Right now the proposed Currency Exchange Rate Oversight Reform Act of 2011 is under discussion and debate within Congress, and little of the public sphere. The goal of this Act would be to give power to the US government to place countervailing duties on products imported from other countries if they can show that the country they are being imported from are subsidizing their exports by undervaluing their currencies. Meaning if the US government merely thinks they are keeping their currency low, they can use duties to increase the price of goods being imported.
The aim of the move is quite transparent, it is intended to inflate the cost of Chinese goods. The bourgeois economic theory is that if you increase the cost of foreign made goods, consumers and businesses will be encouraged to purchase domestically. In turn this would supposedly protect American jobs. Of course such a tactic would be completely ineffective. No matter how high the import duties on products would be, they would still be cheaper than domestic made products. Its also not a viable solution under capitalism because the bourgeoisie would bring down any politicians or government pushing through such a policy harming their profits. Not to mention the fact that it would be impossible to reverse neo-liberalism at this point, its not economically possible.
The bill has bipartisan backing, members from both the Democrats and Republicans support it. It is a popular position, blame China for woes in America caused by its own capitalist class. The bourgeois move jobs out of the US and send them to China because its cheaper to produce there, but then turn around and have the government blame China for their own actions. Its a pretty typical move for a Western nation. However this move is not supported by leading US business groups at all. They don’t want to pay more for the goods they bring in from China.
The real reason why this bill is being put forth is for two reasons: One, it makes it appear as though the US capitalist class is not responsible for the current lack of job availability, when it most certainly is. Place the heat on China and maybe the hostility towards the effects of capitalism will die down. Two, it helps propel US President Barack Obama for a re-election campaign for 2012. Its a nice populist position to distract from long term unemployment, political volatility and a lack of support for his re-election. Even the New York Times acknowledged the anti-China orientation in Obama’s re-election bid with the article, “China emerges as a scapegoat in campaign ads”.
As the global economic situation stands, each nation is having to take measures to protect their economies from the second dip that they are all expecting. This is almost literally whining from the US over China doing what it needs to do in order to survive. The hypocrisy is almost overwhelming; China is a villain for dealing with its currency to protect is economy, while the US invades country after country killing millions to protect its own. Exactly what kind of moral ground do they think it is they’re standing on? Who are they to point fingers at a monetary policy while they kill millions to achieve the same goal?
Besides, China has revalued its currency in the last few months anyway. “In the past, surging food, fuel and other commodity prices in China have put greater pressure on China to allow a faster rise in the value of the RMB to contain inflation. At the same time, China’s central bank has continued its drive to appreciate the yuan to fight imported inflation. Even the current pace of appreciation means that China’s trade surplus could diminish within half a decade, as inflation is likely to continue to push up the RMB in real effective exchange rate terms.”
The real threat here is the growing possibility of a growing trade war that could very likely break out into a physical war. This is not beyond the scope of possibility, these were similar conditions that lead to both World Wars. As China and the US begin jockeying for survival, and top spot in the world, they will begin to harm each others economic interests in the process of competition. As these economic measures taken against each other escalate, there will be battles over access to resources in other countries via proxy wars. If situations escalates they could turn into outright physical wars against each other.
Once again we are being shown the self-defeating nature of capitalism. As two sides in competition seek to control and dominate the global market and its resources, they sink closer and closer towards the total annihilation of those resources. The mad drive for profit and the greed driven nature of it, will do nothing but harm everyone for the profit of a few.
This can and must change, if not just to to have a better wold, but ensure the survival of the human race and the planet itself.