Commentary by William Pesek:
...
The U.S. Treasury secretary, in his drive to get China to
strengthen the yuan, has hit a barrier almost as great as the
4,000-mile one outside Beijing. Never mind excitement yesterday
that the yuan was at the strongest since a dollar link was
scrapped in July 2005. China will continue to move gradually.
One suggestion for Paulson: Try a different argument. The
current one is looking increasingly weak on the economics.
To his meetings with Vice Premier Wu Yi in Washington last
week, Paulson brought the now familiar charge that China is
unfairly holding down its currency and costing the U.S. jobs. Wu
brought something far more potent: an argument poking holes in
the contention that U.S. imbalances are China's fault.
Roughly 85 percent of China's trade surplus is generated by
foreign companies exporting products from China that are no
longer made in the U.S., such as shoes. Wu mentioned that
inconvenient fact when she said ``we should not easily blame the
other side for our own domestic problems.''
There was little carping when Corporate America spent much
of the 1990s building factories in China. Now that the U.S. is
feeling the heat from an ascendant Asian economy, Capitol Hill is
all of a sudden irritated about companies using China to boost
profits?
Sure, Asia's No. 2 economy needs to go further to liberalize
its financial sector and clamp down on piracy. Yet lawmakers
demanding that China act to reverse a record $232.5 billion U.S.
trade deficit should be careful what they wish for.
...