Yglesias makes some very relevant comments, which seem all the more relevant since I finished re-editing the international trade chapter in my upcoming textbook this week by adding a section talking about this:
... any trade-related issues as a question of “China” versus “America” is always misleading. Industry employes just 27 percent of China’s workforce. Almost 40 percent of Chinese workers are laboring in agriculture, together producing only 10 percent of China’s GDP and thus being quite poor. These people do not benefit from an undervalued RMB. On the contrary, the low price of the RMB further depresses the value of their already meager earnings. The main beneficiares of the cheap yuan are the owners of China’s exporting enterprises, and the people who work at our supply those enterprises. This, however, isn’t “China” it’s a particular set of politically influential Chinee people who have a dominant voice in China’s economic policy.Video below the fold.
America has a bizarre cotton policy. But that’s not because “America” has decided that this policy is good for “America,” it’s because cotton-growers control the relevant levers of power.