If I have seen further it is by standing on the shoulders of giants.

Tuesday, November 15, 2011

Scapegoating others no answer to U.S. economic woes

by Liu Tian

In a replay of scapegoating China for the economic woes of America's own making, U.S. President Barack Obama claimed Sunday that Beijing has "still not done enough" to revalue its currency.

"There has been slight improvement over the last year but it hasn't been enough," he commented on the exchange rate of the yuan against the U.S. dollar at a news conference after the Asia-Pacific Economic Cooperation (APEC) economic leaders' meeting in Honolulu, Hawaii.

But he failed to mention the fact that the yuan has already appreciated by about 30 percent against the greenback in the past six years.

In international trade, every country is supposed to exert its competitive edge. China does have an advantage in labor costs when it comes to the trade with the United States. But it's puzzling that when Washington keeps complaining about its trade deficit with China, it refuses to sell hi-tech products to China, in which America has an edge.

To many, the U.S. obsession in the issue of yuan exchange rate is just another puzzle. Based on the facts over recent years, it's evident that forcing the yuan to appreciate will only result in massive bankruptcy of Chinese small- and medium-sized companies, and still leave the problem of U.S. trade deficit unsolved.

Chinese President Hu Jintao told Obama on Sunday that appreciation of the yuan won't help Washington solve its problems such as trade deficits and unemployment. In fact, China's exchange policy is responsible, said Hu.

At a CEO summit of the APEC, Hu also pledged China will give equal importance to import and export and focus more on increasing import while maintaining a stable level of export. This will probably spur the U.S. exports to China which may also create jobs in the United States.

For the United States, it should put its house in order before chiding others.

Since the onset of U.S. subprime crisis in 2007, it was the country's domestic economic problems that triggered a disastrous financial crisis that swept the world.

Excessive spending for many years has added up debts. Meanwhile, traditional strong industries such as finance and auto were devastated by the crisis, pushing up unemployment.

In face of such serious domestic problems which probably could trigger a new global economic tsunami, many U.S. politicians seemed only to care about how many votes they could get, without having a single thought about what kind of the global responsibilities the country should take.

Thus it should come as no surprise that the angry "Occupy Wall Street" protesters are calling for an end to the political tricks in Washington.

Squeezing China, especially on the yuan, is an old trick in the run-up to U.S. presidential election. Such a tactic of scapegoating others may attract some voters' attention, but is definitely no answer to America's real problems.

via Xinhua - Scapegoating others no answer to U.S. economic woes

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