The New York Times had an interesting piece yesterday discussing a whole host of beefs that China has with US economic policy. I’m sure we could drum up a few more folks who have a beef with US economic policy these days. But is it all justified? Some of the points in the New York Times article just don’t persuade me. Here’s why.
Beef No. 1: “Chinese officials seem to be galled by the apparent hypocrisy of Americans telling them what to do while the American economy is at best stagnant. China, on the other hand, has maintained its feverish growth.”
Aw, come on. Our economy is much bigger than China’s. Growth is neither equal nor steady along the path of industrialization. We would expect China to be growing more than the US, based on where it is in its life cycle. A very large mature economy like the US is going to grow at a slower pace. And eventually, all economies suffer from recessions. Just ask the Asian Tigers of ’97.
Beef No. 2: “Some officials are promoting a Chinese style of economic management that they suggest serves developing countries better than the American model…”
The New York Times left out the word “communist” after the word “developing.” No further comment. And just in case you plan on traveling to the Olympics this summer, make sure you have reviewed your Chinese in-country Olympics rule book in case you thought you could protest.
Beef No. 3: “The Chinese envoy to the WTO called on the US to halt the dollar’s unchecked depreciation before the slide further worsens soaring oil and food prices.”
First, let’s add another commodity we all know and love, steel. We’ve seen steel prices double since the beginning of this year. But second, the Fed can’t both help improve the economy and keep inflation in check. It’s really one or the other. Look, I’m not saying I like a deflated dollar, but a correction was in order. So what is the real beef? The Chinese are miffed about the value of their dollar holdings.
But in all fairness, some of the grievances are justified. In particular, protectionism through the promotion of unfair duties on Chinese goods, is a legitimate gripe. You may all be familiar with a mattress innerspring anti-dumping case we have reported on here and here. And metals in particular have been hit harder than other commodities.
Hey, whoever said it was going to be easy to do the Tango?