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China-Bashing Is Popular but Could Do More Harm Than Good
China-Bashing Is Popular but Could Do More Harm Than Good - Bloomberg
President Barack Obama and the presumptive Republican nominee, Mitt Romney, both act as if lecturing China about its undervalued currency is a good way to show they care about U.S. jobs.
We hope Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton will be able to set such rhetoric aside next week when they head to Beijing for a fourth round of talks on strategic and economic cooperation.
Make no mistake: China’s exchange-rate policy represents a threat to the world’s financial and economic stability. By keeping its currency cheap to support export-driven growth, China is doing more than just putting the squeeze on other countries’ manufacturers. With dollars piling up from its trade surplus, China is flooding the rest of the world with easy money. That encourages more borrowing and spending, contributing to debt crises like the one from which the global economy is still struggling to recover.
Pushing China to revalue its currency, though, is no way to fix the problem. Economic reality is applying ample pressure without any help from the U.S. China’s share of world exports is reaching the point where further expansion will be unprofitable. The country’s overheated export machine is driving up prices and wages inside China. This real appreciation has the same effect as nudging up the exchange value of the yuan: Chinese goods become more expensive, and hence less competitive, abroad.
Slowly Rising Yuan
China has also been letting the nominal exchange rate slowly rise. As of Wednesday, a yuan bought 15.9 cents, up from 14.6 cents two years ago and 12.1 cents in 2005.
What, then, might U.S. politicians achieve by taking a tough stand on the currency? For one, such pressure could actually prevent Chinese officials from pursuing exchange-rate liberalization, for fear of looking as if they’re capitulating to foreign interests. Worse, if the U.S. -- as Romney has advocated -- follows through on threats to declare China a currency manipulator and imposes sanctions, it could trigger a trade war that would incur heavy losses for both sides.
Even if China moved further on the yuan, it’s not clear the outcome would be beneficial. China faces the daunting task of shifting its economy to consumer-led growth, a move that will require it to end various subsidies supporting export industries. If it gets the timing and mix of currency, trade and financial liberalization wrong, that could derail an economy that has been a major driver of global growth. Such reforms could also lead to social upheaval if major job losses result.
More important, success in reducing China’s trade surplus wouldn’t necessarily help the U.S. In 2011, China’s current- account surplus, a broad measure of trade and financial flows, shrank by nearly 50 percent as a share of gross domestic product -- a trend economists attribute to rising commodity prices, slowing global growth and a previous increase in the exchange rate of the yuan. During the same period, the U.S. current- account deficit hardly budged.
Given the uncertain benefits and abundant risks, the U.S. would be better off doing nothing than adding its voice to that of the growing ranks of China-bashers. If it wants to address the root causes of global trade and finance imbalances, the U.S. could focus on limiting the government’s appetite for borrowing to cover its budget deficits, or on reforming a tax system that encourages consumers and companies to take on debt.
Low Rates
On the Chinese side, officials are aware there’s much to do beyond nudging up the exchange rate. China’s consumers, for example, would have more spending money if they didn’t have to keep their savings in banks that pay penuriously low interest rates. China also would free its consumers to save less and spend more if it created retirement and health-care safety nets.
True, such reforms are more difficult to pursue and sell to constituents than a public fight with a foreign power that is seen as stealing U.S. jobs (the populist American perspective) or looking to contain its ambitions (the nationalist Chinese view). But they would make a more desirable and lasting difference.
alleged bashing of Chinese students in Sydney
http://www.smh.com.au/national/chinese-students-at-risk-in-australia-20120426-1xn5v.html
The controversy surrounding the alleged bashing of Chinese students in Sydney is showing no sign of abating as China's largest television network and consular officials warned that Australia was no longer safe for Chinese students.
Six people, aged 14 to 18, allegedly robbed passengers, including two Chinese students, on a train between Central and Rockdale about 12.30am on Monday.
Officers were called to Rockdale station about 15 minutes later, where they arrested three men, two aged 18 and one 19, a 14-year-old boy and two girls, aged 16 and 17.
They were all charged with a number of robbery and assault offences. The alleged robbery included racist taunts.
China Central Television, the state network with hundreds of millions of viewers throughout the country, has warned the rising youth crime rate in Australia posed a threat to the safety of Chinese students.
"Once upon a time, Australia had one of the lowest crime rates in the world and was considered one of the safest places to study. However, the safety of overseas students studying here is under threat from escalating youth crime," CCTV reported.
The news report also alerted viewers to the spate of shootings in Sydney this week and said some cases involved under-aged offenders.
The Chinese consulate-general in Sydney also posted a travel warning on its website and warned its citizens to avoid unnecessary travel after dark.
A Foreign Ministry spokesman said that China was very concerned about the incident and urged Australia to improve its public security.
He refused to comment on whether the Chinese government still considered Australia a safe place for Chinese students to study.
The outrage among the students community is still brewing and Fairfax Media understands that more than 3000 students have signed a petition and are considering the option of staging a rally.
A Chinese mother from Nanjiang expressed her concern over the safety of her child studying in Australia and she said she was "extremely concerned about the safety issue over there. It breaks my heart to hear about my child's fear of going home after dark."
Peak students bodies in Australia have also issued strong statements in support of their overseas peers.
"The train attack on Chinese students in Sydney over the weekend will not be a welcoming prospect for those considering to study in Australia in future and we request an inquiry into making these services safer for our valued international student cohort,” said Chamonix Terblanche, national president of the Council of Australian Postgraduate Associations.
One of the victims of the attack, known as Xuan, suffered from a fractured nose and burns from a lit cigarette.
The international student from China is seeking a master's degree at the University of Technology, Sydney.
A translation from Xuan's blog on the Chinese social media site Weibo reads: "I really wish all of this is just a nightmare. However, the smell of blood in my mouth and body pains reminds me that this city is so dangerous.
"A gang of hooligans attacked us. Our noses are fractured and our bodies are covered in blood. My friend's cheekbone was crushed. They attacked us with glass and burnt us with lit cigarettes. My face is burnt and totally disfigured! Worst of all, I really hated their racist comments.
"They were calling us Asian dogs and pussies while they were beating us. When my friend tried to wipe blood from his nose, a teenaged girl stuffed my friend's mouth with her tampon removed from her pants.”
After receiving a report of the attack, former foreign affairs minister Kevin Rudd raised the issue with various interested parties, such as the Chinese ambassador in Canberra and the Minister for Immigration Chris Bowen.
The Mandarin-speaking MP also put his language prowess to use and posted sympathetic comments on the Chinese social media site Weibo.
Rudd in damage control as media storm over Sydney bashing of Chinese students escalates
http://www.smh.com.au/national/rudd...hinese-students-escalates-20120425-1xl4h.html
Former foreign affairs minister Kevin Rudd has started damage control to head off a potential diplomatic row with China after a media storm over an alleged attack on two Chinese students in Sydney.
Police said six people, aged 14 to 18, robbed passengers on a train between Central and Rockdale about 12.30am on Monday.
Officers were called to Rockdale station about 15 minutes later, where they arrested three men, two aged 18 and one 19, a 14-year-old boy and two girls, aged 16 and 17.
They were all charged with a number of robbery and assault offences.
After receiving the report on the attack, Mr Rudd called the Minister for Immigration Chris Bowen and the deputy secretary of the Department of Foreign Affairs and Trade.
He also messaged the Chinese ambassador in Canberra and Australia's top diplomat in Beijing, Frances Adamson.
Fairfax Media understands that Mr Rudd also raised the issue with the NSW Police authorities through an email.
The Mandarin-speaking MP put his language prowess to use and posted sympathetic comments on the Chinese social media site Weibo to placate the angry Chinese students.
"I completely detest racism and the safety of international students should be our most basic responsibility," Mr Rudd said.
He also downplayed the racial aspect of the attack and said the robbery and assault was not directed against Chinese.
"Apart from the two Chinese students, other people were also robbed, the attack was not directed at Chinese."
Mr Rudd has invited Chinese students to share their Australian study experiences with him.
"I have a special interest in the experience of Chinese students, deep emotional connection and even a sense of responsibility. Though I don't have any power or responsibility now ... I am still interested in receiving reports about your experiences in Australia."
The media storm surrounding the student attack has spread beyond China into Malaysia, Singapore, Japan and Hong Kong.
Singapore-based English-language newspaper The Straits Times reported that "Chinese students [were] beaten and robbed in Australia".
The president of the Australia-China Youth Association, Jeffrey Sheehy, said: "This event is not only tragic for those involved, but also damaging to Australia's reputation in China. This event has reverberated thousandfold around China, on Weibo and in mainstream media."
Mr Rudd's damage control move seems have yielded positive results. Many students have heaped praise on the former prime minister and thanked him for his effort to raise the issue with the Australian authorities.
Tinco, a Weibo user from Perth wrote: "I am living in Perth now and just graduated. I was mugged when I was a student but I still love this country."
Mocmex, a blogger from China said: "Despite the possibility of facing discrimination in Australia, there is still the infrastructure of justice and many layers of checks and balances in this society. There are channels for the disadvantaged minorities to voice their concerns and politicians like Kevin Rudd who cares to listen.
"Unlike in China, where people have to rely on the internet to seek redress and some complainants have been sent to mental asylum."
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