Should we care about China’s concerns?
11 oktober, 2010
Sammanfattning
Kina har på senare tid uttryckt sin oro över USA:s – och på sistone också Eurolands – kritiska syn på sin valutapolitik. I sitt försök att avfärda den västerländska kritiken påtalade premiärminister Wen Jiabao Kinas olika risker som följd av en snabbare kursändring till en starkare renminbi – inklusive risken för social oro. Den senare punkten framkallade – konstigt nog – ingen större massmedial eller analytisk uppmärksamhet i vår del av världen. Är detta skäl nog att negligera Wens varningar?
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During the first week of October, the U.S. and – after a longer period of relaxation – Europe loudly increased their pressure on China. They want China to speed up its appreciation process. This criticism may be motivated if we stick to the pure economic analysis of global economic and financial imbalances which actually put the world’s two biggest economies in the front row. Another question, of course, is whether the Western verbal attacks on China can take us closer to a solution of the problem.
I don’t think so. I even think that this renewed external currency pressure on China is counterproductive and will delay a better solution of the currency disequilibrium between China and the OECD world. This conclusion is not very courageous. But there is another piece in this verbal “currency war” that puzzles me a lot:
Why did Chinese prime minister Wen Jiabao use the following strong words when reacting recently (October 6) on(mainly) the tough American pressure on Chinese exchange rate policy:
“Do not pressurize us on the renminbi rate…Many of our exporting companies would have to close down, migrant workers would have to return to their villages. If China saw social and economic turbulences, it would be a disaster for the world… “.
The answer is not quite obvious. Three possibilities may be singled out:
a) Many Chinese exporting companies are really in deep troubles and can just survive with their current product/profit margins.
b) Derived from a): Chinese political leaders have tough domestic pressure on their exchange rate policy for short-term labor market reasons, thus neglecting the needs of certain structural domestic improvements and globally necessary adjustments, like, for example, in exchange rate policy.
c) Chinese problems with the export-related employment are not so serious – but they may be stressed by the expectation that very concerned and dramatic Chinese descriptions of the current situation may lead to increased international understanding of China’s complicated exchange rate policy.
I am not very inclined to join the third possibility (even if it cannot be ruled out completely). It does not seem to be plausible option that a Chinese leader for tactical reasons points at the risk of social unrest and its consequences.
Conclusion:
Chinese political leaders are probably truly concerned about the risk for social nervousness or even social conflicts if the renminbi gets into a fast appreciation cycle – a development that in particular influential conservative political leaders outside the government internally may be warning for strongly these days.