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Tuesday, August 26, 2003

Trade with China

The New York Times reports on growing pressure from manufacturing interests and members of Congress on the administration to press China to increase the value of its currency. They claim the undervalued yuan is responsible for job losses in the US.

If China for some reason wants to sell us cheap manufactured goods, we should happily accept the low-price imports. This helps US consumers, don't forget. If US producers can cut their own costs or make higher quality output, they will be able to compete. Otherwise they should exit on account of higher Chinese efficiency. And if China's policies are really so crazy, they will not be sustainable in the long run; similarly, if their producers are selling below cost, they won't be able to stay in business, and if their government subsidizes them, we should gladly allow a foreign government to pay for a discount for our consumers.

The Times also plays up the angle of the White House not wanting to piss off China right now, given the situation in North Korea and our need for Chinese help there.

Unfortunately, the nonsensical protectionist position is gaining favor in Democratic circles:

"For her part, Governor [Jennifer] Granholm [D-MI] said that the issue was so important to retaining manufacturing jobs in her state that she would make it one of the litmus tests as she decides which candidate to endorse in the Democratic presidential primary."