Re: appreciation of yuan, national interest and morality

[Jonathan Lassen <jjlassen@chinastudygroup.org>]

Mobo Gao wrote:

 > I know academics are not immortals living in the cloud and they have 
to have tenures, publications, grants and so on. They therefore need to 
be defending the “national interest”. In this particular issue US 
specialist on Chinese economy, foreign affairs, so on and so on will 
have to defend the US national interest such as protecting US jobs and 
industry and so on, as I have seen some prominent China scholars have 
been dong. Fair enough. However, would it not be difficult to talk about 
human rights for the Chinese and universal values at the same time? On 
what ground do we hold the moral high ground? I know: democracy!


I'm not exactly sure where your irony lies in the above. But (taking you 
seriously), I think you give way too much credence to the concept of 
national interest. If we view the 'nation' as fundamentally 
contradictory, then we can immediately move to refute the idea of a 
unitary national interest, and can only view the term (universally 
employed) as an illicit elision of particular interests onto the 
general. Thus there are multiple and contradictory 'national' interests 
to defend. We have to choose one before we can defend it.

 > In this case, would defending the US national interest not be morally 
(either intentionally or unintentionally) responsible for the 
predictable suffering of the Chinese poor, now or later, more so later? 
It goes like this (see China weighs dollars and sense of revaluation 
http://chinastudygroup.org/newsarchive/7858/ for details)
 >
 >    1. The US consumers buy commodities made by migrant workers in sweat
 >       shops in China at increasingly lower prices (you would think it
 >       should be the other way round!)
 >    2. The US government directly and therefore the US consumers
 >       indirectly borrow from the Chinese government directly and
 >       therefore the Chinese poor indirectly to spend on these
 >       commodities (Chinese purchasing of US bonds and US dollars reserve)
 >    3. At the moment the exchange rate of US and Yuan is about, say,
 >       1:8.38. The pressure is on by the US to appreciate Yuan as they
 >       did on Japan in 1985. Millions of dollars are flowing into China
 >       now, expecting this to happen


Yes but in 1985 there was consensus among central banks to devalue the 
dollar. Now Japan and the EU are pissed at the US for trying to 
unilaterally let the dollar slide, and China will have none of it either 
(that is, the unpegging). Despite its rhetoric, the US has been unable 
to force anything by general concessions about relaxing the yuan peg 
(which are not new) from the Chinese government.

 >    4. Under the pressure with the help of our academics the exchange
 >       rate becomes, say, 1:6. US dollars will flow out of China like
 >       plane loads


I think it would depend on whether the yuan revaluation would trigger a 
financial crisis or not. If not, perhaps the 80-100 US billion in 
speculative money that's in China would leave with a nifty profit, but I 
can't imagine it would lead to a general dumping of assets by foreign 
holders.

 >    5. The outcome: Foreign firms made loads of money either way and US
 >       consumers enjoyed all the sweat shop commodities for nothing.


If the yuan revalues, foreign firms in China could be hit the hardest. 
If something like 70% of exports from China are generated by foreign 
firms in China, a 25% valuation in the yuan vs. the dollar could play 
havoc on them. They might be able to displace their misfortune onto 
others (workers, the Chinese state, etc.), but that would be a battle, 
and the outcome is far from certain I think.

 >    6. The poor Chinese? We all know (perhaps we don’t) what is and will
 >       happen to them. There are millions of them of course.


Well, what do you make of Henry Liu's thesis that the finance 
imperialism (currently underway) is *already* grinding Chinese workers 
into poverty?

Also, Mitchell and Ravenhill's work from the mid-90s I think it useful 
to think these things through (and I can't find the cite to Mitchells 
work that dealt explicity with the Plaza Accords, does anyone have it?): 
  Beyond Product Cycles and Flying Geese: Regionalization, Hierarchy, 
and the Industrialization of East Asia - Mitchell Bernard; John 
Ravenhill - World Politics, Vol. 47, No. 2. (Jan., 1995), pp. 171-209.

Cheers,

Jonathan