Stop
Blaming China For America's Woes: America Misusing Sept 11
09 April 2010By Colin Speakman
After the Sept 11 attack on the United States, all
fingers pointed at Al-Qaida and Osama bin Laden. But
the US leadership under George W. Bush convinced most
Americans that Iraq was part of the violent plot.
Worse, the US said Iraq possessed weapons of mass
destruction and began a tragic war that has yet to
end.
The US met its economic 9/11 in 2008, when its banking
system collapsed, big names disappeared from the
corporate landscape and the job market went into a
tizzy. The causes were obvious: lax control, greed and
speculation in the corporate world, bubbles in the
property and stock markets, and the very high rate of
consumption of the American public with little or no
savings.
But the US administration seems to be trying to
convince its public of another untruth: that China is
the true cause of America’s economic woes — and that
China possesses “weapons of mass economic
destruction”. What is that weapon of mass economic
destruction? The humble yuan, which the US says has
been manipulated to hurt the American economy. So,
according to many US officials, an economic war
against China is justified. In fact, China has already
gotten a taste of America’s first “shock and awe” in
the shape of massive tariffs on its goods imported to
the US.
The US Treasury’s 2009 report did not identify China
as a currency manipulator. Yet now there appears to be
strong political pressure, encouraged by some American
economists, to do so.
China’s exports dropped because of the weak world
economy, but it didn’t seek to offset the loss so
suffered by devaluating the yuan. Its currency has
remained stable against the US dollar, though it has
risen against European currencies. Its exports may
have rebounded in February, but the corresponding rise
in its imports took the monthly trade surplus to a
one-year low.
China already runs a trade deficit with South Korea
and Japan and many other countries. In fact, seeking a
trade surplus is not its motive, it has said,
promising to increase imports to maintain its economic
growth.
Of course, the US allegations are related to the
“dollar issue” — they are not a global issue. But then
the dollar deserves special treatment. The greenback
is still the de facto international reserve currency
despite being undisciplined in trade and fiscal
deficits. But the dollar has not faced the kind of
economic fallout that has hampered a country like
Greece. The problem is countries that oblige the US by
holding large amounts of its denominated debt and
reserves have a right to demand that the dollar
remains stable against their currencies. And since
China is the biggest holder of US assets, it has that
right.
Economist Paul Krugman recently said China’s trade
surplus with the US had grown in the past decade even
without the yuan rising sufficiently against the
dollar. Before America’s economic 9/11, however, its
consumers seemed happy to get affordable Chinese goods
year after year and its businesspeople were busy
making profits from lucrative partnerships with
Chinese companies. Don’t the American entrepreneurs
and intellectuals know that was made possible only
because the yuan didn’t rise against the greenback
“sufficiently”?
The last two years have been full of economic woes for
people in the land of plenty. The US is still
struggling to come out of its economic recession. No
wonder then that the American public is desperate to
identify the problems and find solutions. But how can
their leaders blame China for all their ills, which
despite being a developing country helped maintain
about half the world’s economic growth last year? Why
does China have to be made a scapegoat for America’s
domestic woes?
The international community, but for the obvious
exceptions, has praised China’s economic stimulus
package and the importance of its robust economic
growth. China’s stimulus for its economy has created
opportunities for Western countries’ exports, too. The
2010 Shanghai World Expo will allow well over 200
countries and international organizations to showcase
their products and technologies for sustainable living
to 70 million visitors, a large majority of them
Chinese. China would readily buy more advanced
technologies from America, but Washington is reluctant
to sell them.
We need to be clear that China’s rise is good for the
world economy. And we need to be clear that China does
not possess any “weapons of mass economic
destruction”. Americans, no doubt, still remember the
song, “Won’t get fooled again.” Hopefully, they will
see through their politicians’ desperate attempt to
shift the blame for the country’s problems to China in
order to cover their own failures. And let’s hope they
will realize that peaceful and respectful cooperation
between the US and China is the only way to mutual
economic progress — and the world is counting on it.
The author is an economist and director of China
Programs at the American Institute for Foreign Study,
a US-based organization that has exchange programs
with Nanjing University and the American Institute for
Foreign Study.
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