The Chinese yuan, Gerald Ford, and St. Augustine

The media and the blogosphere have been alive this week with Treasury Secretary Henry Paulson and Fed Chariman Ben S. Bernanke’s trip to Beijing. Washington still feels the best way to quiet the clamor over the trade imbalance with China is to pressure Beijing to raise the value of the yuan. This week’s Economist chimes in arguing that revaluation of the yuan is not the solution that American policy makers seem to believe and furthermore would have unintended consequences both in China and in the US. Mr Paulson has taken the rather unusual tack of pleading with the Chinese to come to his aid against protectionist factions in America. Citing “resistance in both our countries to greater integration into the global economy”, he called for tangible results “on the most important issues facing our nations.” This is code for allowing the yuan to appreciate, and other measures to rein in the massive trade imbalances between the two countries. China’s cheap currency is the prickliest issue, at least in the public mind. A Democratic senator, Chuck Schumer, along with a Republican, Lindsey Graham, have been pushing a scheme to slap penalties on Chinese goods if China’s currency is not allowed to

December 15th, 2006

Does the Future Belong to China?

Interesting back-and-forth in the British magazine Prospect between Will Hutton, the author of The Writing on the Wall: China and the West in the 21st Century, and Meghnad Desai. a former director of the Centre for Global Governance and an emeritus professor of economics at the LSE and a Labour peer.

Hutton leads off: It is a commonplace to observe that the rise of China is transforming the world. Extrapolate from current growth rates and China will be the world’s largest economy by the middle of this century, if not before. If it remains communist, the impact on the world system will be enormous and very damaging. Britain and the US are, for all their faults, democracies that accept the rule of law. This is not true of China. If an unreformed China takes its place at the top table, the global order will be kinder to despotism; the fragile emergence of an international system of governance based on the rule of law will be set back and the relations between states will depend even more nakedly on their relative power.

All that, however, is predicated on two very big “ifs”—if the current Chinese growth rate continues, and if the

December 14th, 2006

Another Coal Mine Disaster: The Music Video

Via The Peking Duck and CDT: A moving 10 minute+ video showing the victims and families of China’s multiple coal mining disasters. Economic progress marches on, but I think the faces in this video tell a far different story than the images of New China rising in Shanghai and Beijing ’08.

According to CDT, the images and videos are all government-sourced but the creator is unknown. Not surpisingly this video has been banned in the PRC.

December 9th, 2006

Winners and losers facing "last call" at China A-Go-Go

Signs that not all is well in today’s China A-Go-Go, from today’s IHT:

BEIJING: Protests and riots have become the most destabilizing factor in China and pose a challenge to the Communist Party’s ability to rule, the official Xinhua news agency said Friday.

Xinhua called for “prudent” use of force in handling “mass incidents” — an official euphemism for protests and riots — after the police shot and killed at least three demonstrators a year ago.

China has been grappling with outbreaks of unrest for several years, as three decades of market reforms have lifted living standards, but also widened the gaps between the rich and poor, the urban and rural.

Resentment over the loss of farmland, corruption, worsening pollution, arbitrary evictions by property developers and layoffs by state enterprises has galvanized Chinese to take sometimes drastic action.

It’s tempting to see these incidents as “reactions to authoritarian rule,” and the government is certainly a part of the problem. But it’s also important to remember that what seems to set people off are the bread-and-butter (or rice-and-tofu, if you will) issues of an economy surging forward without the necessary legal, environmental, or social structures in place to deal with

December 8th, 2006

China Is Not Just Rising, but Also Changing

Mao biographer Ross Terrill, of Harvard’s Fairbanks Center, has an op/ed in this morning’s NYT. Most of his assessments won’t surprise veteran China watchers and I think he may be a bit too optimistic about economics driving China toward positive political change (what of the devil we don’t know?) Overall, however, this is a good overview of the situation in China today and wouldn’t be bad for use in an undergraduate or high school classroom, either.

“A tussle between economics and politics, yin-yang’s stiffest test, seems inevitable. President Hu Jintao has surely bet that freedom in the two realms can be separated. But if Adam Smith was correct to call his free market economics a “system of natural liberty,” this will not be possible. In Beijing in the spring, I watched people snap up Chinese-language copies of F. A. Hayek’s “The Road to Serfdom,” which says a command economy is precisely that…China’s new economy will surely experience setbacks. But eventually, with its emerging middle-class society, it will refashion the old politics. In that sense China’s economic boom will both fail and succeed. As Leninism-plus-consumerism it will reach its limit. But as a base for a post-communist political system, it

September 9th, 2006
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