Politicians are getting ready for the fall election and looking for issues. They are also seeking scapegoats to blame for America’s suffering and malaise. Unemployment, according to most opinion surveys, is the number-one concern of voters. And China, many politicians charge, is the cause. Their mantra has become “Blame China.”
To these politicians, the most relevant issue is China’s undervalued currency, the yuan. They charge that Chinese exports to the United States are too cheap and U.S. exports to China too expensive. The huge trade deficit that results from the undervalued yuan supposedly translates into unemployment in the United States. Is China stealing American jobs?
Most economists agree with the perception that China’s currency is undervalued but suggest it is only by a fairly small amount. Others say that it is not undervalued at all, given that China does not have a trade surplus with most of its trading partners, which means debtor America is not competing very well. Politicians, on the other hand, suggest very high figures for the currency distortion, up to 40 percent. But this exaggerates and distorts the real picture. Most economists contend that a revaluing of the yuan would not have an immediate impact and magically fix the trade deficit.
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