A staff member counts money at a branch of the Bank of China on Aug. 10, 2011 in Lianyungang, Jiangsu Province of China.
October 11, 2011
Irwin M. Stelzer is a senior fellow and director of Hudson Institute's economic policy studies group.
Better to war-war than to jaw-jaw, to stand Winston Churchill's remark on its head. The United States Senate and the trade unions are not alone in believing that we have been jaw-jawing with China for too many years, while it continues to take jobs from America by manipulating its currency, stealing our intellectual property, and subsidizing exports of solar panels and other bits of green technology so as to strangle the U.S. green industry in its cradle.
The Democratic controlled senate, with 12 Republicans joining 50 Democrats, passed by a vote of 62 to 38 what it calls the Currency Exchange Rate Oversight Reform Act to impose tariffs on Chinese goods unless the regime allows the yuan to appreciate faster, perhaps by somewhere between 15 percent and 40 percent. U.S. companies that have been competitively disadvantaged by China's currency manipulation can treat "misaligned" currencies as a form of subsidy, and apply for tariff protection. This bill, in the unlikely event that it passes the House—Speaker John Boehner calls it "dangerous"—would result in a flood of complaints by China to the World Trade Organization. American companies would almost certainly lose, and animosity towards the WTO and by extension other international organizations would rise. But those supporters of the bill who keep their dog-eared copies of The Wealth of Nations handy can at least claim to be acting in the great tradition of Adam Smith, who wrote that "when some foreign nation restrains ... the importation of some of our manufactures ... Revenge ... naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours."
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