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Why Should We Care What the Chamber of Commerce Tells Us About China?

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Friday, 07 May 2010 05:58

The Washington Post devoted a whole article to the views of a delegation of "senior U.S. executives " selected by the American Chamber of Commerce in Beijing. These executives told readers that China's industrial policy was a far bigger concern than the value of its currency.

It is understandable that executives of U.S. corporations operating in China would argue this case. A drop in the dollar relative to the yuan will improve the U.S. trade situation for two reasons. First, it will make U.S. exports cheaper for buyers in China, leading them to buy more. Second, it will make Chinese imports more expensive for people in the United States, leading the U.S. to consume fewer goods from China and more domestically made goods.

The U.S. executives in China only care about the former effect. The latter effect -- the impact of a lower dollar on imports from China -- is likely to be the far more important one, since we import far more than we export. Rather than presenting the views of these executives as the simple truth about U.S. trade with China, the Post should have presented them as the views of a narrow interest group. It should have presented the views of independent experts or representatives of other groups to put these views in context.

Comments (3)Add Comment
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written by izzatzo, May 07, 2010 8:59
That's right Mr Global Demand-Sider, all you think about is the import consumption side, demand demand demand, cut demand to improve the trade deficit, never a word of support for the Global Supply-Siders, the ones who really make things and create jobs here in the US in markets free of protectionism.

How do you expect WalMart employees to make a living if Supply-Siders from the US can't break into protected Chinese markets?

Stupid liberals.
Protectionism? Really?
written by David, May 07, 2010 1:14
So China keeps their currency low against the dollar so their workers make the equivalent of $150/month, driving down US wages and jobs. So the executives from the US want to "break in" to Chinese markets by trying to sell things to people that make an average of $3000/year? Probably won't being doing too much "breaking in" with US workers. If anything, this will worsen the situation. It is all about the currency, and nothing but the currency.
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written by zinc, May 07, 2010 7:04
How seen we forget. "Free trade" open markets will provide Mericans with low cost goods, spur innovation and productivity, increase domestic GDP, instigate the development of ground breaking new products, yada yada braddelong yada.

Well, wrong on all counts. Walmart (Chinese) goods are anything ut innovative and cost much more (when the entire costs of unemploment and health insurance, destruction of the infrastructure, etc) are considered.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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