Not the Time for the U.S. to Slam China

By Nicholas Hastings, China Real Time Report – WSJ, Oct 6, 2011 —

China may well be right this time.

Calls by the U.S. for Beijing to speed up appreciation of the yuan are not the solution.

In fact, slowing growth in the world’s second largest economy as the global recovery continues to falter could well make matters worse.

The trouble is the U.S. is getting desperate.

It is looking for any solution to stop unemployment from rising and its economy from heading back into recession. And China, with its weak yuan, is back in the firing line.

For most of last year and much of this one, the dollar itself had been under heavy selling pressure and China was essentially off the hook.

With the weakness of its own currency being accused of causing ‘currency wars’ by countries such as Brazil, the U.S. was hardly in a position to point the finger of blame anywhere else.

Also, as promised, Beijing had continued its steady policy of allowing the yuan to appreciate gradually against the dollar. In the last few months, however, as the euro-zone debt crisis has intensified and the global economy has started to dive again, the dollar has found itself back in favor, with the dollar index rising nearly 10% since its recent low in early April.

So now, the U.S. administration has been left not only with a dollar on the rise but an economy that simply refuses to bounce and the government is frantically looking abroad for excuses.

That is why the U.S. Congress is once again dredging up that old chestnut: Let’s slam tariffs on imports from countries that have undervalued currencies–like, guess who, China!

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Not the Time for the U.S. to Slam China – China Real Time Report – WSJ