Last updated at: (Beijing Time) Tuesday, September 09, 2003

RMB Should Not Be Lumped Together with US General Election

US general election can't be linked together with China's RMB , but recently a certain kind of links was made to the two different things by certain US politicians and media.


US general election can't be linked together with China's RMB (Renminbi, or People's Currency), but recently a certain kind of links was made to the two different things by certain US politicians and media. On September 1, the US Labor Day. President George W. Bush braved the rain to hurry to a manufacturing industrial factory in Ohio, where he vowed that his administration would intensify its effort of support to the industry, meanwhile, he hinted that some foreigners had taken away the rice bowls of American workers in this sector. He said certain countries should be clear that the Americans are expecting an environment for fair competition. A White House staff member explained this to the effect that the president referred to the excessively low exchange rate of the RMB, which has benefited Chinese enterprises. Meanwhile, US Secretary of Treasury John Snow is busy himself with the "exchange rate travel" in Asia, his main purpose is to ally his country with Japan to persuade China to adopt a floating exchange rate, so as to boost the revaluation of the RMB.

It is undeniable that the United States currently has over 3 million jobless people, with the unemployment rate approaching 6 percent, a record high since the period of the US great economic depression, the unemployed workers are concentrated mostly in the manufacturing industry. But it is a big mistake if the slump of US manufacturing industry is imputed to the excessive low exchange rate of the RMB. From a worldwide perspective, the sagging of the traditional manufacturing industry is a normal trend, particularly in the United States, leader of the world economy. US Deputy Secretary of Treasury Taylor once said that for more than 50 years, US manufacturing industry had been going downhill. In the mid-1960s, the manufacturing sector provided all America with 30 percent work posts, but now this figure has dropped to 12 percent. Experts revealed that the US manufacturing industry had accumulated quite a lot of risks during the period of the Clinton administration, which broke out in a concentrated way in Bush term of office.

There are many senior counselors in Bush's financial body, so it is impossible that he is unaware of this truth, but Bush, unhesitatingly taking the risk of hurting the feelings of the Chinese and American peoples, insists on bringing up the RMB-related matter, it is evident that he has something under consideration.

What he takes into consideration perhaps is next year general election. The economy has always been Bush's "soft rib". The poll conducted by a US company between August 25-26 shows that 52 percent of the people surveyed are dissatisfied with Bush's economic achievements. An analyst pointed out Bush is likely to follow his father's footsteps: winning the war, but is being dragged down from office by the economy. The Democratic Party's candidates naturally will not give up this good opportunity, they vie with each other to hold high the great banner of defending laborers' rights and interests, advocate rescuing textile, construction, manufacturing and other sunset industries, they regard inclusion of the creation of new jobs into the election program as a trump card for defeating Bush.

Bush naturally would not resign himself to be "caught without putting up fighting", he casts his eyes to Ohio, Indiana and several other mid-west states. These states are the bases of traditional manufacturing industries of the United States, which saw over 2 million jobless people in the past three years. At the same time, these states have always been the main battlefields of contests for voters between the Democratic and Republican parties. In the last election, Bush won in a narrow margin of 4 percentage points in Ohio.

This time, the RMB has become the trump card played by Bush in order to win these states. Some politicians and capitalists of these states, in order to shirk their responsibilities, began very early to whip up such public opinions, i.e., the excessively low exchange rate of the RMB has entailed low-priced Chinese commodities which have, in turn, occupied their markets. Misled by this force, plus the representation of the favorable balance worth US$100 billion in China's trade with the United States last year has made the RMB become a scapegoat for the economic depression and the big increase in the unemployment rate of these states, resentment against Chinese commodities has also emerged among ordinary people, these sentiments can most easily be used by the Bush administration. The current war-caused financial deficit of the Bush administration is shocking and the structural unemployment problem is serious, to impute these US domestic economic problems to the deliberate underestimation of the RMB value can attain their aim of diverting people's attention and hitting back the Democratic Party's charge that the Republican Party only concerns with the interests of large entrepreneurs without regard for the life and death of ordinary people.

To a certain extent, Bush plays the "RMB card" under the compelling situation, which, however, is unacceptable. During his meeting with US Secretary of Treasury Snow on September 3, Chinese Premier Wen Jiabao clearly indicated that maintaining the basic stability of the RMB on a reasonable and balanced level conforms to the common interests of China and the United States. He said bilateral trade was of reciprocity, mutual benefit and supplying each other's needs, the Americans' charge that we took away their rice bowls is groundless. The traditional manufacturing industry has declined in the United States and has begun to be shifted to other countries, whereas China's manufacturing industry is in its prime of life, given this, the increase in the share of some Chinese commodities on American markets is understandable, this is exactly an expression of the international division of labor. China does not engage only in export without import, we have imported large numbers of Boeing airplanes and Ford motor vehicles, but we have never complained that they have seized our rice bowls. In addition, over 50 percent of China's exported products are produced by foreign-funded enterprises in China, what we have earned is just some "thank you" reward.

Therefore, before leaving Beijing, Snow had to admit that presently it is unrealistic for the appreciation of the RMB, he said that he had realized there still exist substantive obstacles to instituting a floating exchange rate system tomorrow (in China).

The above article, written by Cai Yumin, appears on page 3 of Global Times, September 5.

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