Thomas P.M. Barnett :: Weblog

COLUMN: “Gradual rise of renminbi keeps market-watchers guessing,” by Steve Johnson, Financial Times, 23 March 2006, p. 24.

ARTICLE: “WTO urges US to resist protectionist sentiment,” by Doug Cameron and Frances Williams, Financial Times, 23 March 2006, p. 4.

ARTICLE: “China’s competitiveness hit by energy and labour costs,” by Tom Mitchell, Financial Times, 23 March 2006, p. 1.

Sens. Graham and Schumer take a fact-finding tour of China as part of their showy threat to jack up tariffs on all things Chinese. Schumer, whom I dislike immensely for more reasons than I can count, was bragging to the international press during this huge ass-kissing exercise that the Chinese certainly are taking his threats seriously. I like a charming political blackmailer myself.

This kind of pressure is--to put it mildly--rather crude. The Chinese have basically been slowly but surely raising the renminbi across 2006, tiny slices at a time. They are betting they’ll do just enough to stave off the protectionists on the Hill, who, apparently, would gladly torpedo China’s economic rise and the hundreds of millions that rise has lifted out of poverty. Of course, such an approach strikes some as strategic, because putting the Chinese government in a precarious position vis-à-vis their domestic economic performance will get us… a more repressive regime. But then that dovetails with the hawks, who can continue to use China to justify the wrong force structure for a war that will never be fought.

And you see the alliances that work right now in DC: those favoring disconnectivity in both economics and security, which is just what you’d expect from the leader of the Free World, yes.

But this is how you turn the 2000s into the 1930s: the foolish pursuit of zero-sum thinking (I maximize my gains by minimizing yours). To realize that so much of this thinking still permeates our Congress is really disturbing. We need more people with serious security experience and serious business experience on the Hill, rather than the clutch of life-long professional politicians we currently suffer.

Anyway, China moves toward making its currency more flexible and responsive to global market pressures for a lot of good reasons that improve the decision-making within its domestic economy, which is maturing as it accumulates wealth.

And it’s that maturation process that means the notion that China presents a neverending low-price pressure on all things global simply evaporates, as the world turns out to be a lot less flat than imagined. Energy costs and labor costs already mean that China is no longer the cheapest investment market in Asia, so the losses in trade experienced by the region’s smaller economies are already reversing, with Bangladesh, Cambodia and India gaining most.

Guess somebody better alert Sens. Graham and Schumer to prep their tariffs against the legions of poor in those states as well. I mean, gotta protect American workers from cheap labor. That way we’ll keep America productive and efficient and stuck right where we need to be on the production value chain. No sense leaping into any futures when the past is so comfortable.