or years, American officials have voiced dismay about China artificially devaluing its currency. For the most part, they have done so diplomatically, patiently, looking for the cooperation required to strike a better balance in the global economy. The Chinese have nodded their heads. The renminbi, or yuan, has ticked slightly upward the past year. Yet, in the main, China has stuck to its aggressive policy of maintaining a weak currency to fuel its export-driven economy.
No surprise then that frustration has mounted in Washington, especially as the American economy has struggled to gain momentum, a stubborn unemployment rate remaining above 9 percent. The clearest expression of the dismay has surfaced in the U.S. Senate, where Sherrod Brown and a bipartisan collection of allies appear on the verge of approving legislation that would punish China if it failed to allow for a more market-oriented currency rate.
The Ohio Democrat long has made the argument for applying tariffs on Chinese goods as a strong response to China manipulating its currency rate. In the past, this editorial page has expressed skepticism about such steps, fearing a risky escalation, China launching its own punitive response, protectionist measures on both sides resulting in harm.
This still is a concern, one conveyed by John Boehner, the House speaker, who has called the tariff proposal “dangerous.” Yet at some point, patience begins to run out, and alternatives are required to advance conversation, even through initial turbulence.
Consider the words of Ben Bernanke, hardly a member of the protectionist club. The chairman of the Federal Reserve made plain at a congressional hearing last week that the Chinese maneuvering contributes to the slow economic recovery. How? The cheap renminbi gives Chinese exports an advantage in the global market, eroding the position of the United States and other countries looking to sell goods in China and elsewhere overseas.
That translates into less economic activity, and the creation of fewer jobs. So, yes, in more ordinary circumstances, a tariff regimen would be blatantly protectionist. In this instance, it represents a bid to improve the economic landscape, making more productive the flow of trade.
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