Cool The China Demagoguery Until the Crisis Ends, Please
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  • Dave

    Would have been better to act 10 years ago than now, but better to act now than to wait for a recovery that won’t come until China changes its behavior.

  • S.Clark

    Enforcement of existing laws would be easier if there weren’t so many of them to enforce. No one should be surprised at the lack of uniformity in this regard. Your candidates for ones to enforce are certainly good ones to choose, but they have to compete for resources available and the constituency affected by industrial espionage is not particularly vocal, and the populist impulse is hard one to resist with an election cycle about to begin.

  • WigWag

    “Given that the Fed has been doing its best to keep interest rates (and therefore the dollar) as low as possible, we are not in the best of positions to attack China for currency manipulation right at the moment.”(Walter Russell Mead)

    No, not exactly. While the Fed has been doing it’s best to keep short term rates low, it has been getting a major assist in keeping short and long rates low from China itself. China’s currency manipulation, which keeps the renminibi significantly below where it would be if it’s value was set by the market, helps drive China’s massive surpluses.

    It’s China’s need to do something with these surpluses which motivates it to buy the sovereign debt of the United States of various durations even if the return is practically nonexistent. What else is China supposed to do with all those dollars it is accumulating because of it’s massive trade surplus with the United States? Convert the dollars to Euros? Buy non-performing American mortgages? Use the dollar bills to wallpaper the Great Wall of China?

    One of the reasons U.S. Interest rates have been so low for so long and the major reason the ten year note is yielding significantly below two percent is because Chinese surpluses ensure that China has a voracious appetite for U.S. Government debt. Chinese currency manipulation hurts American exports and our manufacturing sector and at the same time drives our interest rates down.

    While these low interest rates may provide our economy with some major benefits, there is no question that they also drive the profligate fiscal behavior of both the private and public sectors in the United States.

    In fact, while those more concerned with ideology than reality like to fixate on the bad behavior of Fannie and Feddie, in fact low American interest rates driven by China’s need to invest it’s surpluses were a proximate cause of the housing bubble.

    Professor Mead may be right that this isn’t the moment to fight with China about currency manipulation, the world economy will never be stable as long as China keeps manipulating it’s currency.

  • Kris

    “I feel there’s a time and a place for everything, and the time for a big fight between the US and China would be sometime when the world economy has settled down”

    Au contraire! According to many, “It was World War Two, not the New Deal, that ended the Depression.” So what better way to get out of this incipient Depression 2.0 than a good ol’ war with China?

  • Jim.

    The media keeps repeating “access to the China market” more as a mantra than an argument.

    Debates like this one would be vastly assisted by a little bit of data about how much we actually export to China — in other words, how much is actually at stake in a trade war?

  • Rifle308

    Dr Mead, you and David Goldman (Spengler of Asia Times and blogger at PJM) should get together by whatever means of communication that is workable to talk and hash out ideas. The cross fertilization of knowledge between you two I think would be of good value to all readers.

    I say this because the both of you have an international perspective with what I would call a true vision of the hard facts of the world.

    I can think of other writer-thinkers I would like to see talk with each other and you, from Jerry Pournelle to Victor Hansen Davis.

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