to pay living wages in comparing economic advantages is one of the more troubling aspects of the current commentary.
As another friend once said, "You don’t make things better by pulling us down to their levels," referring to the wages paid to cotton pickers in Ecuador. The United States left the era of $1-a-day wages in the last century. It’s a shame so many seem to be trying to pull us back to it.