Sign In | Create an Account | Welcome, . My Account | Logout | Subscribe | Submit News | Place An Ad | All Access E-Edition | Home RSS
 
 
 

Tides are turning on China

Business Sense

January 17, 2010
Larry Ringler

The tide may finally be turning in the United States' delicate dance with China.

Recent decisions to slap tariffs on tires and steel tubes was a promising first step by the government.

Most recently, the private sector is drawing its line in the sand, thanks to Internet search engine Google's threat to give up the lucrative China market in a dispute over censorship.

The final straw for Google came when it said its China service was hacked in order to get information on human rights activists in that country.

Leaving the world's most populous and fastest growing economy - at least for now - would be a wrenching financial decision, but it also would draw an important bright line about how far Western companies should go in their lust for the almighty dollar, or yuan or whatever the currency may be.

Say what you will about China's march toward capitalism; it's still a state-controlled country where taking the world's money is fine as long as no one steps out of line.

This is to whom we are mortgaging the fortune and future of our children and grandchildren. It should be an eye-opener to all of us.

- - -

Ever wonder how a country's currency manipulation affects our living standard?

The Fair Currency Coalition cited news reports from Venezuela after that country's 50 percent currency devaluation for ''non-essential items'' that consumers flooded stores to buy non-essential imports before bolivar prices spiked.

President Hugo Chavez said the devaluation would boost the country's ability to export while discouraging Venezuelans from buying all but ''strictly necessary imports.''

It's that mind-set that leads China to keep its yuan at a lower value to the U.S. dollar, thus requiring its citizens to shell out more money to buy American goods, while artificially cheapening its exports sold in America.

This policy is a key reason for America's nearly $2 trillion current account deficit with China since 2000 - we've bought that much more from the Chinese than we've sold to them during that time, the coalition notes.

Sure, we've gotten cheap cell phones, jeans, microwaves and big-screen TVs, but we've lost 5.6 million manufacturing jobs, with all the lost tax dollars and higher social costs that come in the process.

Sound like a fair trade?

China's currency manipulation is something U.S. Rep. Timothy Ryan, D-Niles, has been fighting with currency reform legislation that he's proposed in a bipartisan House bill with Tim Murphy, R-Pa. The Senate has a similar proposal.

American consumers have been hooked on cheap Chinese and other imported goods for most of their lives, so it's going to take some major economic shocks to awaken them. Don't look now, but those shocks have begun, and they may get more frequent.

- - -

Speaking of Ryan, he showed laudable initiative by going to the North American auto show in Detroit last week to spread the good word about the Mahoning Valley's economy.

I've been to a number of Motown auto shows and never saw a local elected official going to meet the power players.

His message was we're not our grandfather's Valley. Instead, we're going geek and green, with emphasis on the new fuel-efficient Chevrolet Cruze to be built this August at Lordstown, high-tech startups at the Youngstown Business Incubator and, someday, alternative energy firms at a Warren incubator.

Not only was Ryan doing face-time at the show, but he was showing his geek side by sending tweets on Internet messaging service Twitter.

It was a refreshing change from the days of big talk-no action posturing we've seen from some area politicians in the past.

lringler@tribtoday.com

 
 

 

I am looking for: