The proposed currency bill by the US senate has been met with opposition in and outside the US – and for all the right reasons. Reading the text of the proposed bill, one does not see a direct reference to China in a legislative attempt that ostensibly aims at punishing countries exporting goods to the US with undervalued currencies.
However, from the sentiments expressed by the senators backing the bill, no other country is being mentioned as the target, apart from China. It is therefore, quite clear that the bill is yet another example of anti-Chinese strategies by the Sino-phobic in the American body politic. Quite tellingly, those pointing China has kept mum about the fact that the Chinese Yuan has been consistently appreciating!
Of course matters economic are but an excuse. “It’s the elections, stupid”…to paraphrase the Bill Clinton mantra. US politicians across the Democratic and Republic party divide face the daunting task of explaining to the electorate the spectacular economic downturn as the 2012 campaigns take shape. What a better excuse than to drag China as a scapegoat into the fray? To say the least, this short cut to explaining away US economic failures is an extremely simplistic option and the anti-China hawks in the US know it.
As the International Herald Tribune editorialized recently, the bill “…could add an explosive new conflict to an already heavy list of bilateral frictions,” between the world’s two largest economies with negative implications for the global economy.
Would China take this latest legislative ploy lying down? What would be the result of China’s retaliation against this provocation? Well, a trade war that could suck in the rest of the world complicating the global economic crises that emanated mainly from policy failure in the US and the West. For this reason alone, the US senate should either shelf this bill or, more realistically, shred it altogether or, trigger a new round of economic contraction globally.
It would appear that the sponsors of this protectionist measure are disconnected from the more rational viewpoints even in the US itself. For instance, the American Chamber of Commerce and the Roundtable, two respected lobbies have rightly cautioned that the bill would have a reverse effect on US businesses. In any case, the best way of addressing global currency issues is to engage at the WTO and other supranational economic bodies rather than unilaterally initiating domestic legislation over a matter of global economic ramifications.
In any case, the US has won some economic battles against other countries, including China, through WTO and a case in point is the automobile tyre manufacturing industry where WTO recently ruled in its favour. Reportedly, the US has not sought the supranational route to its currency complaints when the WTO should have been the first port of call.
The currency bill is however a quintessentially American approach to global issues. Because of the hegemonic attitudes of some US politicians, their preferred way of dealing with internal challenges is to implement strategies that target ‘outsiders.’ In this stream of thought, the shooting rate of unemployment in the US is not a result of internal failures but external factors.
This line of thought does not take cognizance of the fact that neo-liberal policies such as excessive borrowing that led to the real estate bubble in 2007 is the real culprit of US economic woes. The fact that the US spurned the UN and went into the resource draining Iraq war is swept under the carpet. The fact that US anti-terrorist campaign in Afghanistan has equally piled pressure on the economy is avoided. The fact that the Bush administration went into the Middle East wars without prudent budgetary considerations that ultimately put strains on the economy is turned a blind eye to. Indeed, these are the fundamentals that the US needs to grapple with rather than shifting the blame to China.
What does the currency debate mean for developing nations? Foremost, the so-called third world countries especially in Africa and Asia have labour as their most important economic factor. If the currency bill was to succeed, many such countries would be next target serving to impoverish already struggling societies. At the geopolitical level, by standing up to the US over this trade war, China is checking the unbridled misuse of America’s power where it matters most – the economic front. Indeed, BRIC countries would be acutely aware that once the US is done with China, it would target them, thus the need for these countries to lobby hard for the more structured, multilateral WTO route on matters relating to global currency exchange rates.
By Bob Wekesa
The writer firstname.lastname@example.org is a Kenyan journalist studying international communication at the Communication University of China