There is no basis for accusing China of manipulating its exchange rate
Jeffrey Frankel, professor of economics at the Kennedy School of Government Management at Harvard University, wrote that when exchange rates are determined by the market, they automatically offset tariffs. The internationally accepted criteria for exchange rate manipulation in the IMF clauses include the following two: unilateral intervention by a country to depress its own currency exchange rate, and huge current account surpluses, which are not applicable to China today. The sudden decision of the US Treasury Department to designate China as a currency manipulator is another example of the US wanton violation of established norms, professional opinions, long-term credibility of US institutions and even legal texts.
Frankel also pointed out that the U.S. government is now accusing China of manipulating the exchange rate, while on the other hand, it hopes to manipulate the U.S. dollar exchange rate. The U.S. government is not satisfied with putting pressure on the Federal Reserve to cut interest rates. It has also made a clear attempt to lower the dollar exchange rate through public voice.
Daniel Ikensen, director of the Trade Policy Research Center of the Cato Institute, argues that the protectionist policies of the US government are pushing up the dollar exchange rate, which will only lead to a permanent trade deficit. If we want the dollar to stabilize, we need to develop more predictable and calm policies. He also said that the current impulsive and unpredictable risk-taking policy in the United States is triggering a wave of uncertainty around the world.
Stephanie Siegel, a political economist and senior researcher at the Center for Strategic and International Studies, a think tank in the United States, also believes that there is no basis for accusing China of manipulating its exchange rate. She said that previous reports issued by the International Monetary Fund pointed out that Chinas external position basically conforms to the economic fundamentals. From the perspective of global financial stability, it is hoped that the U.S. governments decision-making will become more prudent.
Paul Krugman, Nobel Laureate in economics, has recently published articles on US economic and trade frictions with China in the New York Times and other American media. He believes that people who understand the economy have been losing from the U.S. government, and the rest are mostly ignorant people. Comparing the prices of imported goods subject to tariff restrictions with those of other imported goods, we will find that the burden of American enterprises and consumers has increased significantly. This is actually a tax increase on American consumers.
The result of the escalation of economic and trade frictions will only be a double loss
Kruger stressed his support for an open multilateral trading system and the settlement of trade disputes through the framework of the World Trade Organization. She said there was evidence that economic and trade frictions were damaging the global economy. In addition, due to the increase of uncertainty and the escalation of trade frictions, the economic growth of the United States may further slow down. I believe people will eventually realize how destructive the economic and trade frictions are. Before the problem of economic and trade frictions is solved, the economic growth of those countries with open trade policy will be faster than that of other countries.
A 10% tariff on $300 billion worth of Chinese imports to the United States would obviously increase the cost of American consumers buying goods. There is growing evidence that the interests of American businesses and consumers are being undermined, Frankel told reporters. Few believe that the United States is benefiting from the current situation. Frankel also stressed that some people in the United States now believe that tariff increases will force China to make concessions, which is wrong.
Since the current U.S. government implemented protectionist policy, many economists have not only pointed out its harm from economic principles, but also carried out a lot of empirical research on the specific impact of tariff measures. Felix Tinterno, an economist at the University of Chicago, shared a recent study with two other economists. The study examined the impact of the tariff imposed by the United States on imported washing machines in 2018. The study found that tariff increases led to an increase of about 12% in the cost of washing machines for American consumers, which means an increase of $1.5 billion in overall consumption costs per year. Tariff increases not only cost consumers more, but also make it difficult for them to enjoy better products.
American xenophobia and protectionism will endanger the world
Economic and trade frictions between the worlds two largest economies are bound to adversely affect the global economy. Since last year, global economic growth has slowed down and the outlook has become more uncertain. Frankel said.
While escalating economic and trade frictions, some Americans are trying to push the US policy toward China into full-scale blind confrontation. Many experts who have long been concerned about Sino-US relations believe that this practice will have a negative impact on regional and global stability.
In a speech, former Acting Assistant Secretary of State Dong Yunchang suggested that excessive attention to competition would lead to a long-term zero-sum perspective, and that the two countries would not be able to cooperate without focusing their policies on common interests.
Former U.S. envoy to China, Fu Limin, pointed out that American xenophobia and protectionism will endanger the whole world. The active participation of the United States and China in the international system is a prerequisite for both countries to continue to move forward and for global prosperity and stability.
(Washington, 11 August)
Our American correspondent Zhang Niansheng Hu Zexi
Source: Responsible Editor of Peoples Daily: Han Yukun_NBJ11142