We have all noted the sense of urgency in the past several months on the dialogue over the proper value of the RMB (haven't we?) and its relationship with domestic macro concerns as well as global imbalances. This is not a new issue (I remember writing about it back in the days of my first China blog), but the tone is changing. Domestic and international commentators, not to mention policymakers, are coming together much more and agreeing a bit more on the "when" and "how much" questions. Now even the Europeans are starting to complain and agree with the Americans – oh my.
One argument that was quite in vogue for a couple of years was which country was responsible for global imbalances. Most of the focus was on China's bilateral surpluses (e.g. U.S., EU) and the U.S. savings problems (low private savings, government deficits). As the dollar has plummeted, even this conversation seems to have changed.
From Brad DeLong, econ professor and blogger:
Four years ago I would have said that the principal source of international economic disorder was made in America. That has passed as a result of the decline in the value of the dollar and the ebbing of the political strength of right-wing populist factions in the United States that seek ever-greater redistribution to the rich fueled by ever-increasing tax cuts and ever-rising long-run deficits. Today the principal source of international economic disorder is made in China, in the form of factions inside China's government that hope to avoid a more-rapid appreciation of the value of the renminbi.
DeLong is not a China basher. This could signal a real change in the tone of the conversation. Unfortunately, the timing of this coincides with a lot of bona fide China bashing going on in the West right now. Let's hope that econ policymakers over here listen to the constructive criticism of folks like DeLong and ignore the crazy talk of those in Congress who are still pushing punitive tariff measures.
Food for thought:
Chinese Exporters Adapt to Rising Yuan
Flexibility of China's Currency Expands