Submitted by Gilman Grundy, May 10, 2007 01:51

"It is not "protectionist," I am a longstanding free trader, to complain about policies that are predatory; China's are just that. The logic of free trade is that comparative advantage ultimately benefits everyone."

What utter nonsense. The logic of this piece seems to be:

1) Free trade favours all people all of the time,

2) Trade with China seems too cheap and must therefore be unfair,

3) Consumers don't seem to mind paying too little for goods produced in China so the government must take action.

Anyone can see the falseness of this logic, the Chinese try to make as much money out of exports as they can, they are not likely to do otherwise, but outside of specific examples of areas where there is a suspicion of dumping it is simply nonsense to accuse them of being 'predatory' simply for trying to boost exports. Most goods produce for export to the US in China are produced by foreign owned companies like Wal-mart. The low prices of Chinese exports have been low consistantly for the last five years or more, no prospective 'dumper' could sacrifice profits for such a length of time.

As for China threatening other third-world countries, it should be note that other third world countries have seen similar boosts to their exports in proportion to their economic growth. The author talks about countries sticking to what they do best, does the author think that China should refrain from exporting those things which are produced in other countries but which its workers can produce more cheaply and instead stick to exporting egg noodles and parasols? As China's economy develops so Chinese wages will also increase and it too will begin to import the things which its consumers require but which, because of labour costs, are too expensive to produce inside its borders, just as the United States does now. In fact this is already happening, as manufacturers are beginning to relocate production to away from cities like Shenzhen and Shanghai and toward not only the Chinese interior, but also the Indian subcontinent and south-east Asia, which then export goods to oversea markets, including China.

Like other (mainly American) commentators the author chooses yet again to bring up the issue of the Chinese currency, which has gained more than 10% against the dollar in the past year and seems set to do so yet again next year. I am no great supporter of the Chinese government, but I wonder what exactly the people who harp on about the low value of the Chinese currency expect the Chinese government to do that they are not doing already. A sudden commitment to absolute free tradability of the Renminbi would hardly serve China's interests in this regard, as it would open the Chinese market to the rather rough atmosphere of the Asian currency trading market, in which more than one country has had extreme difficulty, especially during the 1997 crisis. In fact the US is just as vulnerable to accusations of currency manipulation under this standard as China is, as the dollar is now hitting historic lows against all global currencies (in 2001 the dollar traded at 1.45 to the pound, it has already reached 2 dollars to one pound sterling this year).

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