This is further ammunition for my theory that China is on "our side", that our battle is not with China, but with the Islamist resurgence and its claims for a caliphate with the Koran to take place of western constitutions, written or not.
As part of that theory, there is it converse: that needless criticism of China -- and lots, thought to be sure not all, is needless -- is counterproductive to the west.
The "brouhaha" as Jake calls it, over the value of the yuan is particularly puzzling, given any major moves on the upside will impact US facilities in China, which are the major source of exports to the US: 80% as the chart above shows.
Jake says it better:
Brouhaha over trade surplus and weak yuan makes little sense |
| US lawmakers and manufacturers have criticised China for keeping the yuan undervalued to benefit its exporters. SCMP, June 21 It is the old line of talk and we can expect it any time there is also talk of movement in the yuan to US dollar exchange rate, as there has once again been in Beijing at the weekend. But talk is cheap, they say. And this time the story is not exactly what the old line of talk has it to be. China's enormous trade surplus is rather lopsided (see first chart). In nine of the past 10 years, it was a trade surplus with the United States alone. With the rest of the world, China has consistently run a trade deficit. This is not quite as the figures from Beijing show the picture. They portray a much smaller trade surplus with the US. They only manage to do this, however, by treating much of it as a surplus with Hong Kong because the goods are shipped through Hong Kong as re-exports. Get the figures from US customs authorities and you get the true picture. Then there are the foreign-invested enterprises, which account for more than half of China's exports. They also account for more than 75 per cent of its trade surplus, up from less than 10 per cent 10 years ago (see second chart). It is possible, I suppose, that these foreign-invested enterprises could come from all over the world but I doubt it. If they account for more than 75 per cent of China's trade surplus, then I think it pretty certain that they hail from the same country that overwhelmingly accounts for this surplus. So can we hear again how US manufacturers criticise China for keeping the yuan undervalued to benefit its exporters when the exporters in China who have benefited most from this trend are US manufacturers? Will someone please explain to me how US politicians can fulminate so loudly about China's pernicious trade surplus with the US when that trade surplus has been created by the very US corporations that these politicians say they wish to protect from competition in China? I just can't make it add up. It gets even worse than this, however, worse for China, better for the US corporations. These foreign-invested enterprises do not keep the US dollars that they make from their big trade surplus. They could do so if they really wanted and there certainly were times in the past when they did so. As recently as six years ago the People's Bank of China complained loudly that they kept too much of their profits abroad and should repatriate the money. But these days they bring it all back to China, much more than the system can handle and the PBOC has the opposite complaint to deal with. It must mop up the dollars if it does not want the system to drown in them. It does do by giving the holders yuan instruments, bonds and other things, in exchange for their dollars. This is not quite enough to relieve the pressure, however, and thus the PBOC is now again talking of letting the yuan appreciate. The foreign-invested enterprises win again. They get yuan, which rises in value against their home currency, the US dollar, and the government of China gets US dollars, which fall in value against its home currency, the yuan. It is not only at the World Cup where own goals are scored these days. |
