Mr. Robert Romano, Senior Editor
Americans for Limited Government
You argue in the “Daily Grind” that Chinese currency manipulation is a tactic in China’s “trade war” against the United States and that we are “losing” because we “have not been fighting back” (“China and the world’s trade war against the U.S. – and why we’re losing ,” April 6).
Let’s assume – contrary to fact – that a major premise of your essay is correct, namely, that Beijing has long kept the prices of Chinese exports artificially low by keeping the value of the Chinese yuan artificially low. If this premise is true, then the losers of this “trade war” are not us but, rather, the Chinese people themselves.
In real wars, belligerents’ strategies include efforts to impoverish and dishearten enemy populations by destroying their enemies’ wealth – by burning their crops, bombing their homes and businesses, and embargoing merchant ships bringing valuable goods into enemy ports. Yet if Beijing really is ensuring that Americans continue to buy Chinese-made goods at prices below the Chinese’s costs of producing these goods, then Beijing is destroying its own people’s wealth no less certainly and ominously than if the People’s Liberation Army literally burned Chinese crops, bombed Chinese homes and businesses, and embargoed foreign merchant ships bound for Chinese ports.
If and to the extent that Beijing’s policies allow Americans to buy Chinese-made goods at artificially low prices, we Americans should feel pity not for ourselves (for we are artificially enriched by such policies) but, instead, for the Chinese people. It is they, if your premise is correct, who are losing. The Beijing government (again, assuming your premise to be correct) is waging war, not against us, but against its own subjects.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030