[LINK] "China versus world"
Jan. 13th, 2011 08:23 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
rfmcdonaldScott Peterson's point at Wasatch Economics is well put. I've heard and read people talking about this for some time.
This derives from a Michael Pettis post suggesting that while developing countries--particularly China--are able to limit the strength of their currencies, the United States and the Eurozone aren't so able, and are consequently going to be forced to "give up the hope to rebuild growth and employment based less on consumption, and more on production and manufacturing" or to do something else, perhaps (as in Portugal) resolve its external imbalances with a collapse in demand.
It appears that the PRC is and will continue to be unresponsive to the concerns of essentially the rest of the world in terms of trade policy. This is understandable from the perspective of the PRC’s leadership, as their primary objective is to remain in power and continuation of current policy seems the best way to achieve that objective.
What can the rest of the world do to offset the result of the above? The indoctrination of policymakers and the public regarding the virtues of “free trade” over roughly the past 30 years in Western countries means that setting up tariffs and trade restrictions against Chinese products would be an admission that “free trade” has been a failure. The logical conclusion from this would be that policymakers and politicians who created and advocated for “free trade” need to be replaced. Therefore such a policy reversal is unlikely to come from current leaders. In addition the status quo has been highly profitable for elites both in the West and in the PRC, which means that these groups will be strongly opposed to policy reversal, decreasing the chance that this will happen.
This derives from a Michael Pettis post suggesting that while developing countries--particularly China--are able to limit the strength of their currencies, the United States and the Eurozone aren't so able, and are consequently going to be forced to "give up the hope to rebuild growth and employment based less on consumption, and more on production and manufacturing" or to do something else, perhaps (as in Portugal) resolve its external imbalances with a collapse in demand.
