Here's The Deal About Chinese Currency And Manufacturing

Paul Krugman

Photo: Dave Shankbone via Flickr

The Senate will be taking up Chinese currency this coming week. So I though I should offer a brief note about one of the arguments people make against focusing on Chinese currency manipulation — namely, the claim that China doesn’t really compete head to head with US manufacturing, so that a rise in the renminbi wouldn’t help.

I’d argue that this is wrong on three levels.

First, the notion that there’s no head-to-head competition is false. There have lately been quite a few stories about manufacturing moving back from China: the labour costs will always be much higher in America, but other advantages, especially logistical, can make even labour-intensive production worth doing at home.Read the rest of this post at The New York Times.

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