Saturday, November 06, 2010

Why strengthening of the RMB is wrong for the US - Janet Carmosky


Wal-Mart Supercenter in Shenzhen, China
Image via Wikipedia
China played a key role in the emotions surrounding the US midterm elections. Janet Carmosky explains in Forbes why strengthening of the Chinese currency is wrongly on the wishlist of US politicians. And why it scares her when the US is losing its economic position.
So unless Wal-Mart wants to take a patriotic hit on its mark-up margins, a strengthening of the Yuan is just going to put consumer electronics, apparel, and housewares out of reach for America’s already depressed middle class. The manufacturing jobs will move to Vietnam, the Philippines, Bangladesh, Malaysia, and other such countries with lower wage costs than China.
The US should do what it is good at, she argues:
I’ll admit that the prospect of America losing its way scares me too. But I would counter the fear and discontent with a simple message: America never can and never will out-Chinese the Chinese. China saves. America spends. China runs its economy top-down, from highly strategic single-party rule. America creates new models, believes in bottom-up genius finding its way through an obstacle course to a market shaped by human desires rather than government purchase orders.
Janet_-_023I
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