The world currency markets were abuzz on Friday when China's currency, the renminbi ("the peoples' money," also known as the yuan), traded for 20 minutes above the mark it has held for almost a decade. Was it a mistake, quickly corrected, or a little test by the the People's Bank of China, the central bank, just before it let the value of the renminbi rise?
See, there's been a lot of hoo-hah about the refusal of the Chinese government to allow the renminbi (this has nothing to do with the Rimbaldi story line on "Alias") to trade more freely, rather than keeping its price fixed to the dollar. Some analysts, economists and increasingly-irate China-bashers on the Hill think the Chinese currency issue is central to the outsized advantage China has in manufacturing a whole raft of goods, many of which are flooding the U.S. market and costing tens of thousands of jobs. Let the renminbi rise, they say, and China's exports will become more expensive (and imports to China cheaper), making for fairer competition.
I'm somewhat skeptical that a change in currency will make a huge, obvious difference in the U.S.-China trade deficit (which reached $162 billion last year)--not to mention difference in trade with other countries. Will it make some difference? Sure.
But, the bottom line is workers' wages. As the AFL-CIO's petition to the U.S. Trade Representative pointed out, China artificially suppresses wages by anywhere from 47 to 85 percent of what they should be. In the Chinese labor system, people work twelve- to eighteen-hour days with no days of rest, earning meager wages, in factories full of chemical toxins and hazardous machines, and suffer sickness and death at the highest rates in world history. A change in currency will not mean much as long as an authoritarian regime artificially suppresses the market for wages by ruthlessly enforcing a system that controls where people can work, and imprisons and tortures people who attempt to organize real unions or strike. That labor system--not the currency difference--is the reason, for example, that Wal-Mart saves 10-20 percent on its global procurement, according to the Harvard Business School.
So, when it comes to China, I think we should keep our eye on the ball--keep front and center the issues of freedom of association for workers and the elimination of the conditions that make China a ripe ground for corporations seeking cheap wages.
P.S. I can't help note the irony of writing about China, the place of choice for multi-national corporations, on May Day.
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