

How will an RMB revaluation affect China, the US, and the world? - cwan
http://mpettis.com/2010/03/how-will-an-rmb-revaluation-affect-china-the-us-and-the-world/

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gamble
"Beijing has pointed out many times that a contraction in the Chinese trade
surplus does not necessarily mean an equivalent contraction in the US trade
deficit. All it requires is an equivalent contraction in the rest of the
world’s net trade deficit. This could easily happen with an improvement in the
trade balances of Vietnam, Mexico, Korea or anyone else, enough fully to
absorb the reduction in China’s trade surplus. In that case, the US trade
balance does not improve, and the US gets none of the employment benefit of
the RMB revaluation. China will simply import fewer jobs from abroad and some
other countries will import more, or export fewer, jobs."

This is probably the most overlooked aspect of the debate. It's hard to argue
that China's currency manipulation doesn't destroy manufacturing overseas -
but is it American jobs that are lost? It's more plausible that China's rise
comes at the expense of other countries like Mexico that specialize in low-end
manufacturing.

