Protectionist Threats

The protectionist threats are getting louder. Unless China changes its practices immediately, Senators Schumer and Graham are calling for a vote on their bill to impose a temporary tariff of 27.5% on all imports:

Play by the Rules, by Charles E. Schumer and Lindsey O Graham, Commentary, WSJ: If there's one issue on which we all should agree, it is that increasing global trade is good for American workers and businesses. No serious economist believes that we would be better off if we closed our borders. But for trade to be good for our people, every major economic power needs to abide by the rules of free trade.

One of the fundamental tenets of free trade is that currencies should float -- or at the very least, move along with market forces. The reason for this is that a free-floating currency allows large trade imbalances to self-correct... Unfortunately, the Chinese government intervenes in the market to keep its currency, the yuan, artificially low, which allows China to artificially inflate its exports and reduce its imports. Their continued manipulation is a form of protectionism, and it throws the whole global trading system out of balance...

China bends or breaks the rules far too often. Years of currency manipulation, intellectual property theft, and barriers to entry have cost American jobs and contributed heavily to our trade deficit with China... China's actions ... make it harder for Americans to support free trade...

Three years ago, we grew frustrated with the pace of China's reforms, and we introduced a bill that would impose a temporary tariff of 27.5% on all Chinese imports unless China agreed to play by the rules. Our bill was carefully crafted to not impose tariffs immediately, giving the parties time to negotiate an alternative. In addition, the president would retain the right to delay the tariff for up to two years. Neither of us wants the tariff to become law; our goal all along has been to send a shot across China's bow and prod them to play fair...

Senior administration officials concede that our bill has helped strengthen their hand in negotiations. So we have succeeded in getting China's attention. In fact, we believe the only reason there has been any progress on this issue at all is because of the existence of our bill...

In April 2005, we finally brought our bill to the Senate floor. The Chinese responded that July by allowing the yuan to appreciate by 2.1%, and promising to allow market forces to play a greater role in determining its value. Since the small revaluation, however, the currency has appreciated very little in 14 months... So the rhetoric out of China is not being matched by real results.

We have agreed four times since last April to delay taking a final vote on our bill. Before the most recent delay, in March of this year, we traveled to China to meet with several of its top government officials... We returned from our trip with the strong impression that China would move more quickly in the ensuing months. However, ... there was no real movement.

We appreciate that China's banking system is not yet ready for a fully floating currency, but we also agree with most mainstream trade economists that gradual currency appreciation is possible without disrupting their "harmonious society." We have been patient and reasonable, but the time for patience has run out. The workers and manufacturers in our states rightfully demand a level playing field...

Unfortunately, the Chinese appear to be content with the status quo... They have no reason to change unless we send a very strong message that the status quo is not acceptable.

We look forward to meeting with Treasury Secretary Hank Paulson, who just recently returned from China. We hope he brings back good news. If not, the clock will have run out and it will be time for an up-or-down vote. With Congress's recess imminent, we know our bill will not become law, but it will be our last opportunity before a new Congress convenes to send such a message. We believe more strongly than ever that pressuring the Chinese to allow their currency to float is in the economic interests of both nations.

My guess is that China will say the right things, then do what it was going to do anyway. Hopefully, whatever happens, protectionism can be avoided -- that's a downward spiral for all. But if the yuan is devalued revalued significantly, a previous post (slightly edited) summarizes what might happen. We shouldn't expect any miracles in the short-run:

1. Consumers are worse off due to the rise in the price of consumer goods. If revaluation is bilateral and production moves from China to other countries, this effect may not be as large in the long-run. If the dollar devalues against other currencies generally, the effect on prices paid by U.S. consumers will be larger.
2. Borrowers (households, business, and government) are worse off due to rising interest rates which increases the cost of loans and the cost of financing government debt. Part of this is a transfer from borrower to lender, but there is a net drain as well due to debt held by foreigners.
3. U.S. manufacturers are better off, but this requires the dollar to devalue against other currencies generally, not just against a particular currency such as the yuan.
4. If U.S. manufacturers do better, then employment will increase as well making labor better off, but this takes time to occur.
5. If employment and manufacturing do increase, there are transitional costs to consider. Rising interest rates will cause less activity in sectors such as housing and more activity in other sectors such as (hopefully) computer chips. Thus, during the transition unemployment could increase. Nevertheless, to the extent that such domestic and international rebalancing is healthy for the economy in the long-run, there is a long-run benefit that more than offsets the short-run cost.

Update: I didn't cover this aspect, but Greg Mankiw and KNZN (the latter more completely) evaluate the statement "One of the fundamental tenets of free trade is that currencies should float."

Update: William Polley has the latest, "But it does keep their name in the papers...":

Senators Schumer and Graham may be standing down... for now...

Comments

[John Konop]

Mark,

You never talk about child and slave labor with this issue why! Labor is a major factor in cost of products. Also people like you who support or show indifference blind eye to the slave trade are part of the problem.

The only arguement I hear from you is am pushing my morals on you.With that in mind, my last question , should we just bring back the slave trade so we can compete? Of I forgot we do it know with illegal immigrants and blue collar job visa holders from third world Countries.

[anne]

A typically offensive and absurd and would-be bullying comment.

[John Konop]

anne,

You say, "offensive and absurd" comment. Show me in the post what was said about child and slave labor. We all know this is a big part of the problem. So Why not talk about it?

[save_the_rustbelt]

"...that's a downward spiral for all...."

A large chunk of the US workforce is already in a downward spiral.

[paul]

Mark - you wrote But if the yuan is devalued significantly, ....

You meant revalued, no?

[Ken]

any significant revaluation of the yuan would be the pin that pops the already deflating housing bubble. The dollars recycled by the CCB have kept rates low and allowed us to run massive deficits for the past 5 years without significant consequences via higher interest rates. The Bush administration has used the peg to support Tax cuts and financing for the Iraq War. As the economy slows and tax recepts fall as a result, the US will become more dependent on foreign demand for US Treasuries.

The fact is our largest sectors. the retail sector and housinf sectors are addicted to the peg.

All this talk about a revaluation is just that. pre-election rhetoric. If they were serious the administration would be talking about deficit reduction before pressuring the Chinese to float the Yuan.

One way or another the American consumer will pay the price. There is no free lunch

[Dave Schuler]

As long as we reduce what we manufacture here, import manufactured goods from China, and China restricts what it imports from us in any of a hundred ways, we'll have a substantial trade imbalance with China. You've written on this subject yourself, Mark, and your prescription IIRC is that we need to re-emphasize manufacturing. How is that to be done without import tariffs?

BTW Menzie Chinn of Econbrowser very kindly produced a Chinese GDP to bilateral trade balance graph which I've appropriated and commented on here. Very interesting.

[kharris]

Note the timing. A vote on the Schumer/Graham bill was delayed from earlier this year to closer to the election season. I don't expect we'll be faced with passage of legislation. Just lots of sound bites and photo ops.

[calmo]

Is the stall related to the multinational composition of the China exports?
I liked this bit:

The workers and manufacturers in our states rightfully demand a level playing field..

juxtaposed with the recent domestic auto industry's announcements (In particular, the new Ford CEO's compensation and the firing of half the employees.) about how they are going to cope with a dwindling share of that field.
Is the trouble with the picture related to the multinational nature of the producers of that picture?

[John Konop]

Dave,

How do tarrifs fix child and slave labor with no enviormental and workers rights. Would not the Country with no standards make a higher margin per widget.Why not negotiate and enforce livable working standards with enviormental, safety and workers rights.Why not raise the bar not lower it.

FROM WILLIAM THOMAS

Preface - Made In China.
Fateful decisions made by China’s leaders, limiting births to mostly males and forbidding farmers to tap shrinking reservoirs diverted to smog-choked cities could lead to internal strife and foreign conquest as this economic powerhouse reaches the limits of explosive growth. But US consumers continue to fund China’s military modernization, even as they erode their own economy and employment at home. Even worse, Wal-Mart shoppers are supporting forced labor camps where the healthiest inmates are executed for “organ harvesting”. Wal-Mart also buys heavily from slave labor manufacturing zones, where women workers are typically paid 3 cents an hour or less for 70 to 90-hour work weeks. See smuggled photos here. And please don’t buy any products “Made In China”.

“When the natural way is lost…
When goodness is forgotten…
When the people are no longer kind…
When this is lost…
May be the beginning of confusion,
The beginning of great folly.”
-Way of the Tao by Lao Tzu

http://www.willthomas.net/Convergence/Weekly/China.htm

You guys are blind not to think this is not part of the problem !

[anne]

Rubbish. I must remember to look for a couple of fine Chinese silkscreens for gifts.

[John Konop]

anne,

Read for yourself.

The Chinese Ministry of Labor admitted that the child labor situation was very serious throughout the country. It stated that exploiting child laborers has become a common occurrence. In some coastal areas and particular economic zones, such as Fujian and Guangdong, as well as Zhejiang, Sichuan, and Hubei, there are reported to be approximately four to five million-child laborers under the age of 16. Child laborers under 12 years of age are also found in Whenzhou and in some areas of Guangdong and Hainan. The children usually work 10 to 14 hours a day with half the wages of an adult

http://ihscslnews.org/view_article.php?id=57

Read more,

Slave Labor: Made in the U.S.A. (Excerpt)
by William Norman Grigg
February 6, 2006
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Under the influence of disgraced super-lobbyist Jack Abramoff, former House Majority Whip Tom DeLay became an apologist for slave labor camps — on American soil.
Deep in a humid tropical island jungle, in poorly ventilated buildings ringed with barbed wire and patrolled by armed guards, impoverished Asian women — most of them Chinese — toil for 80 hours a week making brand-name apparel for export to the United States.

The female garment workers were lured to the labor camps, which are run by members of the Chinese Communist Party, with promises of wages extravagant by their standards, up to 60 percent of what their counterparts in the U.S. earn. But before they were hired, the women had to sign “shadow contracts” that effectively made them slaves to the company. Their activities are strictly regimented, and since they depend on the company store for most of their necessities, what they earn is recycled back into company hands. Furthermore, most of the workers had to borrow huge sums of money, at extortionate rates of interest, to pay, up front, the human traffickers responsible for transporting them to the island.

As is the case wherever the Chinese Communist Party claims jurisdiction, the female garment workers are subject to the regime’s repulsive one-child policy. They are forbidden to marry or have boyfriends. Those who become pregnant are forced to have their children aborted.

http://www.thenewamerican.com/artman/publish/article_3116.shtml

This is called the race to the bottom economic strategy.

[anne]

Rubbish, and offensive rubbish, and I know that not having bothered nor ever being bothered to read such rubbish.

[Steve Waldman]

Mark writes regarding the consequences of a revaluation...

U.S. manufacturers are better off, but this requires the dollar to devalue against other currencies generally, not just against a particular currency such as the yuan.

I think this is a bit overstated. While US exports to countries other than China would not be helped by a revaluation of the Yuan alone, domestic manufacturers who compete in the US market with Chinese imports and US exporters who hope to sell in China would be directly aided by a bilateral revaluation.

[nedlink]

I think I recall the same scenario years before re Japan. We complained that Japan was flooding the US with exports while our goods could not penetrate its market due to "unfair" barriers, etc. As I recall, after a few years of bitching we got over it and simply dropped the subject. Perversely enough, I would rather like Congress to impose tarrifs on Chinese goods and see what happens. I suspect it would end up being a good lesson for us.

[John Konop]

Steve,

Are you saying if we fix the currency issue the race to build sweatshops would stop and wages would go up? Why would a company stop going after the cheapest labor market with no standards ? Companies compete among themselfs, not by Country.

[John Konop]

nedlink,

Japan did not have a policy to treat employees like slaves. To compare Japan to China,Oman,Jordan.... is like apples to oranges.

[Ken Houghton]

The Chinese have already damaged most of the rest of the SEAN economies much more seriously than they could ever damage the U.S.

[nedlink]

Konop:

The idea that we can control Chinese labor policy, etc., is simply silly. And please tell Wal-mart not to sell any more cheap Chinese imports because of its "slave" labor. I am sure Wal-mart will stop importing from China immediately. LOL.

[Ken]

Thats very true. Labor had a very large role in post WW2 Japan and one of the reasons a middle class emerged. China's cheap labor is their only export. they are natural resource poor.

The only way we can "trade" with emerging markets is if there is more transparency and some representation of labor at the WTO.

Take a look at Mexico. Remember that BS promise? American Companies will open factories and improve the livin standards of the Mexican people. Illegal immigration will slow.

yea right. BTW i've got some prime real estate overlooking the Tigris Euphrates for sale

says...

It seems that the USA is fielding eleven narcissistic one-man "teams" in a football match against a finely honed, well-trained & organized TeamChina or TeamJapan. And while the USA seems to be dressed for a walk-in-the-woods, our primary competition is dressed in full body-armour.

Maybe one day, nation-states will fade to insignificance and BWII will be supplanted with something robust and impervious to manipulation. Maybe, in the future, nuclear fusion will provide unlimited free power to all make leisure equally possible for everyone. Perhaps, one day in the future, cooperation between nations for progress will supplant what in many markets is zero-sum competition.

But in the meantime, what does one do to preserve trade that is good, in theory, and rather often in practice? For the USA, in its most myopic pursuits, facilitates, enables and even encourages trade and geographical patterns of investment by US Companies & our "partners" that are overtly predatory in nature by design and rather obviously unstainable.

US Congressional indignation like Schumer's is understandable if one only looks at facile symptoms, but is laugably hypocritic when seen in light of their (and the whole US polity's) historical unwillingness to support and empower more sustainable fiscal, monetary and energy policies that would, at the very least, insure we were, metaphorically, fielding a high-calibre team, trained for a competitive match in the same sport. One need only look to the EU for such policy schematics that at least treat it as a team sport until there is something better and more enlightened for all, to supplant it.

[John Konop]

nedlink,

We use to have laws that did protect against slave labor in trade deals.That is what the debate was about with WTO/CHINA and NAFTA.........

This was from the original debate in 1999 about WTO/China.

REP. SHERROD BROWN, (D) Ohio: The deal was killed by Chinese Communist Party behavior over the last ten years. Every time we try to work with the Chinese, there is one more example of how they violate every accepted international norm -- shooting missiles at the Straits of Taiwan. Selling nuclear Hispanic ring technology to Pakistan; smuggling AK-47's in the United States illegally; forced abortions, child labor, slave labor and ultimately a trade deficit with the United States, a surplus on their part, a deficit with us. We sell only about $12 billion of our goods to China because they've closed their market. We buy about $75 billion worth of goods from China. So the President can claim and Charlene Barshefsky can claim and Premier Zhu, for that matter, can claim that they've made a good agreement but they've promised lots of things in the past. I don't think we look at what they promised. We look at their behavior in the last year. Let's see if they can stop doing the kinds of things and sticking their thumb in the eye of world opinion and world international accepted norms for a period of six months or a year before we so enthusiastically let them into this World Trade Organization

http://www.pbs.org/newshour/bb/asia/jan-june99/zhu_4-16.html

Other than China killing our middle class and our Country in debt to China with uncontrolled trade debt what has change ?

[nedlink]

Well it takes two to tango. And the Chinese aren't showing much inclination to dance. So what do you propose doing that would be feasable? And please don't tell me we should stop buying Chinese goods, since that ain't-a-gonna happen. We can bitch and screech and scream, I suppose, if that makes us feel better. And not much else.

PS They are now in the WTO so we can't use that as a club.

[John Konop]

Nedlink,

Would you rather sell goods to a market with an average wage of 40k (U.S.) or 2k China ?

Also China is having problems with unrest due to the slave wages. So it would help them also to keep people happy if wages went up.

Read from an article based on reporting from the Washington Post.

Though each of these was an isolated incident on its own, they are part of growing pattern of angry resistance by China’s poor—whether from peasant farms or sweatshop factories—to the Communist Party’s cozy alliance with capitalist business. A minister for public security in China estimated that 3.76 million people participated in what he termed “mass incidents” throughout the country during 2004, and that the frequency of these incidents has been increasing.

The government has become very concerned, both because this expression of people power threatens the stability of Communist Party control and because it could undermine the party’s goals for further economic development in the capitalist mold. The spread of cell phones and the internet are allowing unofficial news of resistance to reach a larger Chinese audience, despite the efforts of government censors in the official media. Even the state-run media has begun reporting that the root cause of the recent unrest is the widening gap between rich and poor in the country. Perhaps conveniently, these reports downplay the idea that protesting citizens could be angry about the political structure of one-party rule. After all, much of the economic development that has been part of China’s shift to capitalism and the growing rich-poor gap has relied on collusion between local government officials and private businessmen.

http://www.fguide.org/Bulletin/Chinesepeasants.htm

[Movie Guy]

Mark Thoma,

Have you taken the time to read the Senate bill - Schumer-Graham bill?

That would be worthwhile. It's a short read.

To suggest that immediate tariffs would apply is to misconstrue the provisions of the bill. There is considerable latitude allowed in implementing its provisions - 2 years all together, as I recall.

I recommend that you post the link for the actual legislation so that others can read it.

[Mark Thoma]

Thanks - you might read the post again too - all of that is noted:

Our bill was carefully crafted to not impose tariffs immediately, giving the parties time to negotiate an alternative. In addition, the president would retain the right to delay the tariff for up to two years. Neither of us wants the tariff to become law; our goal all along has been to send a shot across China's bow and prod them to play fair...

[nedlink]

Konop:

How soon do you think the Chinese will take your advice, as they undoubtedly will? Tomorrow or next week? LOL.

[anne]

There is no worry, fortunately we are growing closer to China. The proposed tariff legislation will never become law.

[anne]

Notice however the lunatic language:

"Neither of us wants the tariff to become law; our goal all along has been to send a shot across China's bow and prod them to play fair..."

Imagine, such lunatic imagery as firing a shot across China's bow.

[John Konop]

nedlink,

YOUR QUESTION

"How soon do you think the Chinese will take your advice, as they undoubtedly will? Tomorrow or next week? LOL".

This is not about advise it is called negotiating. You forget are consumers make 40k a year not less than 2k in China.

Do you really think our economy would fall apart if we stop buying from China? This blog even put up a post months ago showing wages are droppping faster than any savings from the trade deals for people around the world and here.

Your deer in the headlight trade strategy is not working! The real point is we must change this game and fast.

Read for yourself.

Nov. 19 - In Germany, Federal Reserve Chairman Alan Greenspan warned that the persistence of bloated U.S. trade deficits over time can pose a risk to the U.S. economy.

By Warren E. Buffett, FORTUNE

I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits -- and, as you know, we've not only survived but also thrived. So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in -- and today holds -- several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.

[John Konop]

Mark,

You said.

"Our bill was carefully crafted to not impose tariffs immediately, giving the parties time to negotiate an alternative. In addition, the president would retain the right to delay the tariff for up to two years. Neither of us wants the tariff to become law; our goal all along has been to send a shot across China's bow and prod them to play fair"...

The President and Congress both get money from companies like WalMart. Why would you expect them to change anything to do with production cost ie slave labor,regulations....... Why not call them on the carpet about workers rights. You guys who were for this deal , as I posted, told us you had this issue under control. And now that it is not working in any of the trade deals with China,Mexico,Jordan... you do not talk about this issue. WHY ????

[John Konop]

anne,

Do you not think China,Mexico,Jordan... has a problem with workers rights?

Do you not think this effects trade and wages ?

[John Konop]

Mark,

I do understand the currency issue. But it looks like, you guys think you fix that and the trade problem goes away.You can show me all the charts and studies you want , but if you have no rules about labor companies will migrate toward slave labor.

This debate was had in our own Counrty before the Civil War! BTW you are right, I do think it is wrong on a spiritual level. I do think in life there is right and wrong, that is why we have laws. I am not saying things cannot be in different shades , but slave and child labor is just wrong.

[save_the_rustbelt]

"...There is no worry, fortunately we are growing closer to China. The proposed tariff legislation will never become law...."

Anne:

Does it bother you a little to see the Secretary of the Treasury toadying to the Chinese government officials?

Of course he is really there representing Wall Street, so he has an agenda that extends past January '09.

[anne]

China should be understood to be and cultivated as a friend for us, as for other countries, and I am not the least interested in fear-mongering comments about the Chinese. There are domestic needs in China as here and problems that need to be worked on as much as we work on problems with France, but Chinese economic development has been and is a profoundly hopeful accomplishment for them and us.

[anne]

Cordial diplomacy, as this Administration is increasingly practicing with China, always pleases me. Interestingly enough, we have been conducting combined military exercises with the Chinese in the Pacific.

[anne]

STR, I understand your frustration but argue the need is a sense of New Deal domestic growth and labor policy.

[Ken]

Anne,

in regard to my previous post on productivity and healthcare

http://biz.yahoo.com/ap/060926/insurance_rising_premiums.html?.v=3&vm=r

note this stat

Employers on average pick up 84 percent of the cost for individuals and 73 percent for families

[anne]

This is helpful for us, Ken. Nice.

[nedlink]

Konop:

If you think the US is going to "stop buying" from China you need to see your analyst right away. Buffett didn't propose that we stop buying from China, he decided to buy foreign currencies that he thinks will hold their value better than the dollar.
What is the point of making rather silly posts completely divorced from reality?

[MarkedExcess]

Divorced from reality?

Buffet goes on to propose to eliminate the trade deficit by implemeting an artifical system that restricts the dollar value of imports to the dollar value of exports. A pretty substantial reduction in Chinese imports, one suspects.

http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html

Nobody's saying don't trade with China, just do it on our terms. Why sign a trade deal that's bad for Americans? Why? We certanly don't have to. We have all the leverage in the world -- they want into our market.

Are you really supporting a trade system that turns a blind eye to labor and environmental exploitation and that drives American wages to 3rd world levels? Is that where you want your wages?

Who's divorced from reality?

[save_the_rustbelt]

"...Why sign a trade deal that's bad for Americans? Why? We certanly don't have to. We have all the leverage in the world -- they want into our market...."

Well, maybe.............

Because economists think it is good for us --- in the long run.

Because it is good for corporate profits.

Because the wealthy who own the government want it.

[nedlink]

MarkedE:
You are quite naive to think we can dictate our "terms" to the Chinese. In fact, we are not in much of a position to compel them to do anything they don't want to do. Like revalue the yuan. You appear to think the US runs the world to its liking. It doesn't. I'd get in touch with reality if I were you.

[John Konop]

save the rustbelt,

You said it all !!

I have one question why do economist keep pushing a plan that is not working? Could it be they get grant money from the guys who are walking away with all the money while the middle class is sinking ?

[John Konop]

Nedlink,

Is your solution in a fight is to keep taking punches til you die ?

[John Konop]

Mark,

BTW, do you agree with Nedlink, that we have no chips to bargain with China ?

[save_the_rustbelt]

John:

It will work IN THE LONG RUN.

[nedlink]

And when push comes to shove, the US blinks:

http://news.yahoo.com/s/nm/20060927/pl_nm/
trade_china_usa_dc;_ylt=Aql45HWQruJbL078p24JjW0Bxg8F;
_ylu=X3oDMTBjMHVqMTQ4BHNlYwN5bnN1YmNhdA--

The senators get cold feet about confronting China. LOL.

[John Konop]

nedlink,

Why are not answer the question. What is your solution?

[John Konop]

SORRY,

why not answer the question ???? NEDLINK

[nedlink]

I don't see the need for any immediate "solution". But as Herbert Stein famously said, "when something can't go on forever, it will stop." Meanwhile both the US and China benefit from the relationship. That is why it exists. If I were you, I'd calm down and go with the flow. The tarrif proposal is just politcal theater.

[John Konop]

nedlink,

China has about 1.8 billion poor people. if we add in Mexico , Central America, Middle East..... It's a big number.

So understanding supply and demand , the U.S. has about 300 million. So do we need to cycle the billions of poor in third world before real wages go up again ? And with wages going down and debt going up you think this can keep going on ?

[nedlink]

John K:

Realism seems to have trumped politics:

"Two senators said Thursday they will abandon legislation that would have hit Chinese goods with steep tariffs but promised to renew efforts next year. Their goal is to pressure Beijing to change currency policies they say cost millions of U.S. jobs."

Yeah, "next year." LOL

[nedlink]

John K:

Just to rub it in a bit.

Brad Setser | Sep 28, 2006
And exit an undervalued yuan; enter an undervalued yuan and a undervalued yen.

Schumer and Graham are dropping their bill – apparently for good. It was pretty clear that they were unwilling to force the issue in any case. Schumer represents New York City as well as Buffalo …

Manipulation and tariffs are out. Misalignment is in.
I think it is also quite clear that the Treasury will not find China guilty of manipulation this fall either. Manipulation is not consistent with Paulson’s reputation as a China hand who works effectively behind the scenes. Or with his recent rhetoric. Though, consistent with past practices, it won’t actually issue the report clearing China until after the November elections.

[John Konop]

nedlink,

It is your future you should think About.