From the blame-China files, comes this editorial in yesterday's paper pinning the world's economic problems to Beijing's currency policies:
While the strategy is still working for China, it is exacerbating economic weakness around the globe. If China keeps it up, other countries are likely to use their last available weapon — protectionism — to stop the onslaught of artificially cheap Chinese goods. A trade war is easy to start and hard to contain. […]
As China has flooded the world with exports, it has edged out suppliers from other developing countries. This was bad enough when the world economy was growing briskly.
Now China's strategy is doing considerably more harm. In many countries, fiscal stimulus efforts have been weakened by inflows of cheap Chinese imports that have soaked up some of the money added by these government programs. […]
If China continues its beggar-thy-neighbor currency policy, it will make it even harder for countries and the global economy to revive. As overextended governments wind down their fiscal stimulus, many economies will have to rely on exports as a crucial source of demand while their consumers restructure their sorry personal finances.
This follows a New Year's shot across the bow from econo-columnist Paul Krugman:
China has become a major financial and trade power. But it doesn't act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today's depressed world, that policy is, to put it bluntly, predatory. […]
[T]hat trade surplus drains much-needed demand away from a depressed world economy. My back-of-the-envelope calculations suggest that for the next couple of years Chinese mercantilism may end up reducing U.S. employment by around 1.4 million jobs.
[O]ther countries are taking (modest) protectionist measures precisely because China refuses to let its currency rise. And more such measures are entirely appropriate. […]
[T]here's the claim that protectionism is always a bad thing, in any circumstances. If that's what you believe, however, you learned Econ 101 from the wrong people — because when unemployment is high and the government can't restore full employment, the usual rules don't apply.
I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades — and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us).
Unlike Friedman, I've never read "The Herald Tribune over breakfast in Hong Kong harbor," let alone put that in the lede of a column (though I will take this opportunity to reiterate my complaint that the IHT really sucks œuf à la coque compared to its past glory now that it's basically The New York Times International), but hick intuition tells me that a regime that depends on restricting the freedom of its own people is by definition not addressing its "real problems," but rather putting them off for a day of unpredictable reckoning. Meanwhile, blaming another country for America's woes strikes me as, at the bare minimum, weak.
