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US cannot export its crisis

By Wen Siyuan (Guangming Daily)

16:50, October 24, 2011

Edited and translated by People's Daily Online

On Oct. 11, the U.S. Senate passed the Currency Exchange Rate Oversight Reform Act of 2011. If signed into law, the act would allow Washington to impose punitive tariffs on goods imported from its major trading partners that are deemed to have undervalued exchange rates. This is a flagrant violation of other countries' monetary sovereignty and also a dangerous signal to the international community that the United States is trying to export its crisis.

Prominent politicians and far-sighted people in the United States, including House Speaker John Boehner, have expressed disapproval of the currency bill, saying it would harm both countries. They believe that the bill risks a trade war and will not help solve the country's perennial economic problems or promote its economic recovery.

It is generally believed that the bill is directed primarily at China. U.S. politicians have long been bashing China over the RMB exchange rate issue, but it was the first time since the global financial crisis that the U.S. Senate specifically passed a bill to punish China for alleged currency manipulation. Naturally, more people have become doubtful about the sincerity of the United States, which it has reiterated over the past two years that it seeks to ride out the financial storm in together with China.

China has been making great efforts to solve problems concerning the RMB exchange rate. Since it initiated exchange rate reform in 2005, the value of the RMB has risen 30 percent against the U.S. dollar, while the U.S. unemployment rate has nevertheless increased from 7 percent to 9 percent, indicating that there is no necessary link between the RMB exchange rate and the U.S. unemployment rate. Since the global financial crisis, China and many other emerging economies have worked hard to save the global economy, and made far more contributions to global economic growth than developed countries.

Furthermore, despite the imported inflation caused by developed countries' quantitative easing policies, the domestic demand of emerging economies has continued to grow, which has largely offset the impact of shrinking demand in developed countries. It would be unfair wishful thinking for the United States to export its domestic crisis. Argentina's President Cristina Kirchner recently called on emerging economies to be wary of developed countries exporting their crises.

As the source of the financial tsunami and the most important and most sophisticated player in the international financial and economic system, the United States should find the solution to the crisis by reflecting on the course of its development and by taking lessons and gaining experience from history. However, some Americans have always required other countries to act as saviors, criticized the ineffective cooperation among various sides and even sought to use its strength and status to transfer the crisis and related responsibilities to other countries, instead of thinking over its real shortcomings.

The key problem is the lack of courage to face the crisis rather than the emergence of the crisis. The United States was a latecomer among world powers, and it overtook other powers just after effectively overcoming various types of severe challenges. The United States resolved to adopt the New Deal amid the Great Depression in the 1930s to make institutional reforms of its financial, industrial and agricultural sectors, social security and even the separation of powers between three branches of government by implementing three major strategies of relief, recovery and reform. This succeeded in enabling the United States to recover and paved the foundation for its dominance of the world.

Today's United States will not have a way out by transferring the crisis to other countries or making insufficient overhauls. The rampant spread of the recent "Occupy Wall Street" movement has shown that the appeals of the U.S. masses are not limited to job opportunities and benefits but involve serious discontent and disappointment with the existing institutions and mainstream political parties.

Responsible U.S. politicians and real experts should face the music to find out the solutions and even make tough decisions if necessary. Those who are seeking to find faults with other countries perhaps forget an old saying, "God helps those who help themselves."

The world is closely watching what means the United States will adopt to emerge out of the crisis.


Leave your comment3 comments

  1. Name

wende at 2011-10-2571.125.85.*
US will not be able to improve because it does not want to plug tax loopholes as politicians are looking to the rich for their contributions. US is also using hard power to maintain its hegemony.
helen at 2011-10-25203.82.92.*
The United States will do anything to maintain and sustain its US Global Tyranny. That is the reality.And shall continue to enjoy carrying out more QEs or US$ printing as and when it suits its purpose.It is the World of nations who are naive, gullible and stupid enough to allow the US$ to continue to be the World Reserve Currency. Putin has declared that the US was basically a parasite on its Weimar US$ status. It's time to stop subsidising the Americans and the US military's invasions of small helpless sovereign nations ...Nations should expedite their bilateral trade in non-US$ and the world financial order would be in a better shape.
Canada at 2011-10-2570.36.49.*
Today on the business channel a guest said that the U.S. Treasury added lots of fuel to the [recovery] fire by making lots of cheap money available [printing it], but U.S. corporations didn’t spend the money in the U.S. to create jobs and improve the economy, but instead spent it in other countries.

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