U.S. declares economic imbalance caused by China's exports of shoes and apparel products

When some U.S. lawmakers, officials, and scholars clamored for pressure on China to force the appreciation of the renminbi, Europe, China’s close neighbors, Japan and South Korea, and Latin America and Australia, which exported raw materials to China, uttered quite different voices. This is in contrast to the scene that forced the appreciation of the yen to be different in the past, reflecting that the status of economic relations in international relations has become quite different.

Declaring that China’s exports have caused global economic imbalances is one of the main means by which the United States has forced the appreciation of the renminbi. According to this argument, the United States believes that the suppression of Chinese exports through the appreciation of the renminbi can make the global economy "rebalance." The real intention of the United States in creating this set of theories is to draw up relevant countries to jointly exert pressure on the appreciation of the renminbi.

However, judging from the actual state of each country, the United States has not drawn any "alleged forces." This contrasts with the scenario when Japan was forced to sign the Plaza Accord.

U.S. departure no response

The EU, which is China's largest trading partner, is clearly the number one target of the United States’ "Lianheng," but the European Union has made it clear that it does not intend to raise the RMB exchange rate issue to the political level. The Financial Times reported on March 25 that EU Trade Commissioner Karel De Gucht stated that during his visit to China in April, he intends to discuss several factors affecting trade (from footwear to foreign investment) and The Chinese government has started consultations and the value of the renminbi is just one of them. “At the moment, this issue has not risen to the political level in Europe,” De Gucht explained.

The European Union’s core country, Germany, also made a similar statement. German Economy Minister Rainer Bruederle stated on the 23rd that he hopes that China’s RMB exchange rate can be completely freely floated, but China’s implementation of this is not easy. Fully understand."

Even the United States’ allies, the United Kingdom, have not kept up with the United States this time. British Foreign Secretary Miliband said to the media on the 23rd: “The British government has not taken a position on the issue of RMB valuation.”
Compared with the ambiguous attitudes of European countries that do not want to violate the United States and do not want to offend China, China’s close neighbors’ attitudes appear relatively clear.

When meeting with Chinese officials, Deputy Governor Melnikov of the Central Bank of the Russian Federation emphasized that Russia firmly supports China’s RMB exchange rate policy.

The “Financial Times” reported on the 25th that Yoshihiko Noda, Deputy Minister of Japan’s Ministry of Finance, said that the sanctions aimed at forcing China to allow the renminbi to appreciate were “not desirable”.

South Korea's attitude is slightly prominent at both ends of the mouse. South Korea’s “Central Daily” said on the 16th that if South Korea holds the idea of ​​“stand by and enjoy it” for the Sino-US exchange rate dispute, it is equivalent to that South Korea has not shaken off the “small country nature” and “has no future for big countries” and should strive to use the Seoul Consensus. "To resolve the Sino-US exchange rate dispute, but not to unilaterally pressure China. However, Park Chul-hwan, a South Korean National Federation of Economic People (FKI) officials, broke through the real calculations that determined South Korea’s attitude: “If the renminbi appreciates, it should weaken the price competitiveness of Chinese products. In principle, this is for South Korea. This should be good news, but in reality it depends on how many Korean companies have factories in China and what percentage of their output in China is exported."

According to analysis by the Financial Times of the United Kingdom, Japan and South Korea have established considerable manufacturing capacity in mainland China, which means they are taking a share of China’s export boom. Therefore, they actually prefer to keep the RMB exchange rate stable.

However, China’s import source countries are simply not willing to see the renminbi appreciate because this will mean that their exports have decreased. Reuters’ 24th article reported on the Latin American attitude toward the RMB exchange rate. The article said that the Inter-American Development Bank meeting held in Mexico had a different view on the sensitive issue of the renminbi, or simply evaded it, even though the United States is brewing to take a more radical position. The article said that a Canadian representative said that his country had "views" about exchange rate manipulation and his assistants huddled to the reporter to emphasize the complexity of the issue. However, officials who export commodities to China, such as Peru, the second largest producer of copper in the world, have downplayed this. Peru’s Finance Minister Aarus said: “Our policies are largely coordinated with Asia, especially China. China is a very important business partner, and we must all work hard to reduce exchange rate risks.”

Europe will not put pressure on the yuan

Why did the United States become a "loose man" on the issue of the RMB exchange rate, and did not even receive the response of the traditional allies EU?

Li Xiaoning, a distinguished strategist and a special researcher at the China Economic System Reform Research Association, said: “There are two major changes in the current pattern of international relations. One is that the layout of the alliance relationship has changed, and ideology is no longer divided into camps. An important basis; the second is that the principle of alliance has changed, national security is no longer the only 'headline topic,' and the importance of economic relations has risen to at least equal importance with safety.”
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One of the reasons why the EU is unwilling to join the US-led coalition forcing the appreciation of the renminbi is that the renminbi is already appreciated against the euro and does not require persecution. Since the RMB is staring at the US dollar, since the end of 2009, when the exchange rate of the euro against the US dollar began to fall, the RMB has kept its appreciation against the US dollar. From December 2009 to the present, the cumulative appreciation of the renminbi against the euro has exceeded 12%.

The trend of RMB appreciation against the euro has actually had a significant impact. In 2009, when China's imports fell by 11.2% year-on-year, EU exports to China increased by 4%. From January to February of this year, China’s exports increased by 31.4%, while imports increased by 63.6%, and the increase in imports was significantly higher than the increase in exports. Among them, for the EU's core national trade in Germany, China's total exports to Germany from January to February increased by 34.4% year-on-year, but imports from Germany increased by 39.9%.

According to the official statistics of the European Commission, in 2009 the EU’s total exports were 1.093 trillion euros, total imports were 1.199 trillion euros, and the trade deficit was 105.476 billion euros. Compared with the deficit of US$380.7 billion in the United States, it is not “terrorism”. Therefore, there is no impetus for Europe to follow the United States to force the appreciation of the renminbi.

Judging from the EU’s major import and export commodities, the EU’s most important export commodity categories are: machinery (€490 billion in 2008), chemicals (€129 billion in 2008), automobiles (€110 billion in 2008), and pharmaceuticals (69.7 billion Euros in 2008) and civilian aircraft (45.7 billion Euros in 2008), which together accounted for more than 80% of the EU’s total exports, and all of the individual statistics maintained a high surplus. Among the EU's major import and export commodities, the only project with a huge deficit is textiles and footwear. In 2008, the deficit was 44.2 billion euros.

It is not difficult to find from the data that Europe’s major export varieties are all European products that have advantages and China does not have advantages. In these areas, the economies of China and the EU are highly complementary. Even if the RMB further appreciates, the trade situation in Europe Will not bring much change. Even the European textile and footwear projects with a large deficit are in fact the cause of their deficits. They are all well-known: A large part of the European brand-name clothing and footwear are processed and manufactured in China, but they are sold back to Europe and included in European imports. Only. If the renminbi appreciates, it will actually result in less "Chinese goods", but in European "local" clothing prices.

Appreciation unfavorable to Europe, Japan and South Korea

Niall Ferguson, an economic historian at Harvard University, invented the term “Chimerica” (China) to describe the economic relationship between China and the United States: China desperately produces, and the United States desperately consumes, causing China’s huge trade surplus and the United States’ huge trade deficit. China needs to import huge quantities of raw materials from the world for production, and the United States has to borrow from the world for consumption. This forms a global cycle of industrial economy centered on China and a global financial cycle centered on the United States. The two "cycles" form the core of the global economic system.

Although Europe is the center of the traditional system of international relations, it has been largely marginalized in the contemporary global economic system. In 2009, the total EU import and export volume was only equivalent to 20.9% of GDP, of which exports were 9.97% of GDP. This actually shows that the EU economy is "self-contained" to a much greater extent than its "globalization."

However, exports of high-tech products accounted for a major part of the EU's exports, which account for a relatively small portion of the overall economy. Li Xiaoning told reporters that the EU is China’s largest supplier of technology. The biggest difference between the EU-China economic relations and the US-China economic relationship lies in the fact that the United States more regards China as a "factory" and a "market," and is only willing to conduct product transactions with China, and Europe is more of a partner for China. A lot of technology was transferred to China and then the two parties cooperated to produce products. The cell phone is a typical case. Europe imports a large number of mobile phones from China, but in fact its brands such as Nokia are all produced in China. Nokia established an R&D center in China as early as the 1980s and transferred core technologies to China. In contrast, the United States will not hand over the core iPhone technology to China. In this situation, what Europe really hopes is that the exchange rate of the renminbi against the euro will be stable.

Similar to the situation in Europe, Japan and South Korea have also established a large number of production lines in China. In fact, some of China’s exports are to help Japan and South Korea export. Therefore, Japan and South Korea have no desire to join the United States’ appreciation of the renminbi.

For Latin American countries and Australia that export raw materials to China, most of their imports do not come from China but from the United States and Europe. The appreciation of the renminbi will mean for them a drop in exports to China. Under the financial crisis, this It will have a further blow to their economy.